This is an author version of the contribution published on:
International Politics,
2013, 50 (4), pp. 532–552. doi:10.1057/ip.2013.14.
The definitive version is available at:
The IMF and civil society
Roberto Belloni Manuela Moschella
Introduction
It is now widely accepted that international organizations (IOs) are key actors in the global system. They do not solely set the rules that govern specific areas of activity, they also shape meanings and expectations, classify and constitute reality and, in so doing, they acquire power and authority (Barnett and Finnemore, 2004). Given the autonomous standing that IOs enjoy, scholarship has thus grown increasingly interested in studying what happens inside them in order to explain their behavior and their responses to external shocks and stimuli (e.g. Chwieroth, 2010; Clegg, 2010; Moschella, 2012; Park and Vetterlein, 2010; Weaver 2008).
While these studies deserve merits because they have unveiled a number of key factors that help account for IOs behaviour, significantly less attention has been devoted in explaining how and to what extent the behaviour of IOs is shaped by their interaction with other non-state actors. In other words, while several studies have examined the changes in IOs behaviour as a result of their interaction with members states, especially from a principal-agent perspective (Hawkins et al, 2006), we still do not have a clear picture of how and to what extent IOs react to the stimuli coming from other non-state actors. In particular, the influence of civil society organizations over international economic and financial institutions is frequently asserted but easily overstated.
In this paper, we attempt filling in this gap by investigating the relationship between a primary international economic organization, the International Monetary Fund (IMF), and civil society organizations (CSOs). Specifically, the purpose of this paper is that of unveiling the conditions under which the IMF is – or is not – receptive to the requests coming from societal actors.
In order to address this important theoretical question, we investigate a specific case-study, namely the process through which the Fund opened up its decision-making process to civil society organizations. This process offers a unique case-study because of the changes that the IMF has been through over time. After having resisted requests for opening in the 1980s, the IMF has established regular meetings, seminars, and consultations with civil society representatives both at Fund headquarters and worldwide on specific policy or country issues. A Civil Society Policy Forum, running in parallel with the Annual and Spring Meeting of the IMF and the World Bank, was created to permit formal and informal interaction between civil society representatives and IMF staff.1 Furthermore, the IMF started
inviting civil society organizations to provide comments to papers and policy reviews. The Fund has also established mechanisms to involve civil society in each member country, especially in the context of IMF-negotiated financial assistance programs (Scholte, 2009).
Given the Fund’s technical mandate, its past record of secrecy and its reluctance to openness, a question can thereby be raised about the process that led the IMF to engage with CSOs. How was civil society recognized as a relevant counterpart to the IMF’s activities? What factors allowed civil society to gain participation into the IMF’s workings? In short, why did the IMF adopt policies aimed at including civil society organizations in its decision-making processes?
This paper examines the evolution of IMF-civil society relationship. It builds primarily on the transnational advocacy literature in International Relations (Jönsson and
Tallberg, 2010, Keck and Sikkink, 1998, Klotz, 1995, Olesen, 2011, Price, 2003) and its application to the study of non-state actors’ influence on international economic organizations, including the IMF (Broome, 2009, Gould, 2006), the World Bank (Park, 2005a, 2005b) and the WTO (He and Murphy, 2007). Whereas these studies suggest two alternative mechanisms through which non-state actors influence their target, emphasizing either their ability to socialize or to sanction behaviour, we argue that a full explanation of the Fund’s overtures to civil society requires combining both mechanisms into a common analytical framework. The process that led the IMF to change its policies towards CSOs was driven by the mechanism of reputation, which, as summarized in Table 1 below, represents an intermediate category between the two mechanisms of socialization and coercion. Implicit in our analysis is a shift from a focus on the reputation of non-governmental organizations (NGOs), common to the literature on transnational civil society (Price, 2003, 589), to that of international organizations. Most studies correctly suggest that an NGO’s reputation as a provider of objective expertise is crucial to its legitimacy and, consequently, to its possibility of influencing policy-making.2 Other studies argue that reputation is similarly important for
political organizations (Carpenter 2001), including international ones, because it is useful to generate public support, to obtain delegated authority, to recruit high calibre employees, and to defend organizations from political attacks. While we endorse these claims, we add that reputation means sensitivity to both costs and the social/relational aspect of identity.
Table 1.
Indeed, the argument of this paper is that the change in the IMF’s policies was not simply the result of socialization efforts. Although civil society organizations dramatized the issue of their exclusion from the Fund’s decision-making by framing the problem in terms of fairness
and social justice, the process through which the Fund opened to CSOs was not based on a new norm of conduct or identity but on the cost-benefit analysis of the consequences deriving from its closure. In this sense, the process was similar to the one suggested by the mechanism of coercion. At the same time, as with socialization, the mechanism of reputation works through the intersubjective construction of reality. How actors act depend on the intersubjective understanding that constitute conceptions of self and others (Wendt, 1992, 397). As a result, ‘reputation is a quintessentially “social” concept’ because what other actors say and think affect behavior (Broome, 2008, 126, Sharman, 2006, 6).
