Liberalization and Foreign Policy

Liberalization and Foreign Policy, by Miles Kahler, editor

Introduction: Liberalization and Foreign Policy

The global wave of political liberalization that has gained force since the mid-1970s and the even wider movement toward liberal economic policies that accelerated in the 1980s provide the subjects for a new agenda in international relations. Because these changes have marked so many societies, determining whether liberal states and economies conduct distinctive foreign policies is central to both interpretation of contemporary international politics and prediction of future patterns. With the end of the decades-old Cold War system, the consequences of domestic change for foreign policies and international politics are likely to grow in importance. Those arguing for and against particular images of future order and disorder often base their prognoses on the importance of regime change and the likelihood that liberal politics and economics will be consolidated. ₁ Such arguments are often difficult to evaluate, however, since they are seldom based on an explicit model of the links between liberalizing political and economic change and foreign policy.

The end of the Cold War has also accelerated the erosion of neorealist theoretical pretensions in international relations. Neorealist hostility toward "reductionist" arguments based on the domestic determinants of foreign policy has been an important barrier to serious, systematic investigation of such relationships. The inability of neorealist theory to explain many of the important international changes of the last decade-particularly the dissolution of the Soviet Union and the end of the Cold War-from a purely structural or systemic perspective has opened intellectual space for theorizing at the level of national policy. Although a coherent alternative to neorealism has not been devised at the level of either the system or the national unit, investigation of the consequences of liberalization for foreign policy may produce constituents for such a theoretical construction and permit a test of key assumptions of liberal theories of international relations. ₂ Finally, an assessment of the foreign policy consequences of the newest wave of liberalization holds important implications for the foreign policy stance of the major industrialized democracies. The Western democracies have attached great rhetorical weight to encouraging democratization and market reforms, but the resources devoted to those goals remain slender when compared to the military forces deployed to contest the Cold War. In an intensifying struggle between domestic and external demands, those resources are unlikely to grow without a compelling argument that liberalizing changes are beneficial, not only for the societies involved but for existing liberal democracies as well. The emerging conventional wisdom, summarized by Howard Wiarda in the case of Latin America, deserves more careful scrutiny:

In Latin America, we have discovered, democratic regimes seldom get involved in stupid wars (the Falkland/Malvinas conflict between Argentina and Great Britain comes to mind), seldom seek to subvert and destabilize their neighbors, do not invite Soviet missiles and brigades, do not systematically violate the rights of their citizens-all actions that cause endless grief for U.S. foreign policy and policymakers. ₃ An estimate of both the efficacy of influence and the benefits of liberalization must figure in policy prescriptions that urge support for political and economic liberalization. Changes in the foreign policies of liberalizing regimes may provide a large share of any projected benefits.

The essays in this volume contribute to the understanding of the foreign policy consequences of political and economic liberalization in three important ways. First, they reexamine the significant finding that liberal democracies pursue foreign policies toward one another that are significantly different from the foreign policies of other regimes. Second, they explain the foreign policies of liberalizing or transitional regimes and compare them with the foreign policies of established democracies. Finally, they describe the foreign policy consequences of economic liberalization and explain one important consequence of such liberalization-strategies of international collaboration within international institutions. Before turning to those three dimensions of liberalization and foreign policy, however, we must define liberalization itself.

Although some students of democratic transition have defined liberalization and democratization as distinct processes that are theoretically separable, here the term "political liberalization" will designate a halfway house to democratization, an incomplete or partial variant of democratic institutions. ₄ Borrowing from existing definitions of liberal democracy or polyarchy, I will define political liberalization as the introduction of greater competition in the political system, wider participation (larger numbers of actors are enfranchised), and greater transparency in the conduct of politics and governance. In institutional terms, these three processes imply the introduction or growing importance of electoral competition and political parties, a larger role for legislative institutions, and the emergence of more independent sources of information in the form of the media being less subject to government control. ₅ Although a regime demonstrating such characteristics can be labeled liberalizing, no assumption should be made that liberalization inevitably leads to full democratization. Huntington argues that for the most recent wave of democracies, liberalized authoritarianism is not a "stable equilibrium," but his sample is limited to states that democratized successfully. A larger set of countries that includes those in East and Southeast Asia suggests that liberalization may advance and retreat; partially liberalized regimes may advance to full democratization very slowly, if at all. Singapore, Indonesia, and China are only three examples of thispattern.

