International Organizations and Congressional Recalcitrance

March 14, 2015 Topic: China IMF Region: East Asia Blog Brand: Paul Pillar

International Organizations and Congressional Recalcitrance

Reminders of Congressional resistance getting in the way of the execution of U.S. foreign policy and the effective pursuit of U.S. interests abroad are not hard to find. The most recent reminder is not nearly as blatant and direct as that senatorial letter telling Iranians not to trust any commitments that the United States makes. Instead the reminder comes from an inappropriate statement by the Obama administration: its public criticism of the United Kingdom for deciding to become a member of a new Chinese-initiated international organization, the Asian Infrastructure Investment Bank. That criticism is misplaced; Britain has legitimate and understandable reasons to take this step, and major roots of what is going on here regarding China are traceable not to London but to Washington, and more specifically to Capitol Hill.

The new bank is one of several international financial institutions that China recently has taken the lead in creating and that appear as alternatives to existing institutions with similar missions whose governance has been dominated by the United States, Europe, and Japan. Those existing institutions include not only the Asian Development Bank but also the World Bank and the International Monetary Fund. It is impossible to say what moves China would or would not have made if the governance of those existing institutions had been different, but clearly at least a large part of the motivation for what Beijing is doing is the outdated nature of those governance arrangements, which have not kept pace with change in the global economy. The economic rise of China itself is the most conspicuous part, but not the only part, of that change.

The structure of the International Monetary Fund has been perhaps the leading issue in recent years. Negotiations reached agreement five years ago on a package of reforms of the IMF that coupled changes in members' monetary quotas and the Fund's lending authority with changes to members voting strength—the latter change in keeping with the principle adopted at the birth of the IMF to have voting weight reflect economic weight. The Obama administration played a leading role in conducting those negotiations and in protecting U.S. interests in the process.

Since then the administration has been pushing for Congressional approval of the package but has been unable to get approval from the Republican-controlled House of Representatives. The situation has gone on long enough that now the only thing standing between an outdated IMF and a reformed one is the U.S. Congress. Would-be reformers in other countries are now talking about possible ways to work around the U.S. resistance.

It is hard to find any good reasons for that resistance, given that the reform package does not harm the U.S. interests at stake. The United States would neither pay a larger share of the institution's budget nor lose its veto-capable voting strength (the increased voting share for rising powers like China would be coming mostly at the expense of the Europeans). The resistance in Congress seems to be a matter of old ideologically-laden habits—of disliking international organizations in general, of holding strange concepts of sovereignty when it comes to relations with international organizations, and of believing that the only way to deal with countries we dislike is to reject any of their proposals and not to do any business with them.

Such ill-founded recalcitrance harms U.S. interests in several ways. One concerns what role an increasingly powerful China is to play in the international system. It is in the interest of the United States for that role to be incorporated as much as possible, peacefully and without resentment, in existing structures rather than for a frustrated China to reject those structures or to compete with them.

A second interest concerns U.S. relations with other developing countries. It is not just the Chinese but also Brazilians, Indians, and others who are dissatisfied with outdated governance arrangements.

Finally, a failure to accept updating of institutions such as the IMF loses sight of the significant advantages that they provide the United States as long as the institutions themselves remain relevant. John Ikenberry has explained how the United States, by submitting to rules and principles of international organizations that it took the lead in creating at the end of World War II, has been able to extend its disproportionate global influence longer than other measures of national power would have enabled it to do. That big advantage may be lost altogether if the United States is unwilling to permit the institutions to keep pace with change in the rest of the world.