By combining the logics of coercion and socialization through the concept of reputation, and applying it to the case of IMF-civil society relationship, this paper’s findings suggest some important theoretical and empirical implications. From a theoretical perspective, our case-study demonstrates the usefulness of combining the rational choice with the constructivist approach in explaining the change of IMF policies (Barkin, 2003, Nielson, Tierney and Weaver, 2006, Sharman, 2007). Indeed, as we show, both strategic action and social construction helped influence the IMF to change its policies towards CSOs.
From an empirical perspective, our paper provides a detailed case-study on the importance of reputation to the activity of the IMF. These insights thus sheds light on one of the key issue that the organization has been confronted since at least the late 1990s, when the Fund’s reputation was tarnished by the handling of the Asian crisis causing a major legitimacy crisis (Seabroooke, 2007). But the case-study also speaks to similar problems brought to the surface by the global financial crisis that started since 2007. Although the Fund’s role has been revitalized through the reactivation of its crisis managing functions, its reputation as an organization able to effectively preside over the stability of the global financial system has been severely called into question. Indeed, several findings indicate that the Fund massively failed in identifying the risks that were building up in the global financial
system and that led to the burst of the crisis (Independent Evaluation Office 2011; also Moschella 2011).
The paper also casts doubt on the influence of civil society on the policies of an international economic organization. Indeed, although arguments put forward by civil society organizations to ‘shame’ the IMF’s secrecy and lack of inclusiveness contributed to altering the social context in which the IMF acts, what ultimately led the IMF to change was the calculations of the negative consequences deriving from its closure to CSOs. Secrecy and aloofness from civil society negatively affected the IMF’s reputation – thus risking far reaching consequences to the organization’s effectiveness. As the risks became clear, an endogenous re-assessment carried out within the IMF and based on the perceptions held by others led to change – not the exogenous pressures channelled by civil society organizations.
Before proceeding, an important clarification is in order. Much of existing literature on IMF-civil society relationship raises important issues related to the accountability and legitimacy of the IMF (Griesgraber, 2008b, Scholte, 2011, Thirkell-White, 2004). The predominant concern is whether – and to what extent – the inclusion of civil society in the Fund’s decision-making increases the accountability of the organization. In this paper, however, we table these important issues by concentrating on the process that led the Fund to open to civil society groups. Likewise, we do not participate in the debate on the role that CSOs should play to democratize international regimes or to help increase critical reflections on global governance issues (see, for example, Scholte, 2007, Smith, 2008). More narrowly, we are interested in the mechanisms through which CSOs may ultimately influence the decisions of a preeminent international economic organization.
This paper is organized in three sections. The first elaborates on the theoretical explanation that informs our analysis. Section 2 and 3 link our theoretical argument with empirical findings. We trace the main initiatives through which civil society organizations
attempted to gain participation in the IMF’s decision-making process. Based on archival documents and interviews with staff members, our analysis then attempt to assess the changes that the IMF adopted to enhance its openness towards civil society. The last section summarizes the main findings and explores their theoretical and empirical implications.
Transnational actors and the mechanisms of influence over IOs
Why do international organizations modify their actions in line with the requests of CSOs, transnational advocacy networks, or other non-state actors? Scholars suggested explanations that span a spectrum from socialization, where behavioural changes are driven by the emergence of new understandings of ‘appropriate’ behaviour, to coercion, where changes take place as a result of social or material sanctioning.3
According to the first explanation, non-state actors are able to influence the behaviour of an IO by altering the social environment in which the IO operates. The success of transnational campaigns is crucially dependent on the ability of the campaigners to alter the terms of the debate on a specific issue. The kind of arguments advanced (i.e. the ‘rightness’ of bottom-up participation), and the way they are advanced (i.e. framing), are critical factors to the actors’ influence (Meyer and Tarrow, 1998). For instance, it has been noted that the influence of transnational actors increases when they campaign on ‘global issues with a visible moral dimension’ (Cakmak, 2008, 388) or when they clearly establish who bares responsibility or guilt for a particular situation with negative consequences for individuals and/or groups (Keck and Sikkink, 1998, 17, 27).
The importance of arguing and framing is also found in studies on the impact of non-state actors on international economic regimes. Studying the influence of NGOs on the changes to the international sovereign debt regime of the Heavily-Indebted Poor Countries
(HIPCs), André Broome has shown how the transformative influence of NGOs was related to their capacity to alter the social context for policy-makers by framing the issue of debt relief in terms of fairness and social justice. In doing so, ‘NGOs attempted to embarrass – or to “shame” – both IMF and World Bank officials as well as national policy makers into viewing the insistence on full debt repayment for the poorest countries as an illegitimate position’ (Broome, 2009, 70).
