In 2016, the United States (US) government relinquished its long-standing delegation contract with the Internet Corporation for Assignment of Names and Numbers (ICANN), a private organization that governs the technical infrastructure of the internet. This presents a puzzle as the US not only gave up a power resource, but also relinquished the possibility, as a public principal, to hold the private agent ICANN accountable. I argue that public principals have incentives to leave control in the hands of private stakeholders when a delegation contract is exposed to external pressure by powerful outside states and the probability of extensive policy changes by the privatized agent is limited. The analysis shows that the unilateral US control over ICANN was strongly challenged by other states and private actors. Instead of granting a greater role to rising powers in internet governance, the US gave up its unilateral influence after internal reforms limited the risk that an independent ICANN could deviate too far from former policies.

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Credible commitment problems arise whenever decisions made according to short-term incentives undermine long-term policy goals. While political actors can credibly commit themselves to their long-term policy goals by delegating decisions to independent regulatory agencies, the member states of international institutions rarely sacrifice control over regulatory decisions. Against the backdrop of the United Nations Compensation Commission established by the Security Council to settle claims on damage from the Iraqi occupation of Kuwait, we present an institutional arrangement that promises to credibly commit member states to their previously defined interests without excluding them from the decision process. It separates the stages of rulemaking and rule application, and is reinforced by conditional agenda-setting of an advisory body. We probe the theoretical claim with evidence from a unique data set that shows that the Commission settled compensation claims in a remarkably consistent way. The arrangement provides a blueprint for comparable regulatory tasks in many areas of international, European, or domestic politics, in which independent regulation is not feasible.

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