Johannes W. Fedderke and Dennis Jett – Pricing US Ambassadorial Postings: how much would you have to pay to be posted as US ambassador to the Court of St. James?

This is a guest post by Johannes W. Fedderke and Dennis Jett from Pennsylvania State University. It is based on their recent article in Governance.

US ambassadorial postings are unusual. Unlike other major powers, a significant proportion of US ambassadors are political appointees rather than career diplomats. Political appointees, chosen by the White House rather than the State Department, are non-randomly distributed across diplomatic posts, being most common in Western European and Caribbean countries.  They come from a wide variety of backgrounds, but they have in common the fact that in some way they helped the president get elected. The largest number do that that through campaign contributions, but others do it by bringing diversity to the ranks of appointees, for some other political purpose, by being personal friends or serving as loyal staff aides to the president. These categories are not mutually exclusive, but one is usually predominant.

In a recent paper,[1] we explore the why and the how of the US ambassadorial appointments process.

Patronage utility frameworks provide plausible explanations of “why” donors and special interest group representatives are chosen for ambassadorships, and we examine two possibilities: all-pay auctions and alternating offer bargaining games.

Since a political appointment to a diplomatic post provides a rent to the recipient, one analytical approach to the contest for the posting is provided by all-pay auctions, in which all bidders pay for the prize regardless of whether their bid proves successful or not. As an alternative to the strategic interaction by means of auction, which does not allow for negotiation over the prize or its value, the strategic interaction between the donor and presidential candidates can also be thought of as a multiperiod alternating offer bargaining game.

Under plausible and readily specifiable conditions, the implication of both frameworks is symmetrical: donors get what they pay for, with low donations eliciting low quality posting offers, high donations high quality posting offers. The immediate empirical prediction is that higher campaign donations should be matched by better quality diplomatic postings.

So why are both theoretical frameworks of relevance?

Direct reliance on bargaining over donations and posts would constitute a violation of the Foreign Service Act of 1980. On the other hand, under all-pay auctions, the expectation is that donors would pay the full underlying valuation of diplomatic posts. Empirically this is not universally true, with both over- and underpayment for posts observable. This can be more readily accounted for in terms of a bargaining framework, with donor and candidate having varying bargaining strengths from case to case. Reality is likely a messy and complex result of both of these processes.

In our paper, we test the proposition that higher donations will be associated with better postings, and extend the analysis to provide a “pricing” of posts in terms of their underlying characteristics.

Our data covers ambassadorial appointments to all countries with whom the United States has diplomatic relations, a total of 170 countries, for both terms of the G.W.Bush presidency, and both terms of the Obama presidency, through 2013. The data covers 13 years of ambassadorial appointments, generating 764 data points. We measure the desirability of diplomatic posts by means of per capita GDP (GDPPC), its attractiveness as a tourist destination (measured as the number of tourist visits), and the level of hardship or danger pay the ambassador receives in a post. We also distinguish between different “types” of donation, directly to presidential campaigns as personal donations, to the political party of the presidential candidate, “bundling” donations by means of which donors act as coordinators for larger groupings of donors to provide financial support to campaigns, as well as “ex post” donations to campaigns (for instance to the inauguration of a successful presidential candidate).

We demonstrate that higher donations to presidential campaigns predict an improved desirability of diplomatic postings for donors, across both the per capita GDP and attractiveness as tourist destination metrics.

Types of donations can also be shown to have a differential impact on the quality of appointment. While donors to political parties realize the highest per capita GDP postings (on average $14,000 higher than career diplomats), while campaign donors realize more moderately improved postings (on average $6,000 higher than career diplomats), in terms of the return on each dollar donated, the highest return is realized by campaign donors. Thus a $100,000 campaign contribution raises the GDP per capita level of the diplomatic posting by $27,000; a $1,000,000 party political donation raises the GDP per capita level of the diplomatic posting by $5,000.

The implication is that donating to the party requires much greater contributions to secure a comparable post to campaign donations, but since there are fewer caps on what can be given to a political party than there are for donations directly to presidential campaigns, there is the opportunity to compete more aggressively for better posts by contributing large amounts to the former.

So how much would you have to pay for a US diplomatic posting? In our paper we explore this question for all feasible posts, and across a range of possible forms of political donations. Here we cut to the chase, and list four of the more up-market options (Berlin, London, Paris, Rome) – see Table below. We list the implied “prices” of the diplomatic posts under either personal campaign contributions to a presidential campaign directly, computed specifically for the first Obama term, or for party political contributions, computed as an average for all four presidential terms in our data set. Both prices are on the per capita GDP metric of country desirability rating.

Should your target post be the Court of St. James, the cheapest option was by means of personal contributions to the first term of the Obama administration (a snip at $1.1 million), the most expensive option via party political donations (on average $4.3 million over the 2000-13 period).

  Personal Contribution
Obama 1st term
GDP per capita metric (US$)
Party Political Contribution
All 4 Presidential Terms
GDP per capita metric (US$)
Berlin 1,170,517 4,514,841
London 1,131,642 4,331,352
Paris 1,089,080 4,140,936
Rome 881,985 3,190,090

Notes

[1] Fedderke, J.W., and Jett, D., 2016, What Price the Court of St. James? Political Influences on Ambassadorial Postings of the United States of America, Governance, forthcoming, DOI 10.1111/gove.12254.

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