In short, the mechanism of socialization suggests that the main instrument through which non-state actors acquire influence on the policies of IOs is the reconstruction of social reality, which is achieved by advancing new understandings of a problem and delegitimizing old practices. Socialization involves challenging the IO’s existing behaviour in order to establish new shared understandings of ‘appropriate’ behaviour. This process also entails the constitution of identity through the internalization of new norms of conduct. For instance, as Susan Park (2005a) has shown, transnational environmental advocacy networks succeeded in inducing change in the World Bank by altering its environmental identity. Specifically, the network was able to lead the Bank to internalize a development norm alternative to its traditional development policy.
The second mechanism used to explain the influence of CSOs on the policies of international organizations is that of coercion – which operates through social or material sanctioning or threat. From this perspective CSOs are more likely to influence the activities of an IO when they have the capacity to threat or sanction the organization, thereby menacing its pre-defined interests. For instance, Gould (2003) has convincingly shown how private financial institutions (PFIs) were able to influence Fund conditionality by threatening to withhold financing - thus undermining the Fund’s ability to provide financial assistance to its members. Next to the direct use of threats and sanctions, transnational non-state actors may also put pressure on the targeted IO by winning the support of powerful actors (Krasner,
1993). The political support of the UK and US governments in the campaign for debt relief offers another example of the instruments that contribute to the success of transnational campaigns (Broome, 2009, 73).
When the mechanism at play is coercion, international organizations assess whether the demanded change may maximize their existing interests. For instance, a number of studies have suggested that, in the aftermath of the Asian crisis, the IMF changed some of its policies, such as its conditionality, because it strategically considered those changes necessary to restore the Fund’s credibility among its member governments (Beeson and Broome, 2008, Best, 2007). Overall these studies argue that, acting on a set of pre-defined interests, the IMF will change its policies based on a rational assessment of the costs and benefits that any such change entails. As for the Fund’s relationship with civil society, this logic suggests that the Fund should engage with civil society when the consequences of not doing so could negatively affect the implementation of its programs.
While both socialization and coercion play a role in explaining the influence of CSOs on the activities of IOs, we argue that reputation is the main mechanism that led the Fund to include civil society groups in its decision-making processes. As an ideal-type, reputation shares key features with both socialization and coercion and can therefore be considered as an intermediate mechanism between the two (Table 1). Akin to socialization, reputation is a social mechanism. Influence is exercised through the construction of shared understandings. As Jason Sharman (2006, 2) defines it, reputation ‘is emergent and intersubjective.’ The relational aspect of reputation adopted here differs from the one that prevails in rationalist scholarship, where reputation refers to a status or a property that derives from past actions and behavior (Simmons, 2000). Rather than being a property, we suggest that reputation implies that actors care about what others think of them. Reputation is used to predict or explain future behavior (Mercer, 1996, 6) and thus is critical to international organizations’
credibility and effectiveness. Indeed, reputation is an important source of leverage: it favours the decentralized enforcement of policy by organizations that, having weak or no implementation power, must rely on moral suasion and argument.
However, in contrast to constructivist insights, we argue that reputation is not based on the creation of alternative identities to which actors then comply. Rather, actors stick to their previous identity: what is at stake is the damage to pre-existing identity and its attendant interests. Hence, akin to coercion, the mechanism of reputation is based on a rational calculation of costs and benefits. Put another way, the actor on whom influence is exercised calculates the extent to which the new understanding of her reputation (i.e. the perceptions other actors hold of her) damages her interests, and adjusts behaviour when the costs of not doing so outweigh the benefits.
In what follows, we illustrate the workings of the reputation mechanism in the case of IMF-civil society relationship. We show that, although significant threats to the Fund’s relevance and activities were in place since the late 1980s, when NGOs won the support of US Congress against the IMF, the resultant changes to the Fund’s policies towards civil society were only marginal. While the Fund started disclosing some of its previously secretive documents, it did not include CSOs in its decision-making. Change occurred only late in the 1990s when the discourses against the IMF stemming from the Asian crisis intensified. This change was not based on the Fund’s compliance with the terms of the debate as shaped by CSOs demanding civil society’s participation in IMF decision-making as the fairest thing to do. Rather than adopting a new social script, the IMF changed its policies based on a cost-benefit calculation of its interests. In short, the intersubjective aspect and strategic calculation of action were inextricably linked.
The Early 1990s: The Failed Attempted to Open the Fund
There is a Babylonian range of definitions and understandings of the meaning and significance of ‘civil society.’ A widely cited definition regards civil society as ‘the arena of uncoerced collective action around shared interests, purposes and values’ distinct from the state, family and market (LSE, 2004). While most students of civil society would consider this definition as a useful starting point, there exist considerable differences with regard to which associations and groups can be considered as belonging to civil society (and which cannot) and what kind of functions civil society groups are thought to perform.
