Institutional Transfer: Method or Mirage?

Presenter: Professor Wade Jacoby, Brigham Young University, author of Imitation and Politics: Redesigning Modern Germany

Moderator: Thomas Carothers, Vice President for Studies, Carnegie Endowment

On October 5, 2001, Mr. Carothers convened the second meeting of the Carnegie Endowment Rule of Law Roundtable. The Roundtable brings together a diverse group of rule-of-law aid practitioners on a regular basis to discuss the lessons of experience and future challenges in this rapidly growing area of foreign aid.

Professor Jacoby's Presentation

Professor Jacoby began by noting that his studies of institutional transfer provide lessons for rule-of-law assistance because institution-building is usually an important part of rule-of-law reform. He divided his presentation into three major sections: 1) the importance of politics and coalition-building in institutional transfer; 2) the phases of transfer; and 3) tensions facing reformers during each of these phases.

I. Politics and Coalition-Building

Jacoby noted that reformers often exclusively focus on institutions and lists of best practices and thereby overlook individual and collective actors' roles in reform processes. Keeping this in mind, foreigners advocating for institutional reform should establish relationships with groups representing what Jacoby calls "minority traditions." These groups are not part of dominant ideological or institutional traditions within their respective societies but, when recruited properly, can be powerful allies for effective institutional transfer.

Jacoby drew upon two examples of U.S.-driven reform efforts in post-war West Germany to demonstrate the importance of apt recruitment of minority traditions. In the late 1940s, U.S. reformers assisted a significant minority -- perhaps 35% -- of German union leaders who agreed that rebuilding unions was an important component of democratization, but believed that unions' powers should be focused on collective bargaining on wages, benefits, and working conditions. Such a model ran counter to the aims of the majority of German unionists. These leaders argued for the establishment of "economic democracy" through extensive union participation in all levels of economic and political decision-making. The United States occupation forces took it as their job to strengthen the minority tradition against the majority. Some of the techniques they used were care packages and material support for those unionists, easier access to newsprint for union publications and to official licenses, Marshall Plan aid, and diplomatic coordination with Great Britain on behalf of the minority tradition. In less than a decade, that minority tradition eclipsed the other as the dominant model. Without US intervention, German democracy would have had a very different shape.

Just as fostering relationships with minority traditions can contribute to success in institutional transfer, ignoring them can potentially doom foreign-backed reform efforts. U.S. attempts in the 1940s to democratize the three-track German school system failed in part because Cold War sensitivities prevented American cooperation with the leftist political groups that supported such change. As a result, U.S. tactics focused on top-down attempts at institutional transfer, which made many Germans recoil at what they viewed as coercive Americanization. "The difference between the two West German examples was the Americans' ability to build and sustain coalitions," Jacoby said. More generally, we see in this case a variant of the familiar temptation to promote democracy through heavy-handed means with the justification that outsiders must use strong medicine to break the grip of local tyrants.

II. Phases and Tensions

Jacoby next enumerated four phases of institutional transfer and the tensions that reformers often face in them. Understanding phases is important because institutional transfer should not simply be mindless imitation that takes place in one short flurry of activity. By tensions, Jacoby meant the toughest and most meaningful choices confronting policymakers during the different phases of transfer.

1) Ambition phase

According to Jacoby, this first phase should include realistic evaluations of the underlying problem, awareness of what types of laws need to be changed, and decisions regarding whether incremental or holistic transfers would be more effective. Additionally, reformers should realize during this early phase that, while institutional change is important, it is not a panacea. Jacoby likened the institutional part of a reform to the campaign part of an election, noting that "you can run a perfect campaign and still lose." The major tension facing reformers in this phase is whether to attempt an incremental reform process that builds momentum as it builds small victories or to attempt a more ambitious one that aims to move the society from "worst to first" in a particular area. He argued that the answer to this question has profound implications in the next phase.