Defining economic liberalization is less problematic than setting the boundaries of political liberalization. Like its political counterpart, economic liberalization has as one of its central features the introduction of additional competition through reduction in state regulation or control of market transactions. Such a program of enhanced competition has both a domestic and an international face. The latter typically includes lowering tariff and nontariff barriers to imports, reducing restrictions on foreign investment, and removing or reducing foreign exchange restrictions and controls. ₆ These definitions emphasize institutional dimensions of liberalization; a complementary definition employs the shifting boundary between state and society. Political liberalization implies an expansion in the sphere of political action by civil society and, correspondingly, an elimination or reduction of state monopolies in the political sphere. Economic liberalization also implies a rolling back of the boundaries of state action, whether through the reform or privatization of state enterprises, the elimination of state-administered pricing, or the relaxation of state controls over economic transactions at national borders.

Choosing liberalization or liberalizing regimes as the object for investigation rather than established liberal democracies alone both enriches and complicates the search for clearly defined foreign policy outcomes. Liberalization permits an examination of the effects of analogous changes in both economic and political regimes. Treating liberalization as a possible continuum of political and economic change also permits investigation of a wider array of regime types than does the dichotomous examination of democratic and nondemocratic regimes. As Lisa Martin describes in her essay, even among established liberal, capitalist democracies considerable institutional variation persists. Outside the accepted liberal democracies, the dimensions of liberalization suggest that certain features of regimes normally classified as "authoritarian" or "nondemocratic" might be arrayed on a common institutional continuum with liberal regimes. To view regimes in such a way, however, implies that certain "liberal" dimensions extend beyond regimes characterized as liberal democracies. Whether liberalization is a smooth continuum raises the related issue of transitional regimes, in which the levels of competition, participation, and transparency displayed go beyond those of established authoritarian regimes but stop short of those of liberal democracies. Such a mixed regime may be stable over time. On the other hand, in some of the cases considered in this volume, transitional status combines both intermediate values on the dimensions of liberalization and an absence of a stable institutional equilibrium.

A final issue bedevils the study of democratization or liberalization, however defined: the divergence between formal regime characteristics and the informal mechanisms of control and veto. Although the empirical task of determining whether power lies in new democratic political institutions or with elements of the old regime (the military, for example) may be difficult, it is not impossible. Drawing on new institutionalist analysis of American politics, Lisa Martin offers one strategy for determining the influence of "silent" institutions in the making of foreign policy in democratic regimes; that same methodology could be transferred to semidemocratic or liberalizing settings. ₇ Political Liberalization, Democratic Dyads, and Foreign PolicyTwo long-standing traditions in political philosophy have produced contradictory predictions concerning the effects of political liberalization on foreign policy. The skeptical or realist tradition views the external policies of liberal regimes as war-prone and volatile, because of a fickle and irrational public opinion. In this view, liberal states are ill-suited to statecraft or the long-term pursuit of national interests. Alexis de Tocqueville is representative of this position, arguing that democracies fight well but are not suited for the patient pursuit of their goals through diplomatic means. ₈ a name="6"> This tradition has also found voice in the writings of Walter Lippmann and George Kennan and was even reflected in the American Constitution, which strengthened executive powers in foreign policy in reaction to perceived weaknesses under the Articles of Confederation. ₉ This skeptical view of the competence of liberal regimes endorses what Robert Dahl has labeled "guardianship," particularly in the sphere of foreign policy: the complexity of foreign affairs and the slight attention paid to external events by the citizens of liberal democracies argue for placing responsibility in the hands of an expert minority. ₁₀ A second, explicitly liberal, tradition, represented by theorists such as Immanuel Kant and Joseph Schumpeter, holds that a world composed of liberal states would be more pacific and predictable, because of the institutional constraints imposed by liberal politics and the reflection of liberal norms-such as respect for law-in the international sphere. ₁₁ Both traditions, with their different readings of the implications of political liberalization, are difficult to employ in a more systematic, empirical investigation of liberal politics and foreign policy. In both instances, normative judgments are central: evaluation of liberal regimes and their foreign policies is at issue. Shifting normative standards introduce confusion: earlier theorists, such as Machiavelli, who do not share later liberal predispositions against war, were not alarmed by the warlike and imperialist character of republican regimes. As warfare itself came to be viewed as an international ill and was assigned an increasingly negative place in liberal theorizing, the alleged pacifism of liberal regimes became one of their principal merits. The specific characteristics of liberal regimes that produce these outcomes are often obscure, and little attempt is made to differentiate among such regimes in ways that would illuminate particular institutional or ideological explanations.