Although it is difficult to sort among civil society groups, there are at least seven different kinds of civil society actors which have directed their attention to the IMF (Scholte, 2002, 8-18). First, research institutes, including university-based centres and think tanks, have long taken a close interest in the IMF and its programs. Second, business groups, including banking associations, have also intensively engaged the IMF. Third, labour unions have addressed the IMF both through global and national organizations, particularly in IMF program countries (but not in the European Union and the United States). Fourth, NGOs have dedicated close attention to IMF activities, although relatively few of them have maintained this attention over a long period of time. Fifth, several Foundations have financed research institutes, trade unions and NGOs to conduct IMF-related activities. Sixth, religious organizations, particular Christian ones, have also targeted the Fund, most famously with the Jubilee 2000 campaign. Finally, informal associations, often referred to as ‘social movements,’ have directed their criticism of the IMF through street and other demonstrations, particularly since the 1997-98 Asian financial crisis.
The IMF started attracting the attention of CSOs in the late 1980s, primarily because of the alleged negative social and environmental consequences of implementing Fund
conditionality in developing countries. Next to the primary interest in Fund programs and attendant conditionality,4 CSOs also addressed the transparency, accountability and openness
of the Fund’s decision-making.5 The request for greater participation quickly became the key
civil society demand. The agenda of civil society groups converged to support popular participation in the formulation, implementation, monitoring, and evaluation of World Bank-IMF programs (Abugre and Alexander, 1998, 121). In particular with regard to the Bank-IMF, CSOs claimed that, without informed participation by all of those affected by its activities, including both member governments and citizens in member states, the Fund’s policy decisions would overlook important inputs and would lack the necessary legitimacy (Dawson and Bhatt, 2001, 18).
These criticisms are well represented in the platform of the ‘Fifty Years is Enough’ campaign where openness and inclusiveness figured predominantly among CSOs’ requests to the Fund. Aimed at reforming the World Bank and the IMF, the campaign created a network that brought together over 200 civil society groups in the United States and over 180 internationally (Abugre and Alexander, 1998, 109). As the platform reads, ‘above all, the Network calls for the full participation of affected women and men in all aspects of World Bank and IMF projects, policies and programs.’6 Similarly, in 1995 the Washington-based
Centre of Concern launched its Rethinking Bretton Woods Project which included among its top priorities that of reforming ‘the processes of decision-making on international economic and financial policies, with the goal of ensuring that such processes are more participatory [and] democratic.’7 Making the participation of the affected population the standard
procedure in the Fund’s decision-making was the primary request in the list provided by the campaigners. In a letter sent by more than 90 environmental, poverty, church, and labour groups from 27 countries to the Fund Managing Director, Michel Camdessus before the World Bank/IMF meeting held in September 1997, the issue of participation figured
prominently. Participation, so they argued, would help redress some of the negative consequences of exclusion such as the limited availability of information on target countries and the real or perceived lack of legitimacy of IMF programs (see also Seabrooke 2007). Furthermore, they argued that greater participation would increase the quality of IMF programs. As recalled by Marijke Torfs (1998) of Friends of the Earth-US, one of the leading groups of the campaign, ‘our aim [was] to open the institution’s decision-making process and ensure that it incorporates the input of national poverty and environmental experts and labour union representatives in the design of all its stabilization and structural adjustment programs.’ The content of the ‘Fifty Years is Enough’ platform and the other NGO campaigns reveal that, similar to other successful civil society initiatives such as that on debt relief (Broome, 2009; Griesgraber, 2008), CSOs attempted to frame the issue of their exclusion in moral terms – particularly in terms of fairness and social justice. CSOs attempted to cast the image of a ‘good’ IO as an organization that is able to incorporate the inputs coming from the people affected by its programs, thereby shaming the IMF for its secretive and non-accessible working methods and decision-making. However, and in contrast to other more successful initiatives, the efforts of CSOs to alter the social context in which the Fund operated did not lead the Fund to change its policies. Although the Managing Director started using the language of CSOs to express a preference for economic growth that ‘reduces poverty and distributional inequalities, that respects human freedoms and national cultures, and protects the environment’ (Camdessus, 1994) no significant initiative was launched in the early/mid 1990s to incorporate CSOs into the decision-making of the Fund. As Jo Marie Griesgraber, one of leaders of the campaign on IMF opening and transparency, aptly puts it, at that time, ‘the Fund simply was not listening to outside voices’.8
Along with the attempt to recast the terms of the debate, CSOs also used other strategies to influence the IMF, including mobilizing powerful member states. NGOs based in
the United States were particularly active in this respect. Since the late 1980s some US-based NGOs lobbied US Congress to condition American funding to the IMF on greater public disclosure and procedures for public access to information. US Congress proved particularly receptive to these claims – primarily because it was itself convinced of the need to make the Fund more transparent. This belief grew out of the Fund’s intervention in the 1994 Mexican crisis, which was largely supported by US taxpayers’ money (Moschella, 2010, 71-72). Hence in 1994 as part of the annual Appropriation Bill the US Congress, frustrated by IMF’s lack of transparency, passed a law cutting a proposed $100 million contribution to the Enhanced Structural Adjustment Facility (ESAF) by $75 million. Congress also urged the US Department of the Treasury to work for a reform of IMF disclosure policies and in particular to obtain the public release of several IMF documents. Eventually, by withholding US contribution, the 1994 legislation was effective in forcing the IMF to enlarge access to in-house information.
