Lanham: Lexington Books [an imprint of Rowman and Littlefield], 2018. 317 pp. (Tables.) US$115.00, cloth. ISBN 978-1-4985-3269-3.
In this book, Kenneth Faulve-Montojo constructs a mid-range theory to explain international negotiations between the government of the Philippines (GOP) and the International Monetary Fund (IMF). Specifically, he employs Robert Putnam’s two-level game model to interpret international negotiations on petroleum and imports between 1984 and 1994. The two-level game explores simultaneous negotiations at both the international level with other nations (level I) and the domestic level with domestic constituents (level II). Faulve-Montojo disaggregates level II players further into cabinet principals (level IIA) and private/societal veto players (level IIB). Level II negotiations involve the chief negotiator absorbing the concern of both public actors and societal actors, while building coalitions with them. Based on the behaviour of societal veto players at level IIB, he then generates six possible outcomes: success, limited success, qualified success, reversed limited success, reversed failure, and no attempt. By doing so, he hopes to determine which specific players are important at which IMF negotiations and under what environment.
To explain the causal mechanisms on the action of the chief negotiator in changing the status quo during negotiations, Faulve-Montojo looks to two sequencing patterns of negotiation: “deference sequencing” and “external-internal sequencing.” The former stipulates that A will join a coalition with B if A holds a high deference (or respect) for B. The latter argues that the chief negotiator will negotiate first internationally before doing it domestically, if domestic players have substantive leverage. In general, an “external-internal” tactic should precede a “deference” move at level IIA. Faulve-Montojo also finds that the “deference” tactic is more effective in negotiating for petroleum price reform while an “external-internal” tactic works best for import reform. Based on 13 observations of GOP-IMF negotiations on petroleum prices and imports between 1984 and 1994, he derives 35 different combinations of patterns or possible outcomes. From his typology of these outcomes, Faulve-Montojo offers two major propositions (and six minor ones). Essentially, he claims that leverage clarity at the international level (proposition 1) and the type of formal-informal institutional interaction (proposition 2) “provide the main conditions that produce the thirty-five outcomes” (276).
Faulve-Montojo lays out his theoretical foundation in the introduction and advances his propositions derived from his 35 outcomes in the conclusion. To support his argument, he spends five chapters each reviewing the negotiation process between the GOP and the IMF on petroleum prices (chapters 2–6) and imports (chapters 7–11). For each chapter, he systematically discusses: the international political economy, the domestic political economy, an epilogue or concluding information, and an assessment of the causal mechanism. He begins each empirical chapter by contextualizing the political environment at the time of negotiations, including the decline of the Marcos regime (1984), the democratization process under Aquino (1986), the waning years of the Cold War (1989, 1991), and the end of US military bases under Ramos (1994). In the section on international political economy, he examines the international landscape and how the US, the World Bank, other donating agencies, and commercial creditors can affect the negotiation process. In the section on domestic political economy, he investigates how cabinet principals and societal veto players responded to the declared policy decided on by the chief negotiators for the GOP and the IMF.
In terms of the book’s substance, the GOP needed to raise money from abroad to fund its domestic programs during the 1980s and 1990s, and therefore it asked the IMF for loans. In return, the IMF required the GOP to raise government revenue by increasing petroleum prices or by liberalizing international trade. In general, the IMF pushed the GOP to liberalize and privatize its economy as ways to generate economic growth, and thus government revenue. This was necessary because the GOP heavily controlled petroleum prices and imports. For instance, the petroleum price at the pump consisted of: 1) direct oil company take, 2) tax, 3) price buffer fund (oil price stabilization fund—OPSF), 4) transportation cost, and 5) dealer margin. Prior to 1998, the GOP controlled the price of petroleum through the OPSF, which offered a mechanism to minimize public protests in a volatile market situation. Since 1973, the GOP prohibited oil companies from increasing the domestic price of petroleum products, but the oil companies could make reimbursement claims on the OPSF to safeguard its profit. The Marcos administration also established a populist “socialized pricing scheme,” whereby the government imposed lower taxes on diesel, kerosene, and fuel oil, consumed mostly by poor people, and higher taxes on luxury fuels such as gasoline. Otherwise, a sudden increase in the price of petroleum could have led to public unrests with protests, strikes, and demonstrations, which may eventually have resulted in a military coup attempt to restore order. In terms of imports, politicians traditionally used import controls as an instrument of corruption and protectionism for developing a manufacturing base, especially in import-substituting industries. These industries grew economically strong and politically powerful under the government protection from foreign competition. For me, these two cases shine a light on our understanding of regime survival and how corrupt elites have managed to maintain power in the Philippines.
Overall, the book reads like a doctoral dissertation that aims to test hypotheses and to prove a theory. It does not critically engage readers with interesting/provocative insights for further reflections. The book contains numerous typos, and overall, the editing could be significantly improved. For example, the exact same paragraph can be found on pages 59 and 69, and two identical sentences have been pasted into one paragraph on page 125. As the book is separated according to two cases, there are repetitive discussions of the historical context. Most annoyingly, the book lacks a list of acronyms, given the author’s penchant for using them. More importantly, the reader will need to memorize what level I, level IIA, and level IIB mean, as the author peppers these terms throughout the book.
The world is complicated, so we build a theory/model to simplify its complexity to better understand its operation. Faulve-Montojo advances a theory that shows several similar outcomes have different causes while similar causes can produce different outcomes. In his own words, “[t]his work … treats the outcomes as deviant cases as differences in the processes and procedures can lead to similar outcomes but based on different causes and different outcomes based on similar causes” (276). What? I am utterly bemused. Although the book was published in 2018, most fieldwork and interviews were conducted in the summer of 1995. Given significant changes have occurred in the Philippines during the past two decades, including the dismantling of the OPSF, I question the utility of this work to today’s scholars of international negotiation and/or the political economy of the Philippines.
Apichai W. Shipper
Georgetown University, Washington, DC