Peter Buisseret and Dan Bernhardt date-two domestic government wants to terminate the of our results when voters can choose from a larger set project under conditions where voters want it to con- of political parties,or when voters cast ballots based on tinue.This raises the attractiveness of electing a more retrospective rather than prospective considerations, project-friendly government. or when parties can make limited commitments to their How voters resolve this tradeoff depends on date- negotiation strategies conditional on winning office one outcomes.Greater initial concessions by the for- Our model offers novel insights into how domestic eign government mitigate desires of domestic voters to politics affect international negotiations.First,demo- appoint a radical date-two government to extract even cratic governments should be most successful in ex- more.Instead,voters favor electing a government that tracting concessions from negotiating partners when is more likely to maintain the project.But if voters be- elections are imminent.This finding is consistent with lieve that the foreign government would be willing to evidence in Rickard and Caraway (2014)that labor offer far more concessions than are on the table,they market reforms demanded in exchange for IMF financ- prefer a more hostile government-regardless of their ing are less stringent for loans negotiated within six primitive preferences over the project,voters share a months of a pending election.Second,hawkish govern- common desire to extract as much surplus as possible ments that are the most ideologically opposed to in- from the foreign government.Thus,initial negotiations ternational agreements have electoral incentives to se- are both affected by,and partly determine,electoral cure less generous deals.A forward-looking electorate outcomes and subsequent negotiation outcomes. responds to a favorable status quo by appointing less risky governments that are more likely to preserve Main Results.Our main findings are as follows.If the it-that is,more project-friendly parties.So,a hawkish domestic government is initially relatively friendly,ini- incumbent that uses its leverage to secure better agree- tial agreements are signed whenever the static surplus ments hastens its departure from office!This may pro- between the foreign and friendly government is pos- vide insight into why,despite Syriza's failure to negoti- itive and,when the static surplus is instead negative, ate more favorable terms from the Troika,it retained agreements are signed if and only if elections are not its position as the largest parliamentary party in the too far off.The reason is that the governments'static subsequent election. conflicts of interest are attenuated by a dynamic con fluence of interest that is heightened by proximity to Contribution.The two crucial features of our frame- an election:both governments value more generous work are that (1)agreements are negotiated both be- standing agreements that encourage voters to return fore and after a domestic election and(2)the outcome the friendly party to office.This common interest may of pre-election negotiations determines the standing lead to even more generous offers by the foreign gov- offer in any subsequent negotiation. ernment than are needed to secure the friendly govern- Our focus on elections and renegotiation departs ment's participation.Thus,national elections not only from the "two-level games"framework developed by raise the prospect of agreements,but redirect surplus Putnam(1988)and explored in a vast body of work that away from the foreign government and toward the do- includes lida(1993).Mo(1995).Milner and Rosendorff mestic government. (1997)and Tarar(2001).The premise of this frame- If,instead,the domestic government is initially rel- work is that an agreement negotiated between a do atively hostile,agreements are never signed when the mestic and foreign government requires further do- static surplus is negative and,when the static surplus is mestic (i.e.,legislative)ratification;however,these positive,agreements are signed if and only if elections models do not allow for renegotiation once an initial are not too close.The reason is that the governments' bargain is struck.While important,this framework has static conflicts of interest are exacerbated by a dynamic its limitations.First.many countries do not have rat- conflict of interest that is heightened by proximity to an ification requirements.Second.executives often find election:more generous transfers harm the relatively ways to evade them-for example,via executive agree- hostile incumbent by reducing the prospect that it re- ments and nonbinding commitments in the United tains power,since voters then favor a friendly future States that are not subject to congressional approval.? government that will preserve the agreement.Finally, Third,regardless of ratification requirements,the possi- whenever an agreement is signed,the foreign govern- bility for future renegotiation remains relevant.Our re- ment appropriates all of the surplus from agreement. sults highlight how electoral concerns(both via policy More generally,dynamic considerations have a po and office motivations)drive negotiation outcomes- larizing effect on initial negotiations:static conflicts be- considerations missed by models that focus solely on tween the national and foreign government are mag- ratification.8 nified by other conflicts,including (1)policy and rent- seeking conflicts between the domestic political parties (2)policy conflicts between the parties and the elec For example,in the UK,the House of Commons may delay ratifi- cation of certain treaties,but there is no mechanism for Parliament torate,and (3)the policy conflict between the foreign to scrutinize,debate,or vote on treaties;see Lang (2017). government and the electorate.We show how changes For example,the Joint Comprehensive Plan of Action;see Mulligan in the project valuations of the domestic parties may (2017)for an introduction to the forms of international agreements drive more or less generous agreements,depending on and commitments in the US context The distinction between elections and ratification matters:a rati. the uncertainty about domestic voters'attitudes to- fier chooses between accepting an international agreement and pre- wards the project.Finally,we examine the robustness serving the status quo;voter choices reflect their induced preferences 1018Peter Buisseret and Dan Bernhardt date-two domestic government wants to terminate the project under conditions where voters want it to con￾tinue. This raises