Two implications for our study can be derived from these changes to the Fund’s disclosure policies. The first is that the establishment of a disclosure policy on the part of the Fund can be attributed to the US Congress’ threat to curtail financial support to the organization. The US Congress’ stance was induced less by the lobbying of civil society activists then by the autonomous decision taken by US lawmakers. As a result, much of the early changes to the Fund’s approach to the external environment were more the result of US pressures (the United States being the largest shareholder of the Fund), rather than the result of civil society’s persuasive arguments in favour of IMF’s opening. Not only was the 1994 Appropriation Bill not a victory of CSOs’ advocacy, but rather it was the Bill that eventually convinced the IMF of the importance of engaging seriously with civil society organizations.9
Second, in spite of the measures taken by the Fund to improve public access to information, CSOs’ requests for participation in the Fund’s decision-making process went largely
unheard.10 As late as 1998 Marike Torfs (1998) from Friends of the Earth-US noted that ‘IMF
programs remain[ed] confidential. With limited knowledge of the program details, the extent to which people affected by these policies can provide informed input is limited. In most cases, even national parliaments have little choice but to “endorse” an IMF agreement without serious discussion, input or understanding of the programs.’
In short, since the late 1980s CSOs have articulated requests for openness and participation to the Fund’s decision making. In a number of campaigns CSOs painted the Fund’s secretive decision-making in terms of social exclusion and undemocratic practices. Although the dramatization of the issue led the Fund to justify its practices in public and to implement minor changes in its external information policies, it did not lead to significant amendments to the Fund’s procedures. As one of the most active civil society campaigners put it, ‘it was a total failure. None of the changes regarding transparency and participation had any real effect on the way the organization worked.’11
The Late 1990s: The IMF’s Participatory Turn
If until late in the 1990s CSOs’ efforts to open the Fund’s decision-making proved of limited success, at the end of the decade important changes took place in the IMF-civil society relationship. In particular, in the aftermath of the 1997-8 Asian crisis, a number of initiatives were launched with the aim of enhancing the participation of CSOs in the formulation and implementation of IMF programs. Whereas for almost a decade the Fund had been virtually impermeable to requests for opening coming from CSOs, during a couple of years the IMF significantly opened up by elaborating measures to involve CSOs at different stages of the decision-making process – from policy elaboration to evaluation. How can we account for this sudden reversal?
At first glance, it could be argued that the adoption of inclusionary policies was the result of the renewed mobilization of CSOs. Indeed, in the aftermath of the Asian crisis, several NGOs ’shamed’ the IMF for having imposed unnecessary austerity in crisis-hit countries, exacerbating the economic downturn. These NGOs asked for a set of reforms. including the request that the Fund make public a specific set of documents, that the Fund establish a timeline for public access to Fund archives, and the Fund create an independent evaluation office (Center of Concern, 1998, Griesgraber, 2008a, 157). Furthermore, the Fund was heavily criticized for having pushed crisis-hit countries to continue opening their economies to international capital flows – which came to be widely regarded as the main culprit of the crisis (Danaher, 1999, Thirkell-White, 2004). For instance, the fact that the IMF programs in Korea requested the authorities to continue opening the country’s capital account exposed the Fund to the charge that it was simply following the biddings of the Wall Street-Treasury complex (Bhagwati, 1998). These accusations were widespread across IMF membership – that is to say, they were not limited to civil society groups but shared by government representatives.12 On top of that, several, powerful Fund members – including the
US, UK and Germany – started supporting CSOs requests for opening and transparency.13 In
other words, the climate of opinion on the IMF had changed dramatically – for the worst. Factoring this context, the Fund started changing its policy towards CSOs. However, it did so not out of compliance with the social norm of ‘good IO’ as articulated by CSOs. Neither did the Fund automatically follow the requests coming from powerful member countries. Rather, the IMF opened to civil society organizations because of a new perception of ‘what others think about the IMF.’ That is to say, the IMF acted on the emerging intersubjective understanding of its reputation in order to preserve its identity as a trusted and credible economic organization. The analysis of archival documents and interviews with staff members help illustrate this point.
In the summer of 1998, the IMF started a debate about how to improve its external image and thereby its relationship with CSOs. This debate was heavily motivated by the Fund’s perception of the changed social and economic context in which the organization was operating. As put by IMF staff members, while ‘in the past, the Fund has not organized itself to counter criticism on more than a minor scale’, the new context required change because it was no longer possible to assume that ’those who knew the Fund and understood how it operated would continue to support it.’14
In changing its course of action, however, the IMF did not act out of a reconstituted identity, based on social norms such as inclusion and social justice. Rather, the Fund acted on the cost-benefit calculation of the consequences associated to sticking to past behaviour. In other words, the IMF decided to redress its relationship with CSOs because failing to do so could damage the success of its activities and therefore its relevance in the international monetary system.