2) Alliances phase

Since individual and collective actors are crucial components of institutional transfer, reformers need to focus on creating, sustaining, and expanding coalitions. Of course, potential partners might not necessarily agree on every issue, so external reformers might need to provide "targeted benefits" to certain, key groups, Jacoby said. This could be problematic in rule-of-law reform, however, since all individuals and groups ideally should be treated equally under legal systems. Next, Jacoby warned reformers to "be aware of the seduction of narrow cliques," which he defined as groups that "agree with everything you say." While these groups may well be minority traditions and while their proclivity towards all things Western makes them natural allies of American and European reformers, their narrowness significantly hampers their credibility with their respective publics. As a result, they may be quite useless in actually implementing the new institutions and rules.

Foreign reformers also need to encourage allied minority traditions to frame proposed institutional transfers in ways that alleviate public fears that changes might challenge traditional values and cultures. As Jacoby said, "almost any foreign practice can be defined as contrary to a culture's values," but proper framing of institutional transfers can also help publics realize that change need not damage their most-closely held beliefs.

Finally, Jacoby cautioned that it is important that reformers "work on people, not just structures." He noted that longer-term exchange programs and other person-to-person contacts can be more effective than relatively rapid institutional transfer in achieving eventual positive change. According to Jacoby, the major tension facing reformers in this phase is whether to attempt to start, stabilize, or strengthen a particular minority tradition in hopes that they might later be strong enough to conceive and carry out useful reforms on their own or whether to go for the 'win' immediately by backing the strongest current faction that is at all open to the desired reforms. The latter choice is likely to be both more financially demanding and politically controversial.

3) Adjustments phase

Institutional transfer "never works perfectly the first time," Jacoby cautioned. In cases of failure, "don't despair, repair," he said. At such times, he suggested that reformers can study the original models they were working with, reevaluate their tactics, or embrace experimentalism. When developing different possible transfer strategies, reformers should factor how different state structures and socioeconomic realities will affect the models they are working with. For example, Jacoby noted that federal systems can be particularly favorable for experimentalism because of the potential for "dispersed trials" throughout distinct jurisdictions. Unitary systems, by contrast, tend to institutionalize patience. On the other hand, experimentalism can be more difficult in the developing world, where the misery index increases the public's demand for rapid improvements. In areas where experiments do not completely succeed, "society can fill in the blanks" by mixing local traditions with transferred institutions, Jacoby said. He noted that many communities in the former East Germany took advantage of "local energies" to compensate for failures of West German institutions.

Finally, Jacoby warned that reformers must be prepared for unanticipated consequences of institutional transfer and experimentation. "If you reform correctly in one place, you cause disruptions in other places," he said. Put another way, institutional transfer efforts always have to walk a tricky line between respecting the local culture and trying to change it for the better. Jacoby noted that the major tension facing reformers during the adjustment phase is whether to work with popular lists of current "best practices" or embrace a "fill-in-the-blanks experimentalism" that presumes an ultimate hybrid between foreign institutional models and prevailing local practices.

4) Legacies phase

Finally, reformers should remember that even the most successful policies and institutions of the West are compromises created in a struggle between actors who often actually wanted something different. This means they are more than just abstract designs, but rather are things that people have fought over. By extension, reformers should consider the long-term stresses that transferred institutions will face and have realistic expectations for exactly what success would entail. On this point, Jacoby underlined the importance of compromise and flexibility. Reformers must realize that compromise will be essential for successful transfer and long-term maintenance of institutions. "There is no one path" to successful transfer, he said, adding that "transfer established in one context needs flexibility to survive when stressed."

The major tension in this phase is questioning how much potential for flexibility and compromise reformers should allow in original designs for transfer, Jacoby said. Reformers can choose to try to prevent backsliding on the part of future authoritarians in their own country by "locking-in" their designs or those who attempt institutional transfer can make rules that are flexible and relatively easy to adjust to new circumstances. As with the previous three tensions, there is no easy answer to this question, as both options are viable choices that reformers might wish to pursue.