Since contemporary social science began the exploration of relationships between regime and foreign policy, by far the greatest attention has centered on the conflict and war involvement of liberal democratic and nondemocratic political systems. Here, clear-cut evidence has been found for a narrow version of the Kantian thesis: liberal democracies rarely, if ever, make war on one another. ₁₂ Tests of the finding on a wider historical and cultural sample that goes beyond the modern Western states system have found limited support as well. Democracies did occasionally make war on one another in ancient Greece (most notably the Athenian expedition against Syracuse), and evidence from ethnographic data indicates that political units with wider participation conduct less warfare with one another than do those societies with less-participatory politics. ₁₃ Both the apparent narrowness and the increasing scope of this finding add to its interest. On the one hand, although disputes among democracies demonstrate a lower tendency to escalate to the display or use of force (short of war), democracies are no less likely than other types of states to engage in war with nondemocracies. ₁₄ In other words, it is democratic dyads that are distinctive, not the foreign policies or conflict propensities of liberal democracies themselves. ₁₅ A less systematic survey of the oldest liberal democracies-the United States, Great Britain, and France-indicates repeated willingness to initiate military conflict with nondemocratic regimes. ₁₆ The claim that war is absent or very rare between democratic dyads has been challenged on a number of grounds. Some have argued that the coding in certain key cases, such as pre-1914 Germany, is wrong; others have advanced alternative explanations, such as geographical distance between democracies, the Cold War and American hegemony after 1945, or advanced industrialized states' learning about the cost of modern warfare. A final line of criticism concerns the statistical significance of the finding when war and democracies have both been rare events. ₁₇ One other alternative-that the dyadic relationship reflects homogeneous regimes rather than liberal democratic characteristics-is given limited support by Maoz and Abdolali, who find between autocracies a reduced predisposition toward war, although not an absolute aversion. ₁₈ Perhaps the most compelling criticism-one that is considered more carefully below-is that the distinctiveness of democratic dyads is limited in time, strengthening as the number of democracies increases and achieving statistical significance only after 1945. ₁₉ a name="8"> The distinctiveness of democratic dyads is a narrow, although apparently robust finding concerning regime type and foreign policy. At the same time, the scope of that distinctiveness continues to expand as investigators discover other characteristics of the foreign policies of liberal democracies that demonstrate the same pattern. Democratic states appear to be more likely to form alliances with other democracies, although there is some variation in the affinity over time. ₂₀ Liberal states also behave differently in the legal and other means with which they manage disputes with one another. ₂₁ Kurt Taylor Gaubatz extends the scope of intraliberal foreign policies in this volume by examining the duration of alliances among liberal democratic states.

Gaubatz and two other authors of essays in this collection, Lisa Martin and Joanne Gowa, also address the knottiest aspect of the "3D" (distinctiveness of democratic dyads) finding: developing an acceptable model to explain the foreign policies that mark democratic dyads. Since confirmed patterns in the foreign policies of liberal democratic states apply only to dyads in which both states are liberal democracies, explanations must include a "reflective" or strategic component as well. Three broad explanations have been advanced for the distinctiveness of democratic dyads: interests, institutions, and ideology or norms.