Indeed, IMF staff repeatedly noted that ‘criticisms that go unanswered can gain credence, diminishing the institution’s credibility’ and, therefore, ‘its ability to discharge its responsibilities effectively.’ Hence, if the IMF wanted to retain its status, it had to respond to the requests coming from the Fund’s external observers. The Fund’s aim was that of ‘contributing to public understanding and support for the institution’ and therefore ‘helping to influence economic policy in individual countries’ in the context of the Fund’s traditional activities, namely surveillance and the provision of financial assistance.15 In this connection,
opening to civil society was largely conceived by IMF staff members as part and parcel of the ongoing process of strengthening transparency, as illustrated by the launch of the Special Data Dissemination Standard Initiative (SDDS) and the publication of the Public Information Notes (PINs) in the aftermath of the Mexican crisis.16 Indeed, by enhancing contacts with
making process of the country they were dealing with and make countries more responsive to market discipline.17
The logic of cost-benefit calculation also emerges from the debates in the Executive Board where, since early 1998, public perceptions of the IMF’s activities had acquired salience in the discussion among Executive Directors. As the German Executive Director Bernd Esdar forcefully remarked, the Fund had to signal that it was ‘in the process of reviewing its approach... Otherwise, the Fund might be blamed for ignoring its critics.’18
Similarly, the Canadian Director Thomas Bernes, invited the IMF ‘to show some humility,’ suggesting a thorough rethink of the IMF’s criticized stance on capital liberalization in an attempt to meet the criticisms coming from outside of the Fund.19
Reacting to the new intersubjective understanding of its reputation, and in the attempt to limit damage to its status and activities, the Fund focused on developing a new external communication approach that set the basis for including CSOs in the design and implementation of IMF policies. Indeed, the reasoning within the Fund was that the Fund should have reached out to audiences and groups that were previously marginalized in its decision-making in order to build consensus around the Fund’s activities and ensure their success. As the IMF’s External Relations Department Division Chief put it, ‘the Fund did not decide to open because of the pressures from CSOs. The Fund opened up autonomously, out of a realization that the world had changed, and that it needed to be more transparent and accountable to the outside to preserve its status in the world economy’.20 In particular, the
Fund came ‘to recognize the contribution of greater openness to building support for its core work.’21
Following on this reasoning, the IMF started working on a revision of its external approach. In particular, since mid 1998, IMF staff drafted several background documents in which they suggested a number of actions through which the Fund could increase its
openness to external groups, including the possibility of involving them in its decision-making. In this regard, the suggestion was made to release information on the Fund’s work, policy positions, and processes in order to engage the ‘critics of the institution’s policies.’ ‘Meeting a high standard of public accountability’ also became a crucial key word in the Fund’s documents.22
CSOs figure prominently in the IMF’s new external strategy. In a June 1998 memorandum to the Board, the staff identified civil society as one of the key audiences in the Fund’s external communication approach.23 In the words of the staff, there existed ‘a
discernible need to strengthen efforts to reach out to civil society,’ considered as ‘an audience to be reckoned [with] and addressed.’ 24 IMF staff therefore envisaged the use of instruments
such as ‘briefings and invitations to seminars, conferences, and other fora for discussion’ to engage with CSOs.25 The increasing attention devoted to the incorporation of CSOs in the
decision-making process of the IMF was further underscored by the decision to incorporate civil society’s view in the process of the approval of the Poverty Reduction and Growth Facility (PRGF) – that is, the lending window through which the Fund provides financial assistance to the poorest among its members. Indeed, with the creation of the PRGF in 1999, the Fund decided to include civil society in the process of formulation and implementation of the financial assistance program. In particular, the Poverty Reduction Strategy Papers (PRSPs) demand that the governments consult with civil society. Although this consultation process does not require formal contacts between the IMF and CSOs (but only between the government and CSOs), IMF missions frequently meet with organizations engaged in the consultative process of preparing poverty reduction strategies.
In conclusion, in the late 1990s a new collective and negative understanding of the IMF came to prevail among state and non-state actors that regularly interact with the organization, pushing the Fund to change its previous exclusionary approach towards civil
society. As a result of the Asian crisis the IMF felt the need to respond to its critics by making itself more transparent and accessible than it had been thus far. Many civil society activists found these changes largely cosmetic, as they did not significantly alter the way in which the Fund operates.26 Rather than substantially opening to civil society, the Fund
responded defensively by treating NGOs as an organizational threat to be managed (Kelly, 2011). Thus, the Fund did not act out of a new norm of appropriate behaviour but on the rational calculus of catalyzing political support around its activities. The Fund realized that allowing CSOs to participate in its decision-making could be instrumental in fostering political support for IMF activities. At the same time, however, the change in the IMF’s approach to civil society only took place in the aftermath of the Asian crisis, when a negative shared understanding of the IMF became dominant. Strategic calculation and intersubjective understandings were thus both at play in shaping the Fund’s behaviour.
