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.