INTRODUCTION

States delegate to international organizations (IOs) all of the time. Activities ranging from weapons-inspecting to peacekeeping to monitoring exchange rate practices and free trade arrangements have all been delegated by states to international organizations. International relations scholarship tends to be dominated by two basic interpretations of the outcomes of this delegation. According to one, IOs are perfect handmaidens of state principals and IO activities conform directly to state preferences. According to the other, IOs are independent bureaucracies governed by their own interests or culture; IO activities are not closely related to state preferences at all. However, empirical reality seems to fit neither model. International organizations and specific international organizational activities vary along a continuum of conformity with state instructions. Some IOs and their activities closely reflect state wishes, whereas others seem to be determined by other factors. What explains this variation?

The principal-agent framework (PA) addresses these issues directly and offers an explanation of why certain IOs or particular IO activities conform more closely to state directives, while others do not. This chapter focuses on the delegation of a particular activity to a particular IO – the design of conditional loan arrangements to the International Monetary Fund – and considers how well PA theory explains the variations in IO conformity with state preferences.

In particular, this chapter focuses on the extent to which the PA framework helps us understand the relationship between state preferences and IO activity – or between the principal and the agent – once the initial delegation has taken place.