Conclusions
As the IMF itself concedes, during the mid-1980s few instruments existed for the IMF to engage with actors outside the organizations. ‘Dealings with the press were circumscribed and typically off the record; senior staff contacts with the media were more the exception than the rule, and outreach to civil society groups was largely non-existent.’27 Fifteen years
later, however, the situation has changed significantly and the Fund’s approach to civil society has been amended considerably. Representatives of NGOs attend Annual Meetings, organization of seminars and meetings at the Fund headquarters are regularly organized, and IMF staff consults with a wide range of CSOs.
By focusing on the crucial period of the 1990s this paper aimed at assessing the trajectory that led the Fund to change its approach to CSOs by incorporating them in its
decision-making processes. Tracing the evolution of IMF-civil society relationship, we attempted to contribute to the existing literature on both theoretical and empirical grounds. At the theoretical level, borrowing from the literature on transnational advocacy, this paper has sought to gauge the mechanisms through which CSOs are able to influence the activities of the IMF. Our findings indicate that neither socialization nor coercion can fully explain the process that led the IMF to change its exclusionary stance towards CSOs. Rather, a specific combination of these two proved pivotal – the mechanism of reputation. Similar to socialization, reputation suggests that the IMF changed its behaviour because of a new self-perception, built in interaction with other actors. After the Asian crisis, the IMF experienced a negative perception across states and non-state actors that regularly interact with it. However, in contrast to socialization, and more in line with the mechanism of coercion, the IMF changed its policies based on the analysis of the consequences of the negative perceptions held by other actors. In short, the IMF was forced to change via the pressure of an emerging collective understanding of its reputation. However, the Fund did not change by adopting a newly emerged identity or social norm but rather the change reflected an analysis of the consequences of others’ negative opinions. Our paper therefore suggests the existence of a gray area between constructivism and rationalism (e.g. Barkin, 2003, Nielson, Tierney and Weaver, 2006, Sharman, 2007), because both collective understandings and rational calculations played a role in the transformations of the Fund’s policies.
At the empirical level, the findings of our paper cast doubt on the ability of non-state actors to exercise effective leverage on international political outcomes. Indeed, the Fund ultimately changed its policy towards civil society through a rational calculation of its interests, rather than through a reassessment of them because of the arguments put forward by CSOs. As a civil society activist put it, ‘arguments based on altruism and equity have failed to change the IMF’ (Griesgraber, 2008, 163). Thus, if the transformative potential of civil
society actors in world economy has sometimes been overstated (Amoore and Langley, 2004), our case-study provides a cautionary tale about the influence of state and non-market actors in international politics. Of course, not all civil society’s work can be labelled as unsuccessful. While civil society coalitions failed to reach their goal of fundamentally changing the way the Fund functions (Griesgraber, 2008, 162), they nonetheless succeeded in exposing the IMF’s wrong policy advice, in mobilizing their constituencies and in generating public debate. Put another way, civil society largely failed in lobbying but achieved some degree of success in campaigning to mobilize support and raise awareness about the impact of IMF programs in the developing world.
The apparent non-success of NGOs in the case-study analyzed here allows us to address an oft-heard criticism that research on transnational civil society does not examine failures (Price, 2003, 585, 601)28 but only successful cases of civil society activism – from the
Coalition that lobbied for the adoption of the Convention on Anti-Personnel Mines to the one working to establish a permanent International Criminal Tribunal. Our findings allow us to reflect on the factors that explain the failure of CSOs’ lobbying efforts. Two factors appear as the most relevant. First, civil society’s agenda was too broad. While advocacy on specific issues such as land mines and the International Criminal Court can be easily portrayed through a ‘causal story,’ (Keck and Sikkink, 1998, 27) establishing a (relatively) clear chain of responsibility for an injustice, broader issues such as the reform of global governance are more complex. For example, on the crucial topic of representation and accountability, it can be argued that member states are already represented in international economic organizations such as the IMF and that the proper place for NGOs is found in domestic political debate (Woods and Narlikar, 2001, 580). Although arguments such as these might be self-serving, the reasonable possibility that opening up IOs to special interests may undermine their legitimacy greatly erodes the appeal of civil society’s calls for reform.
