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This chapter considers the role that compensating payments can play in promoting international cooperation. The theory developed here explains that such payments cannot increase cooperation when countries are alike, but that they can have a huge effect when countries are very different. Side payments can therefore only really help when the conditions allow them to play this role. The theory is again applied to the Montreal Protocol.

This chapter focuses on the role of institutions in facilitating treaty effectiveness. It discusses the importance of international agreements in promoting and sustaining cooperation. It considers treaty design to further reflect on the type of treaties, and the various mechanisms stipulated in these agreements, that contribute to treaty effectiveness by assuaging conflict in situations of water scarcity and increased variability. The chapter argues that the design of a treaty seems particularly relevant in regions where climate change and water variability could impact the ability of basin states to effectively manage shared water. The chapter demonstrates how various mechanisms such as different water allocation mechanisms, as well as additional stipulations, such as, side-payments, issue-linkage, benefit-sharing, adaptability, and information exchange, affect the performance of the treaty in the context of water scarcity and variability. These mechanisms are examined from an empirical and large-n perspective, assessing how treaties with such mechanisms fare compared to treaties devoid of these mechanisms.

This chapter assesses the mechanisms introduced in Chapter 4 by considering actual cases and evaluating how the mechanism or strategy used contributed to cooperation. In addition to mechanisms such as issue-linkage, side-payments and compensation as well as benefit-sharing, the chapter also examines foreign policy considerations and reciprocity as mechanisms or strategies for promoting cooperation. Mechanisms and strategies such as these aim to incentivize cooperation and shift the payoff structure so that it favors a mutually beneficial outcome.

This chapter examines how countries build multilateral military coalitions. Diplomatic networks provide critical underpinnings for multilateral coalition-building efforts. States that are most interested in seeing a given coalition deploy will develop operational plans of how the mission should look and instrumentalize existing bilateral and multilateral connections to recruit fitting coalition contributors. The trust, information, and facility to construct issue linkages and side payments embedded in these networks help these states in their coalition-building endeavor. Moreover, these states ask common institutional contacts to serve as cooperation brokers and use institutional venues as coalition negotiation fora. In short, diplomatic embeddedness serves as a resource, a strategic capability that states use to bargain third parties into joining a coalition.

This chapter develops the book's central argument about political institutions, compensation, and reform. It begins by analyzing the term “compensation,” as well as related terms such as “side payments” and “logrolling.” It then shows how compensation facilitates policy reforms in power-sharing systems, where side payments are often used to overcome the opposition of politically powerful losers from reform. Following the discussion of these conceptual and theoretical problems, the chapter demonstrates empirically that compensation has, in fact, been used to bring about important reforms: in the area of trade policy, social policy programs have been used to compensate losers from trade; in the area of labor market policy, governments in power-sharing systems have adopted reforms that combine cuts in benefit provision with positive steps to improve training for the unemployed.

This chapter theorizes how boom times and coalitional politics intersect to affect state building. It describes how commodity booms often generate preferences for new public goods and stronger institutions. Governments will fulfill these desires when export-oriented actors lead the ruling political coalition and thereby expand state capacity. Otherwise, state capacity will stagnate or enervate during commodity booms, thus producing an apparent “resource curse.” The chapter explicates a theory of coalitional politics and side-payments to account for such divergent responses to the state building possibilities encapsulated within commodity booms. The chapter also presents a multifaceted measurement scheme to assess changes in state capacity and applies it to six countries from Latin America and Africa. The chapter concludes by assessing four alternative explanations of state building trajectories in the developing world.

The uniform civil code is presented as a competing strategy to deal with differences in law and conflicts that arise from interaction between different communities. This chapter suggests various steps to take to approach the hardest choices with humility. Competing values must be acknowledged to show appreciation. Side-payments may be used to sweeten the deal. Pursuing both options in cases of dilemmas may lead to an optimal choice for uniformity and protection of important differences. Some perceived differences must be analysed for feasibility of coexistence. Sometimes, when no other option is given, a choice must be made between competing and putatively equivalent mistakes, harms or errors that result from two alternatives. The chapter outlines many more potential solutions to resolving the conflicts presented.