Unintended Agency Problems: How International Bureaucracies are Built and Empowered

The ground underneath the entire liberal international order is rapidly shifting. Institutions as diverse as the European Union, International Monetary Fund, United Nations, and World Trade Organization are under major threat. These institutions reflect decades of political investments in a world order where institutionalized cooperation was considered an essential cornerstone for peace and prosperity. Going beyond the politics of the day, this Article argues that the seeds of today’s discontent with the international order were in fact sown back when these institutions were first created. We show how states initially design international institutions with features that later haunt them in unexpected ways. In the worst cases, states become so dissatisfied with the institutions they build that they threaten to abandon or dissolve them, shaking the foundations of the international order. Our central argument is that two cooperation problems intersect in unanticipated ways. The first problem – the horizontal conflict – involves the distribution of benefits among states. When states first create an international organization, they seek to capture a big share of the benefits and protect their interests vis-à-vis other states. They do this by demanding voting rules that allow them to block unfavorable decisions, requiring leadership positions for their own nationals, and lobbying to include their priority issues on the organization’s agenda. We argue that this initial effort to resolve distributional conflicts is short-sighted, ultimately leaving states dissatisfied with the international organizations they build. The second problem – the vertical conflict among states collectively, on the one hand, and international organization bureaucracies and tribunals, on the other – is worsened by the compromises reached to resolve the horizontal conflict. For example, when states agree that key decisions must be reached by consensus, it becomes difficult to roll back the actions of a wayward secretariat or tribunal down the line. Or, when states place their own nationals in key positions, a multi-national body with an international agenda emerges. Such an international organization can become detached from the national concerns of its creators. Moreover, when states put their key issues on the organization’s agenda, a broad mandate results. In turn, a broad mandate empowers the organization’s staff to set its own priorities, making state control difficult. Contrary to prior isolated studies on horizontal and vertical conflicts, we are the first to identify how the two conflicts intersect in important and unexpected ways. To find possible solutions, we draw on analogous intersections in corporate law literature, which have been examined more thoroughly