Is Multilateralism a Fig Leaf?

By Ngaire Woods*

International organizations are currently plagued by allegations of powerful states wielding undue influence over outcomes. These include recent revelations about Australia, Japan, Saudi Arabia, and other countries pushing back against the United Nations on climate change, suggestions that senior World Bank officials intervened to boost China’s ranking in the Bank’s Doing Business index, and suspicions that China influenced the World Health Organization’s approach to the COVID-19 pandemic.

Underlying all these controversies is the simple reality that powerful countries exert great influence over multilateral organizations. But their clout does not render multilateralism impossible. Rather, it is a force that must be actively managed and counterbalanced.

The undue influence of some countries in multilateral institutions is of course, not new, but the shifting global balance of power has brought it back into focus. For example, the recent Doing Business fracas prompted arguments implying that otherwise technocratic and evidence-based institutions such as the World Bank were at risk of being led by managers too attentive to China’s concerns. As Anne Krueger writes, “Like Caesar’s wife, IMF and World Bank leaders must be well above suspicion in overseeing these institutions’ work and safeguarding the integrity of the data on which that work relies.”

But history tells a different story. The United States has long dominated the World Bank, in both its formal and informal governance. In the 1960s, it was said that the US hardly needed to exercise its formal powers over the organization, because its staff worked with one eye constantly trained on the preferences of the US government, a few blocks away in the center of Washington, DC. As the historian Catherine Gwin noted, “The result was a strong and enduring American imprint on all aspects of the Bank, including its structure, general policy direction, and the manner of granting loans.”

The US government has typically channeled its preferences through the World Bank’s senior management. In 2006, an independent panel commissioned by the Bank to evaluate its research criticized the way in which “research was used to proselytize on behalf of Bank policy, often without taking a balanced view of the evidence, and without expressing appropriate skepticism.” Moreover, “[i]nternal research that was favorable to Bank positions was given great prominence, and unfavorable research ignored.” The panel lamented that, “when the Bank leadership selectively appeals to relatively new and untested research as hard evidence that its preferred policies work, it lends unwarranted confidence to the Bank’s prescriptions.”

Other powerful countries also exercise influence over international organizations’ senior management and staff. In the International Monetary Fund’s 2014 surveillance review, for example, staff noted the “additional internal pressure and scrutiny associated with surveillance of systemic economies.” And in a background paper on evenhandedness for the review, nearly 60% of IMF mission-chief respondents who worked on advanced economies acknowledged “pressure to dilute the candor of staff reports in order to avoid upsetting the country authorities.”

But international organizations need the backing of powerful countries in order to be effective, and they have historically secured that backing by giving these countries special rights. For example, whereas the US stayed out of the League of Nations in the 1920s, it was persuaded to join the UN, the IMF, and the World Bank after World War II. This was not least because the US gained a say over these organizations’ leadership, hosted their headquarters, and had outsize decision-making power (a veto in the UN Security Council and weighted voting power in the IMF and World Bank). China’s leading position within the Asian Infrastructure Investment Bank today reflects similar considerations.

At the same time, powerful countries must accept some constraints in order to persuade and co-opt others to participate in multilateral institutions. For this reason, strong states create organizations that give votes to other states, with formal decision-making arrangements that (however weakly) limit their power to decide unilaterally what the institution does.

The result is a constant constructive tension between the interests of the most powerful and those of everyone else. Three factors are crucial to managing the inevitable strains.

First, leadership is vital. The role of any multilateral institution’s leader includes not only “speaking truth to power,” but also mobilizing smaller countries to ensure their voices are heard in counteracting the influence of the powerful. Yet, such offsetting influence will be muted as long as powerful states control the appointment and reappointment of organizations’ senior leadership – as the US and the European Union (and increasingly China) do at the World Bank and the IMF. As matters stand, the heads of these institutions are implicitly accountable to the leading powers.

Second, in principle, formal governance arrangements guaranteeing the representation of all members, rules about staffing and funding, and decision-making processes permit all member states to hold an institution to account. But the effective operation of such mechanisms requires attention, information, and experience. Currently, too many countries are represented in multilateral institutions by officials who serve brief terms and have little access to information. This makes them easy to outmaneuver. Less powerful countries need to train and equip their representatives appropriately to serve on the boards of international organizations, so that they can hold their own and constrain the undue influence of the more powerful.

Lastly, transparency is crucial. The trend toward open evaluations conducted by independent evaluation offices, and the increased publicity surrounding efforts by some countries to influence international organizations, are uncomfortable for all participants, but they are vital in the pursuit of effective cooperation.

Given today’s heightened geopolitical tensions, complaints about some countries’ supposedly excessive sway in multilateral institutions may become more frequent. More accountable leadership, effective representation, and transparency are the best tools for counteracting, detecting, and mitigating it.

*Ngaire Woods is Dean of the Blavatnik School of Government at the University of Oxford.

Copyright: Project Syndicate, 2022.