Second, CSOs’ failure can be attributed to the international opportunity structure – that is, the degree of openness of international organizations to the participation of transnational NGOs, coalitions and networks (Keck and Sikkink, 1998, 201-210). In contrast to the World Bank, which includes staff with a wide range of political and social viewpoints, the IMF is a relatively centralized, monolithic organization whose members share a common perspective and are generally faithful to a clear organizational culture that rewards loyalty and dependability (Park and Vetterlein, 2010). While some World Bank staff may favour reforms advanced by civil society coalitions, and perhaps even lobby for them, IMF members are unlikely to question the prevailing modus operandi within the organization, although a few of them may agree with civil society activist and support a very narrow range of reforms (Griesgraber, 2008, 157). In this context, external pressures are liable to be met by strong internal resistance. The absence of one of the key conditions for civil society’s success in their campaigns – that is, the existence of strategic allies within a target institution (Weaver, 2010b, Yanacopulos 2005, 104-5) – also demands a change in civil society’s strategies. As the analysis of the IMF opening shows, in the absence of allies the only avenue to stimulate change is through elites who are concerned about the reputation of their organization.
1 The first Civil Society Policy Forum was held during the 2008 Spring Meeting, with more than 200 civil society
organizations in attendance.
2 For an analysis of legitimacy for international actors see, for instance, Reus-Smit 2007.
3 The two explanations reflect the divide between the logics of appropriateness and the logics of consequence (March
and Olsen 1998).
4 For an overview of civil society campaigns directed at the IMF see Scholte, 1998, 17-25.
5 For instance, civil society organizations conducted research on the Fund’s working methods and organization.
Research Institutes, such as UK’s Overseas Development Institute and the Institute for International Economics, published widely read works on IMF operations (see, for example, Bird, 1995). Some of this research had an explicit advocacy component. For example, one study made a forceful argument in favor of the creation of an independent evaluation office (Wood and Welch 2000), which was created only in 2001.
6 Original Platform, available at http://www.thirdworldtraveler.com/50Years_Enough/50Years_Platform.html Accessed
on 31 January 2011.
7 As stated in the Projects’ website, available at https://www.coc.org/rbw/global-economic-governance
8 Phone interview with Jo Marie Griesgraber, former director of the Rethinking Bretton Woods Project at the Center of
Concern, 6 May 2011.
9 Phone interview with Marijke Torfs, Former Director of the International Department at Friends of the Earth – US, 23
January 2011.
10 Notably, however, while the Fund resisted changes to its decision-making procedures, it began incorporating some
civil society requests. For instance, in 1996, the Fund decided to embark on the Heavily Indebted Poor Country scheme.
11 Phone interview with Marijke Torfs.
12 The most well-known criticisms are those raised by the Malaysian Prime Minister Mahatir Mohamad (1998), who
repeatedly accused the Fund during and after the Asian crisis.
13 Phone interview with Jo Marie Griesgraber.
14 IMF Archives, SM/98/153. Staff Memorandum: The Fund’s Approach to External Communications - Next Steps. 22
June 1998, 19.
15 All quotes in this paragraph are from IMF Archives, SM/98/153, 3, 19, 2.
16 The SDDS was established in 1996 to help countries that might seek access to international capital markets in the
dissemination of economic and financial data to the public. PINs were launched in 1997 with the aim of publicizing Executive Board’s discussion of member countries’ surveillance reports and general policy matters. PINs are issued only with the consent of the country concerned. For an analysis of the costs and benefits of transparency for political institutions, see Breton et al., 2007.
17 Phone interview with Roger Nord, Division Chief at the IMF Policy Development and Review Department
1994-1998), Regional Representative in Central Europe (1998-2002), Advisor at the IMF Managing Director’s Office (2002-2004) and Mission Chief for Tanzania, Uganda, Cameroon and Gabon (2004-2008), 17 May 2011.
18 IMF Archives. EBM/98/103. Executive Board Meeting. Strengthening the Architecture of International Monetary
System; Strengthening Financial Systems; and Orderly Capital Account Liberalization. 23 September 23, 1998, 12.
19 EBM/98/103, 13. See also the Executive Board discussion on the Fund’s External communication held on July 10,
1998. IMF Archives. EBM/98/74. Executive Board Meeting. Fund’s Approach to External Communications-Next Steps. 10 July 1998, 4-64.
20 Phone interview with Vasuki Shastry, IMF’s External Relations Department Division Chief, 31 May 2011. 21 IMF Archives, SM/98/153, 7.
22 IMF Archives, SM/98/153, 2; 14.
23 IMF Archives, SM/00/14. Staff Memorandum: Strengthening the Fund’s External Communications-Plans and
Resource Implication, 27 January 2000.
24 IMF Archives, SM/98/153, 17, 9.
25 IMF Archives, SM/98/153, 17-8. Also IMF Archives, SM/00/14. Staff Memorandum: Strengthening the Fund’s
External Communications-Plans and Resource Implication, 27 January 2000, 9
26 Phone interview with Marijke Dorfs. Jo Marie Griesgraber, another leader civil society activist, argued that ‘reforms
did not change the fundamental purposes or operating styles of the IMF’ (Griesgraber, 2008, 158).
27 IMF Archives, SM/98/153. The Fund’s Approach to External Communications - Next Steps. 22 June 1998, 6, fn. 3. 28 An important exception is provided by Jönsson and Tallberg (2010).
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