SSU Forum with Professor Randall Henning
|Date:||Tuesday, June 19 2018, 10:30-12:00|
|Venue:||Seminar Room, 3rd Floor, Ito International Research Center|
|Subject:||"Tangled Governance: International Regime Complexity and Crisis Finance"|
|Lecture:||Randall Henning, Professor, School of International Service, American University|
|Hosted by:||Security Studies Unit, Policy Alternatives Research Institute, the University of Tokyo|
|Abstract:||Global governance now consists of clusters of overlapping international institutions, rather than a single multilateral institution, in a given issue area. The theory of regime complexity offers a useful lens through which to analyze the increasing density of international institutions and the patterns of conflict and cooperation among them. In his new book, Tangled Governance, Randall Henning addresses the institutions that were deployed to fight the euro crisis and reestablish financial stability in Europe. He explains why European leaders chose to include the International Monetary Fund in the crisis response and analyzes the decisions of the “troika” (which also includes the European Commission and European Central Bank). Regime complexity, he argues, arises from the strategies on the part of key states to control these institutions. The European case holds lessons for East Asia and in particular the likely interplay among regional financial institutions and the IMF, given the preferences of key creditor states.|
|Biography:||C. Randall Henning is Professor of International Economic Relations in the School of International Service at American University in Washington, D.C. He specializes in International Political Economy, Global Governance and regional integration, especially with respect to Europe and East Asia. Europe’s monetary union and interaction among regional and multilateral institutions are topics of special focus. His previous appointments include service as Visiting Fellow at the Peterson Institute for International Economics. The author of numerous books and journal articles, his recent publications include Tangled Governance (Oxford 2017) and Global Financial Governance Confronts the Rising Powers (CIGI 2016).|
The Security Studies Unit of the PARI was delighted to host Randall Henning, Professor of International Politics at the School of International Service, at American University (Washington DC), who presented his latest book, entitled “Tangled Governance: International Regime Complexity, the Troika, and the Euro Crisis” (Oxford University Press, 2017).
The event was chaired by Keisuke Iida, Professor of International Political Economy at the University of Tokyo, and member of the SSU. He introduced the guest as a distinguished speaker with vast expertise in financial and monetary affairs, and who has worked particularly on Europe and Japan.
Professor Henning thanked the host and the organisers of the event, remarking that the SSU Forum has become over the years an excellent venue with a track record of very high-profile speakers in the area of international politics. He then summarized the purpose and structure of his talk, which was centered on Tangled Governance.
Professor Henning stated first the main theoretical point he intended to advance, before then presenting the empirical analysis that guided him towards such conclusions. The book is about the crisis in the Eurozone as it developed from around 2010 onwards, and then about the possibility of generalising some of the findings, which could therefore also be applied to the East Asian region. The focus is on conflict and cooperation among institutions in situations where their jurisdiction and mandates overlap. In the Euro Crisis, these institutions are those making up the “troika”: the European Commission, the European Central Bank (ECB), and the International Monetary Fund (IMF).
Indeed international scholarship has wondered why the IMF was involved in negotiations over the solution to the Euro Crisis, particularly in the case of Greece, when in reality the EU had more than sufficient financial resources and institutional capability to deal with the situation, as it had in previous country-specific financial crises. Professor Henning listed the most common explanations that are found across the literature. However, none of those seem to be satisfactory. The explanation that he proposes is based on a theory of “regime complexity”, defined as “a set of international institutions that operate in a common issue area and the (formal and informal) mechanisms that coordinate them”. Gone are the days when international political and economic issues were the domains of a single global multilateral institution. This generates a complex situation where a multiplicity of actors is not only a somewhat inconvenient fact, but also something which powerful states can manipulate and exploit to their advantage. In their quest to influence financial rescues, and substantive outcomes generally, powerful states can deliberately pit one institution against the others in a complex. Such decisions are often made in order to control “agency drift”, namely the possibility that one institution drifts away from the preferences of the state actors that support them (for example, on the part of the European Commission vis-à-vis the creditor member states in the euro area). Furthermore, disagreements between institutions create spaces where powerful states can intervene as mediators, with a significant enhancement of their power position in the whole negotiation process. While diplomats and officials are accustomed to navigating through a tangle of institutions, academics’ understanding of such a recurrent international political situation appears to be more limited. Indeed, currently widespread approaches to the behaviour of international institutions, such as the rational design approach and even the realist one, are ill-equipped to convincingly explain what happened during the Euro Crisis and similar multi-institutional settings.
Regime complexity can therefore explain why Germany (more precisely, Angela Merkel as the head of the German government) insisted on the participation of IMF in the Euro Crisis, even if this was not strictly necessary from a technical or financial standpoint and even if numerous high-raking EU bureaucrats, politicians, as well as some members of the German government itself, were against the idea. In this way, mediating between the positions of IMF, the European Commission, and the ECB, Berlin gained considerable power as the pivotal actor in the process.
Before concluding, Professor Henning turned to the situation of East Asia and the management of its financial stability. Here too there are similar dynamics, even if the architecture of East Asian financial stability mechanisms (for instance, in the context of the ASEAN+3 format) is considerably less integrated than in the EU case. Indeed largest actors, China and Japan, are ultimately committed to the link between CMIM (Chiang Mai Initiative Multilateralization) and the IMF, thus reproducing a similar pattern as observed in the relation between Germany and the troika.