An argument from interests holds that the preferences of civil society may be more clearly reflected in the foreign policy of a liberal democratic state than in other types of regimes. Such an interest-based model of foreign policy in liberal democracies may predict specific policy outcomes. For example, a neo-Schumpeterian might argue that liberal democracies will award less influence to the traditional bureaucratic institutions that dominate external policy in authoritarian regimes, particularly the military. A more familiar link to interests, one that is related to economic liberalization, is an association between economic interdependence (economic openness) and domestic interests that serve to moderate conflicts. Gowa points out the difficulties with models based on economic interests, and other studies in this volume suggest that the interests and preferences reflected in liberal democracies are likely to be diverse and highly spe cific to each society. ₂₂ Broader empirical studies have produced mixed results when measures of economic interdependence are related to levels of international conflict. ₂₃ Few noneconomic domestic interests in liberal democracies could explain the near-absolute quality of the link between liberal democratic dyads and avoidance of war.

Liberal democratic institutions seem to offer a more convincing explanation for the characteristic foreign policies of democratic regimes. Those institutions embody wider participation, greater competition, and intensified transparency when compared with other regimes. Typically, liberal institutions are portrayed as imposing additional constraints on elites; the constraints, in turn, produce a more prudent foreign policy. These constraints are particularly important in dealings with other democracies, whose regimes are viewed as similarly configured. As Bruce Russett outlines the institutional model for the absence of war among democracies, "The constraints of checks and balances, division of power, and need for public debate to enlist widespread support will slow decisions to use large-scale violence and reduce the likelihood that such decisions will be made," other states will be aware of these constraints, and leaders of other democracies in particular will not fear preemptive attack, thus permitting peaceful resolution of conflicts. ₂₄ Bruce Bueno de Mesquita and David Lalman present the most elaborated model of democratic institutional constraints that are likely to produce the 3D results. ₂₅ Their case for an institutional explanation has two bases: the information that is reliably conveyed to other regimes about "hawkish" or "dovish" preferences by democratic institutions and the likelihood that democratic politicians will be punished more reliably than authoritarian rulers for unsuccessful military conflicts. More recent work by Randolph M. Siverson and Bueno de Mesquita appears to confirm the latter assumption. ₂₆ David Lake's argument for the reduced propensity of liberal democracies for rent-seeking and aggressive foreign policies is also based on institutional differences that ensure greater transparency in decision making and lower costs in controlling the state. ₂₇ a name="10"> The institutional explanation for the distinctiveness of democratic dyads depends on a reliable relationship between a set of institutions and constraints on national leaders. The structure of liberal democracies varies considerably, however, and the institutions that appear to impose constraints in one setting may have very different effects in another. For any measurable type of behavior, democratic institutions may also have different effects that, taken together, cancel each other. For example, in crisis behavior, some institutions may induce riskier behavior and others encourage more prudent behavior. ₂₈ Even the same institutions may elicit different foreign policy responses by rational politicians in different circumstances: a Congress that checks one president and renders him more prudent may induce another, in Theodore Lowi's phrase, to oversell the threat and commit to more risky actions.

Electoral cycles, a central feature of any democratic regime, have received considerable scrutiny, and, within the set of liberal democracies, might be expected to constrain foreign policy behavior in a consistent fashion. Gaubatz has found that democratic states are more likely to enter wars early in their electoral cycles (soon after elections) rather than later, at a time when, arguably, the ability of the electorate to sanction the political leadership is lowest. ₂₉ Gaubatz's findings could lend support to the general view that liberal political institutions check military action by elites. Miroslav Nincic, however, has discovered support for a somewhat different cycle of hostility and cooperativeness in American policy toward the Soviet Union: hostility peaked in election years and carried over to the first year of a new administration; cooperation increased in the second term of a two-term president when electoral constraints were weaker. ₃₀ Finally, liberal democratic institutions may play only a weak independent role, reflecting the preferences of the electorate or a dominant political coalition, and, as described above, those preferences may be indeterminate. ₃₁ Whether the electorates or elites of liberal democracies will endorse foreign policies that reflect a particular method of conflict resolution, whether they will be consistently more dovish and less conflict-prone, at least toward other democracies, draws attention to liberal democratic norms, a third explanation for the 3D findings.

