Taking a fresh look at the European Monetary System and its institutional successor, Europe's newly-inaugurated monetary union, this chapter asks whether power asymmetries and the "threat" of domestic political turnover might be influencing the types of international institutions and dispute resolution structures we see emerging across today's international landscape. Perhaps the most striking feature of these new arrangements is their flexibility; most leave considerable room for ex post changes in the initial terms of cooperation. That this is so—and the EMS, whose rules explicitly allowed for periodic parity realignments, is a case in point—presents something of a mystery. Why don't the creators of these arrangements fully specify their terms of cooperation ex ante? By allowing for subsequent revisions or "clarifications" over time, these powerful actors would seem to be increasing, rather than diminishing, their regime's susceptibility to unwarranted defections. The standard explanation is that the creators, being boundedly rational, are unable to devise a complete contract. But this is not, I contend, the only possibility. From a political standpoint, an incomplete regime may actually be preferable. By fleshing out the terms of cooperation ahead of time, the creators would be denying future opponents of the regime (who might one day include the initial prime movers' own domestic successors) any opportunity to moderate its terms, reformulating—or simply reinterpreting—them in ways intended to make their continued participation in the arrangement somewhat less burdensome than it would otherwise be. It is for this reason, I suggest, rather than out of the narrowly-construed efficiency considerations emphasized by previous scholars, that the contractual terms embodied in many of today's regional and multilateral institutions take the looser forms they do. Delimited though it is, this flexibility works to co-opt the regime's "losers," reducing their propensity to mount a serious challenge to it if, in future years, should they ever get the opportunity.