the attractiveness of electing a more project-friendly government. How voters resolve this tradeoff depends on date￾one outcomes. Greater initial concessions by the for￾eign government mitigate desires of domestic voters to appoint a radical date-two government to extract even more. Instead, voters favor electing a government that is more likely to maintain the project. But if voters be￾lieve that the foreign government would be willing to offer far more concessions than are on the table, they prefer a more hostile government—regardless of their primitive preferences over the project, voters share a common desire to extract as much surplus as possible from the foreign government. Thus, initial negotiations are both affected by, and partly determine, electoral outcomes and subsequent negotiation outcomes. Main Results. Our main findings are as follows. If the domestic government is initially relatively friendly, ini￾tial agreements are signed whenever the static surplus between the foreign and friendly government is pos￾itive and, when the static surplus is instead negative, agreements are signed if and only if elections are not too far off. The reason is that the governments’ static conflicts of interest are attenuated by a dynamic con￾fluence of interest that is heightened by proximity to an election: both governments value more generous standing agreements that encourage voters to return the friendly party to office. This common interest may lead to even more generous offers by the foreign gov￾ernment than are needed to secure the friendly govern￾ment’s participation. Thus, national elections not only raise the prospect of agreements, but redirect surplus away from the foreign government and toward the do￾mestic government. If, instead, the domestic government is initially rel￾atively hostile, agreements are never signed when the static surplus is negative and, when the static surplus is positive, agreements are signed if and only if elections are not too close. The reason is that the governments’ static conflicts of interest are exacerbated by a dynamic conflict of interest that is heightened by proximity to an election: more generous transfers harm the relatively hostile incumbent by reducing the prospect that it re￾tains power, since voters then favor a friendly future government that will preserve the agreement. Finally, whenever an agreement is signed, the foreign govern￾ment appropriates all of the surplus from agreement. More generally, dynamic considerations have a po￾larizing effect on initial negotiations: static conflicts be￾tween the national and foreign government are mag￾nified by other conflicts, including (1) policy and rent￾seeking conflicts between the domestic political parties, (2) policy conflicts between the parties and the elec￾torate, and (3) the policy conflict between the foreign government and the electorate. We show how changes in the project valuations of the domestic parties may drive more or less generous agreements, depending on the uncertainty about domestic voters’ attitudes to￾wards the project. Finally, we examine the robustness of our results when voters can choose from a larger set of political parties, or when voters cast ballots based on retrospective rather than prospective considerations, or when parties can make limited commitments to their negotiation strategies conditional on winning office. Our model offers novel insights into how domestic politics affect international negotiations. First, demo￾cratic governments should be most successful in ex￾tracting concessions from negotiating partners when elections are imminent. This finding is consistent with evidence in Rickard and Caraway (2014) that labor market reforms demanded in exchange for IMF financ￾ing are less stringent for loans negotiated within six months of a pending election. Second, hawkish govern￾ments that are the most ideologically opposed to in￾ternational agreements have electoral incentives to se￾cure less generous deals. A forward-looking electorate responds to a favorable status quo by appointing less risky governments that are more likely to preserve it—that is, more project-friendly parties. So, a hawkish incumbent that uses its leverage to secure better agree￾ments hastens its departure from office! This may pro￾vide insight into why, despite Syriza’s failure to negoti￾ate more favorable terms from the Troika, it retained its position as the largest parliamentary party in the subsequent election. Contribution. The two crucial features of our frame￾work are that (1) agreements are negotiated both be￾fore and after a domestic election and (2) the outcome of pre-election negotiations determines the standing offer in any subsequent negotiation. Our focus on elections and renegotiation departs from the “two-level games” framework developed by Putnam (1988) and explored in a vast body of work that includes Iida (1993),Mo (1995),Milner and Rosendorff (1997) and Tarar (2001). The premise of this frame￾work is that an agreement negotiated between a do￾mestic and foreign government requires further do￾mestic (i.e., legislative) ratification; however, these models do not allow for renegotiation once an initial bargain is struck. While important, this framework has its limitations. First, many countries do not have rat￾ification requirements.6 Second, executives often find ways to evade them—for example, via executive agree￾ments and nonbinding commitments in the United States that are not subject to congressional approval.7 Third, regardless of ratification requirements, the possi￾bility for future renegotiation remains relevant.Our re￾sults highlight how electoral concerns (both via policy and office motivations) drive negotiation outcomes— considerations missed by models that focus solely on ratification.8 6 For example, in the UK, the House of Commons may delay ratifi￾cation of certain treaties, but there is no mechanism for Parliament to scrutinize, debate, or vote on treaties; see Lang (2017). 7 For example, the Joint Comprehensive Plan of Action; see Mulligan (2017) for an introduction to the forms of international agreements and commitments in the US context. 8 The distinction between elections and ratification matters: a rati￾fier chooses between accepting an international agreement and pre￾serving the status quo; voter choices reflect their induced preferences 1018 Downloaded from https://www.cambridge.org/core. Shanghai JiaoTong University, on 26 Oct 2018 at 03:53:04, subject to the Cambridge Core terms of use, available at https://www.cambridge.org/core/terms. https://doi.org/10.1017/S0003055418000400