The distinctiveness of democratic dyads-particularly the aversion of liberal democracies toward war with other democracies-may lie not in institutions or interests but in the shared ideology or normsof liberal democratic regimes. The operative norms have been described as a domestic attachment to peaceful means of conflict resolution, such as law and constitutional government. These dispute settlement norms are extended to the international realm by democratic regimes. Such normative or ideological constraints are only (or most powerfully) operative when reflected in other liberal democratic states, hence the dyadic character of democratic war aversion. ₃₂ This model of "dyad-only" normative constraint has proved difficult to specify and to investigate empirically. The precise means by which norms regulating domestic conflict are externalized remain obscure. Domestic "peace" must also be demonstrated, and liberal democracies have had their share of domestic violence and civil wars. Proxies used for the existence of domestic democratic norms, such as incidence of civil wars or political violence, may reflect not norms of conflict resolution but the deterrent police and military power of particular regimes. A second key indicator of norms employed by Bruce Russett is political stability (measured by regime persistence). ₃₃ Although regime duration is arguably related to the development of strong norms, more-established regimes could independently produce predictability for others in the international system, a feature that is not limited to democratic regimes.

Joanne Gowa argues in her essay here that norms must be clearly separated from alternative explanations: what appears to be normatively driven behavior may be reflective of interests that are not domestically derived. State interests, reflected in alliance memberships, may provide the most parsimonious explanation of the distinctiveness of democratic dyads, particularly after 1945. As Russett argues, however, there is no reason to believe that "interests" (defined as threat perception or in some other way) do not include political regime as one of their components. ₃₄ Disentangling the alternative explanations for the distinctive qualities of foreign policies among democratic states has led to closer examination of those relations in specific historical cases. John M. Owen asserts that both liberal ideas and liberal institutions interact to produce the democratic peace. ₃₅ His distinction between the bearers of liberal ideology and liberal institutions permits the separation of normative explanations from institutional ones. Owen's definition of the irreducible content of liberal ideology and the sources of liberal political influence remains unclear, however. Owen's emphasis on perceptions of liberal attributes resembles Thomas Risse-Kappen's (and even the critic David Spero's) explanations for distinctive liberal foreign policies toward other liberal states. ₃₆ Risse-Kappen offers a constructivist elaboration of the normative explanation for the liberal democratic peace, arguing that democracies infer potentially threatening external behavior from the internal violence of repressive regimes. Since there is little evidence that repressive regimes are necessarily more violent in their foreign policies, Risse-Kappen (and some other proponents of the normative explanation) must explain this mistaken learning trajectory.

Foreign Policy and Transitional RegimesThe distinctive character of international relations among liberal democracies appears to strengthen over time, whether between specific pairs of states or among the cluster of all democracies. The level of militarized disputes and crises between the United States and the other liberal great powers declined from the nineteenth century to the twentieth: well before the onset of the Cold War a de facto security community existed among the small number of democratic great powers. ₃₇ A strengthening of the democratic peace after 1945 is conceded by both supporters and skeptics of its earlier reality. The normative explanation for the democratic peace is based explicitly on stable democratic polities over time. All of these observations could be attributed to the consolidation of democratic regimes, of movement from purely formal or institutionally defined liberal regimes to regimes in which the democratic rules of the game are virtually unquestioned.

What is to one observer a newly democratized or liberalized state is to another a fragile, transitional regime. Students of democratic transition disagree sharply over the hallmarks of regime consolidation and the possibility for an indefinite transitional state of weak or incomplete democracy. For Giuseppe Di Palma and others, too stringent a definition of consolidation would consign even established regimes such as Italy to transitional limbo; for others, such as Guillermo O'Donnell and Philippe Schmitter, hybrid or incomplete forms of transition are possible and may be stable over a period of years.

