Power Relations in an Embedded Institution: The European Bank for Reconstruction and Development

Abstract

The European Bank for Reconstruction and Development (EBRD) is unique among the set of regional development banks in that non-regional members have substantial influence in decision making. Moreover, two other European institutions have direct influence on decision making in the EBRD's Board of Directors. This paper analyses the relative influence of members of the Board of Directors by applying three measures of a priori voting power -the Banzhaf, Johnston, and Shapley-Shubik power indices. Weighted voting schemes, such as the one used by the EBRD, have very distinct properties that allow for the calculation of indicators of voting power using simple, cooperative games in order to determine how voting weight translates into the ability to affect outcomes. Voting power analysis reveals that the United States and Japan have significant influence over electoral outcomes. Influence is concentrated in a subset of members in large part because of the presence of 'dictators' in the EBRD's voting groups. The results demonstrate that relative voting power often diverges from intended influence due to the way decision rules are structured and because of the use of weighted voting.

Donor influence in multilateral development banks: The case of the Asian Development Bank

“…In contrast, the African Development Bank has limited explicitly the participation of non-regional countries, effectively preventing any member from dominating the institution, either in terms of formal voting power or operations (Strand, 2001;Mingst, 1990). Given the origins of the European Bank for Reconstruction and Development at the end of the Cold War, states that might have dominated the institution (particularly France and the United States) were forced to compromise, accepting an institution embedded in the existing European institutional structure with a relatively even distribution of voting power (Strand, 2003b;Weber, 1994). Thus, among the MDBs, the ADB is unique in having two dominant members.…”

Control and voting power in corporate networks: Concepts and computational aspects

“…This suggestion was already explicitly formulated in the seminal paper of Shapley and Shubik (1954) and taken up again in Milnor and Shapley (1978). It has been further explored, among others, by Gambarelli (1982Gambarelli ( , 1994, Cubbin and Leech (1983), Leech (1988Leech ( , 2002aLeech ( , 2002bLeech ( , 2003, Leech and Manjòn (2003), Pohjola (1988), Strand (2003), Zwiebel (1995), etc.…”

Policy Norms, the Development Finance Regime Complex, and Holding the European Bank for Reconstruction and Development to Account

“…Weighted voting is used within the mixed constituencies to determine the director of that constituency, who casts the vote on the board. This allows ‘dictators’ to guarantee their election within the constituency (Strand, 2003: 119). The board of directors vote on the Bank’s daily operations, which are devised by Bank staff and are presented to the board by management, led by the president.…”