Global Democracy in Decline? How Rising Authoritarianism Limits Democratic Control over International Institutions.

Author:Heldt, Eugenia C.

1 Introduction

International development finance has the potential to shape the livelihoods of hundreds of thousands of people. A large share of these financial resources is allocated by multilateral development banks (MDBs), where unelected and often loosely supervised international bureaucrats make important funding decisions.' Consequently, democratic control--that is, formal mechanisms through which civil society organizations (CSOs) and individual citizens can scrutinize and shape MDB decision-making--is particularly important for the effectiveness and legitimacy of global governance and its institutions. (2) Established MDBs, such as the World Bank, learned this lesson when the projects financed by them produced far less developmental returns than expected and even created grievances for the populations they were supposed to support. Confronted with a wave of criticism by CSOs, national parliaments, governments, and the media, the World Bank enacted, for instance, a variety of reforms with the aim of becoming more open, accountable, and responsive. (3) First, the Bank opened up by engaging with CSOs in general consultations and project-specific interactions. (4) Second, it became more transparent by enacting--as one of the first major MDBs--a comprehensive access-to-information policy. (5) Finally, the Bank established several accountability mechanisms, including the Inspection Panel, the Compliance Advisor/Ombudsman, the Independent Evaluation Group, the Internal Audit Vice Presidency, and the Grievance Redress Service. (6) With time, the World Bank and other MDBs have thus expanded democratic control mechanisms, following a trend that spans international organizations (IOs) more broadly. (7)

Yet recent shifts in the global distribution of power threaten to undermine this democratic progress at the multilateral level--even if critics underline the limits of these control mechanisms. In particular, the rise of authoritarian regimes, such as China and Russia, have led some observers to lament the decline of democracy on a global scale. (8) This work shows how authoritarian regimes have worked to systematically narrow the space available to civil society, by restricting access to decision-making, transparency, and accountability on the domestic level. These developments present us with the question of whether this decline of democracy extends to global governance and its institutions. (9) Do rising authoritarian regimes use their growing economic and political power to restrict democratic control over IOs?

We address this question by comparing formal mechanisms of democratic control established at the World Bank, which is still dominated by Western democracies, to the institutional design of two MDBs recently established under Chinese leadership. The launch of the New Development Bank (NDB) in 2015 and the Asian Infrastructure Investment Bank (AIIB) in 2016 are often described as a manifestation of China's new power in international development and global governance more generally. (10) Consequently, we presume that their design and operations are strongly shaped by Chinese preferences and normative demands.

We conceive of mechanisms of democratic control as a dimension of the institutional design of IOs, similar to membership, issue scope, or centralization that many see as the research frontier in the study of international institutions. (11) Democratic control describes the formal institutional mechanisms that give stakeholders the right to scrutinize and, if necessary, correct IO decision-making and policies. Our analysis reveals that democratic control mechanisms at the AIIB and the NDB are indeed weaker than at the World Bank. Both new MDBs provide less formalized access for CSOs and are less transparent. The NDB is also less accountable to those adversely affected by its actions.

The article proceeds in five steps. First, we review the liberal constructivist literature on institutional design, suggesting that powerful states upload norms they hold dear at the domestic level to IOs. Second, we introduce the research design and three key mechanisms of democratic control, including civil society access, transparency, and accountability. Third, we present empirical findings. Fourth, we discuss potential alternative explanations for the observed differences. Finally, we summarize our findings and outline their implications for research on democratic control and global governance.

2 How Domestic Norms Shape International Institutional Design

Why do states, typically protective of their sovereignty and political influence, restrict their monopoly of control over IOs by introducing mechanisms of democratic control? In this section, we outline a liberal constructivist argument suggesting that powerful states tend to upload important domestic norms to their IOs. This argument motivates our expectation that rising authoritarian powers, such as China, are less likely to formalize mechanisms of democratic control in international institutions. This might, in turn, contribute to a decline of democracy in global governance.

Grounded in the notion that international institutions are not exclusively shaped by the specificities of cooperation problems and the characteristics of pertinent states, (12) international relations scholars have shown that ideas and norms about what constitutes legitimate modes of global governance play an important role for international institutional design. (13) This logic is often referred to as liberal constructivism, as it derives states' international preferences from commitments to domestic values and institutions. (14) It suggests that domestic political regimes and their ideational underpinnings shape patterns of international cooperation. (15) Ranging from democratic peace and military alliance formation, (16) to trade liberalization, (17) over international dispute settlement, (18) to mechanisms of democratic control, (19) international institutions are shaped by the normative preferences of powerful states.

We translate these insights into an argument as to why rising authoritarian powers should be expected to design IOs with limited democratic control mechanisms. To be sure, we do not argue that normative considerations are the main reason why rising powers challenge extant global governance institutions and engage in institution making in the first place. (20) Rather, we suggest more modestly that when rising powers have formed coalitions strong enough to create new international institutions, powerful authoritarian states are likely to restrict the formal democratic control over their new creations.

We start from the observation that rising authoritarian powers, such as China and Russia, share a common vision of a global political order that deviates from Western liberal internationalism. (20) Rooted in domestic regimes and their ideational underpinnings, this common vision is based on the idea of a global order in which rules prevent any one state, or a group of states, from dominating the international system and imposing a specific ideology on the rest of the world. (22) As a critique of the Western international system, this vision stresses the primacy of state sovereignty and questions the tendency of liberal-democratic governments and IOs to meddle in the domestic affairs of other countries. (23) Part of this argument is the domestically routed rejection of democratic control over International institutions. Similar to domestic restrictions of civil society access, transparency, and accountability, authoritarian powers do not accept strong formal mechanisms of democratic control at the international level.

Following the argument that powerful states upload their norms to international institutions, we expect rising authoritarian powers to inject these normative considerations when they design new international institutions. (24) As an observable implication of this effect, the AIIB and the NDB should provide fewer formal mechanisms of democratic control than the World Bank, which is largely dominated by Western democracies. As the creation and design process of both new MDBs was led by China, they should follow the model of noninterference with national governments' decision-making. Thus, formal CSO access standards, transparency rules, and accountability mechanisms should be less demanding, if present at all.

3 Research Design

We compare the formal mechanisms of democratic control at the World Bank to those at the NDB and the AIIB at the time of their creation in 2015 and 2016, respectively. Our focused comparison of three central IOs in the field of international development finance is an important step in its own right. Studies of the institutional design of the NDB and the AIIB and their consequences for global governance are, to our best knowledge, few and far between. (25)

The comparison is premised on three presumptions. First, international development finance constitutes an issue area of international cooperation that manifests our phenomenon of interest--that is, the consequences of rising authoritarian powers on formal democratic control over international institutions--intensely. China and its coalition partners Brazil, Russia, India, and South Africa (BRICS) have challenged the institutional design of existing MDBs and have begun to create competing organizations of their own making. (26) While these challenges have been paralleled in other issue areas, including international security and financial cooperation, they appear to be most advanced in development finance. Second, we select the World Bank from the pool of more than twenty-five extantMDBs as our baseline for democratic control mechanisms because, under the leadership of liberal democracies, it has become the focal MDB, (27) providing the institutional blueprint for many MDBs created since Bretton Woods. (28) Third, in the spirit of a most similar systems design, the World Bank is...

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