Multiparty negotiations are complicated, challenging, and often require a very good BATNA (best alternative to a negotiated agreement). A European Union summit held in late October 2013 failed to make headway toward more coordination of economic policies. Facing resistance from Germany in particular, European officials grew pessimistic regarding their odds of negotiating a deal over the next year to lay the foundation for a banking union for the 17 nations that use the euro, the Wall Street Journal reports. The proposed banking union would pool assets to allow the nations to engage in shared spending and borrowing, among other activities.
The plan for greater financial coordination was conceived at the height of the European financial crisis in 2012. As consensus grew that a shared currency with 17 different economic policies was unsustainable, the European Union began looking for ways to present future disasters.
Those who support greater integration sought a model similar to the American system of federalism, according to Marcus Walker and Gabriele Steinhauser of the Wall Street Journal. A working group negotiated plans to set up a central budget that would cushion countries hit by crisis—as Spain and Ireland had been—through measures such as funding the costs of unemployment benefits. Yet as the financial crisis subsided, Germany, Belgium, and France began to push back against proposals for greater financial unity.
The conflict reflects the difficulty of forging multiparty agreements during multiparty negotiations, particularly when no formal voting rules have been established. In business negotiations involving multiple parties, it is typically wise to spend time discussing up front how decisions will be made and agreed upon. By discussing the negotiation process and voting procedures ahead of time, parties may be able to prevent a powerful coalition from controlling the discussion.
Multiparty negotiations are common, even among those who are not professional negotiators: think of department heads dividing up scarce resources, family members debating the future of a business, or a group of consumers launching a class-action lawsuit. Three issues in particular make multiparty negotiations more complex than two-party talks, according to Massachusetts Institute of Technology professor Lawrence Susskind and Harvard Law School professor Robert Mnookin: (1) coalition formation, (2) process-management issues, and (3) the fluctuating nature of each party’s best alternative to a negotiated agreement (BATNA). By preparing for these differences in negotiating strategy, you will be well positioned to thrive in your next multiparty negotiation. Learn how to choose coalitions wisely, manage the process, and calculate dynamic BATNAs.