Scholars of world politics frequently highlight the importance of side payments in promoting international cooperation across a broad array of issue areas, from military alliances to environmental agreements. However, in order to be effective, side payments must be credible, meaning that they require the parties to make “binding agreements.” But what does it mean to make a “binding agreement” in the context of world politics? How can such agreements be enforced? The purpose of this article is to address several outstanding issues in the conceptualization of side payments in the hope of defining some scope conditions under which such payments are most likely to promote cooperation.
Policy implications
- Although side payments seem to play an essential role in facilitating international cooperation, it is crucial to specify the “scope conditions” under which they are most likely to be effective.
- Two scope conditions for side payments are as follows: (1) countries must have differing preferences over the outcome (e.g., an environmental agreement) being negotiated; (2) the side payment cannot be too politically or economically costly.
- Conversely, side payments may not be effective when: (1) countries can “free ride” on the benefits generated by an agreement; (2) the government offering the side payment lacks credibility; (3) the government receiving the side payment lacks credibility.
- Side payments are usefully thought of as a “flow” rather than as a one-time transfer since countries may need continuous inducements to remain within an agreement. Given the need to make a stream of payments, it is more likely that side payments will be “small” rather than “large.”
- In cases where governments have strong preferences for an outcome but where side payments would be too costly (economically or politically) to make, they may instead use coercive instruments to induce cooperation; an example may be provided by the European Union's Carbon Border Adjustment Mechanism.
Photo by Eva Bronzini