III. Conclusion

Jacoby noted in conclusion that his talk was entitled "Institutional Transfer: Model or Mirage? " Institutional transfer is not a mirage, he argued, for it happens all the time. Yet neither is it a model because there is no reliable check list of best practices for emulating the prevailing best practices. Rather, institutional transfer is an important tool available to reformers. Like all tools, if misunderstood by its user, it can be turned into nothing more than an exotic hammer used to flail ineffectually at the problem. In the hands of those with a clear idea and the skills to wield it effectively, however, it can be used to renovate or create things of lasting value.

Discussion

Jacoby's arguments about the need for coalition-building with minority traditions particularly provoked a great deal of discussion. One participant questioned whether many examples of institutional transfer have relied more on "steamrolling" tactics than less-coercive coalition-building with minority traditions. He suggested that, in cases of reform demanded by the European Union of accession candidates, governments have little choice but to make the required changes. A participant responded that such cases might be more complex mixtures of coercion and persuasion through offers of carrots, while another cautioned that internal pressure for change is often mistaken as external when domestic reformist groups appeal to organizations such as the EU for assistance.

Most participants agreed that it is probably helpful if reformers share some cultural connections with societies in question, whether through shared history or language, or through connections with domestic coalitions. A participant wondered what cultural distances institutional transfer can bridge. The absence of tremendous cultural gaps between the United States and West Germany in the 1940s/50s and between East and West Germany in the 1990s likely contributed to the success of institutional transfer. The same could not be said for Western-based rule-of-law assistance to countries such as Chad or Somalia today. Therefore, coalitions with "minority traditions" are exceedingly important, many participants said.

Another major topic of discussion centered on creating or nurturing conditions favorable to transfer of legal institutions. Several questioned whether rule-of-law reform could benefit directly from Jacoby's lessons of institutional transfer, since building coalitions with "minority traditions" is not possible everywhere. In autocratic systems, the division is not necessarily between pro- and anti-rule-of-law segments of society, but rather between an anti-rule-of-law government and the general public. In such situations, it is difficult to determine with whom external reformers should attempt to build coalitions, since a useful minority tradition does not exist. Jacoby suggested that reformers must do their best to foment splits in governments, in such cases.

When questioned specifically about rule-of-law reform efforts in China, a participant noted that minority traditions that support liberalization certainly do exist there. He supported Jacoby's minority-traditions thesis, arguing that "transfers by proxy" in China have been more effective than those attempted by purely exogenous forces, since such domestic coalitions add legitimacy to reform attempts. Another participant supported this notion, citing his experience that Czech lawyers who had worked with foreigners were instrumental in opening up that country's legal system. Diaspora communities could be important allies for reform, another participant added.

One participant expanded upon Jacoby's warning regarding the "seduction of narrow cliques," noting that, in many cases, the United States has created those cliques. These groups, including NGOs and opposition movements, could be counterproductive, since they lack legitimacy due to their obvious ties to the West.

Yet another major point of discussion centered on similarities between institutional and other types of transfer, including technological and commercial. For example, commercial transfer seems easier than institutional transfer, since élites can specifically benefit from accession to WTO or EU standards, one participant argued. Unfortunately, he added, many reformers have assumed that changes in commercial law will have spillover effects into the rest of the judiciary, which is not necessarily the case. Several participants questioned how rule-of-law reformers can hope to create the same type of demand among élites that commercial-law reformers often enjoy.

While they agreed with Jacoby's assertion that holistic reforms can be challenging, several participants wondered whether incremental transfers have ever created enough momentum for broader, systemic reforms. In response, Jacoby noted the cases of Meiji Japan, where Japanese adoptions of European-style police forces, railroad organizations, municipal governments, and daily newspapers led to tremendous Westernization, and the European Union, where candidates must perform piecemeal reforms before acceding to the entire acquis communitaire. One participant believed that outright institutional transfer may no longer be feasible in China and instead suggested that "strategic intervention" involving "partial transfers" (the "salad-bar approach") would be more suitable. Others argued that incremental reforms are often unavoidable, since it is difficult to map out a priori exactly what new problems might arise or become apparent as the reform process is implemented.

Synopsis prepared by Jeffrey Krutz, Junior Fellow with the Democracy and Rule of Law Project at the Carnegie Endowment.