Policy Norms, the Development Finance Regime Complex, and Holding the European Bank for Reconstruction and Development to Account

Created to facilitate the transition of economies of Central and Eastern Europe towards democracy and the free market, the European Bank for Reconstruction and Development (EBRD) is a regional institution in the development finance regime complex. This article examines how the EBRD’s independent accountability mechanism (IAM) emerged and changed to demonstrate how policy norms filter through regime complexes. This is important because new ideas can change behavioural expectations and institutional practices across a complex. Tracing where the idea originated from and how it took hold is therefore central to understanding member state interests, the EBRD’s response considering its organisational preferences, and how the policy norm solidified through inter-institutional learning. This deepens our understanding of the development finance regime complex in two ways: first, it, shows how ideas can filter through to seemingly independent institutions via member states, bureaucrats, and stakeholders. This supports the argument that the development finance regime complex is coherent with increasingly consistent rules and obligations. Second, it reminds us not to reify states; while they demanded institutional change nonstate actors influence what constitutes appropriate behaviour for development financiers. Policy Implications • Member states must ensure that development financiers mitigate the negative impacts of development on beneficiaries. • Regional development finance institutions like the EBRD should be consistent with the World Bank and the International Monetary Fund in providing recourse for people affected by their activities. • Reviews of the institutional design of oversight mechanisms like the Independent Accountability Mechanisms, can improve their consistency across development finance. • It is essential that non-state actors be part of the review process of oversight mechanisms like the Independent Accountability Mechanisms. The development finance regime complex is one of coherence (Held and Schmidke, 2019), competition (Rana and Pardo, 2018), and inefficient duplication (Kellerman, 2018). Central to the development finance regime complex is the World Bank and the International Monetary Fund (IMF), with an increasing number of development finance institutions operating at the regional and sub-regional levels (Kellerman, 2018). Little analysed is the European Bank for Reconstruction and Development (EBRD), which was created in 1991 to facilitate the transition of economies of Central and Eastern Europe (CEE) towards democracy and the free market (Weber, 1994). The multilateral development banks (MDBs) were modelled on the World Bank, but the EBRD has a distinct political and economic mandate, with a provision to lend 60 per cent of its loans to private sector operations. Nevertheless, it contributes to the coherence of the development finance regime complex through its fivefold mission: mobilising capital to promote private and entrepreneurial activities; fostering productive investment; providing technical project assistance; stimulating capital markets; and supporting viable projects (EBRD, 1990). While the EBRD has largely flown under the radar of scholarly attention, it is an institution worth investigating: it is a major contributor to fostering development in Central and Eastern Europe; it has expanded its geographical scope to include the Middle East and North Africa after the Arab Spring; its capital was boosted in 2009 in light of the Global Financial Crisis; and both China and India have joined as donors. This article examines the emergence and restructuring of the EBRD’s independent accountability mechanism (IAM), to document how a policy norm spreads and solidifies within the development finance regime complex. A regime complex is as ‘an array of partially overlapping and non-hierarchical institutions governing a particular issue area’ (Raustiala and Victor, 2004, p. 279). The literature on the development finance regime complex has focused how © 2020 University of Durham and John Wiley & Sons, Ltd. Global Policy (2021) 12:Suppl.4 doi: 10.1111/1758-5899.12881 Global Policy Volume 12 . Supplement 4 . May 2021 90