This controversy would not be critical to an analysis of foreign policy effects of liberalization if one could assume a strictly additive character to the process: increments of wider participation, greater competition, or enhanced transparency would produce measurable increments in a particular foreign policy outcome associated with liberal democracies. ₃₈ Such an assumption is undermined, however, if a liberal democratic foreign policy requires a certain lower threshold of such characteristics or if it is institutionalization (or institutional stability) that is captured in many of the characteristic definitions of liberal democracy. Gaubatz's essay here defines liberal democracies to include regularized leadership changes, institutional stability, and stability of preferences, none of which would apply to many liberalizing regimes. ₃₉ Russett employs the longevity of a democratic regime as one of the principal proxies for the influence of democratic norms. ₄₀ It is this dimension of institutionalization, the presence or absence of an agreed institutional equilibrium within a given polity, that separates liberal democracies from transitional regimes.

Even a modest degree of political liberalization may influence foreign policy, but foreign policy outcomes may not be those expected of established democratic regimes. As Lisa Martin notes, England and the Dutch Republic fought three wars in the seventeenth century, when they were the only states in Europe with representative institutions. She suggests that institutional instability in the relations between Crown and Parliament both affected the conduct of these wars and restrained British policy in some instances. As would be the case in many other transitional regimes, foreign policy became an instrument in the struggle for internal institutional predominance, ultimately handicapping England in international competition. ₄₁ Models of foreign policy in transitional, liberalizing but not yet established democratic regimes often parallel the diversionary theory of war. ₄₂ Such explanations for conflict posit a scapegoat effect, in which domestic conflict is managed through externalization: leaders shore up their internal position through aggressive foreign policies. One of the difficulties with such theories, as Jack Levy notes, is their failure to specify the level and type of conflict that results in such scapegoating behavior. One hypothesis is that diversionary foreign policy actions are most likely when the level of domestic conflict is neither very low nor very high: if political transition is nearly consensual with little threat of violence, then the payoff to externalization is low, given the risks; if a near-revolutionary situation exists internally, foreign policy paralysis and quiescence are more likely than belligerence.

The pre-1914 case of a liberalizing autocracy-Russia-offers some support for this generalization. Following the 1905-1906 revolution in Russia, the political elite adopted a widely shared lesson from the recent domestic conflict: another war would mean another, probably fatal, revolution. By 1913-1914, however, as recovery and renovation were widely perceived to be complete and domestic conflict to be lower, this lesson was inverted: public opinion was seen as demanding action; capitulation to Russia's adversaries abroad was believed to endanger the tsarist regime at home. ₄₃ Conditions of struggle over the institutional rules of the game-producing a lack of clarity internally and a lack of predictability externally-seem most likely to encourage an instrumental use of foreign policy for domestic purposes. The cases of pre-World War I liberalizing monarchies once again offer some support. Russia, Austria-Hungary, and Germany were clearly transitional regimes, regimes in institutional flux, in which the internal rules of the game were being challenged and control of foreign policy was a contentious issue. In a recent study of Russian foreign policy during this period, David McDonald describes the profound effects on foreign policy of liberal reforms enacted following the revolution of 1905-1906. Even though foreign policy was explicitly reserved to the tsar and excluded from the oversight of the new (and weak) Duma, ministers felt that they had to work with the legislature, cultivate the press, and also respond to an often inchoate public opinion. ₄₄ A similar pattern could be observed in the other autocracies as popular demands for greater participation collided with entrenched military and bureaucratic interests. Neither the institutional nor the normative bases for liberal democratic foreign policy were in place, as the militarization of disputes among the three, their weak alignment with the liberal democracies, and, ultimately, their decisions for war in 1914 demonstrated.

Conclusions based solely on the liberalizing yet conflict-prone regimes of the early twentieth century are as questionable as the automatic attribution of liberal democratic foreign policies to new and fragile democracies, however. Although transitional regimes may have foreign policies that do not resemble the relations among democratic dyads, claims that they are uniquely conflict-prone are also overdrawn. ₄₅ Coding of these regimes often fails to capture the common understanding of "transitional" in comparative politics. In particular, the portmanteau category of "anocracy" includes societies engulfed in civil war (Angola 1975-1986, Zaire 1960-1966), stable authoritarian regimes (Singapore 1965-1986), and other polities that are transitional as defined here (Portugal 1974-1975). ₄₆ Models constructed to explain the foreign policies of liberalizing or transitional regimes are often plagued by a severe sampling problem: only democratizing states that engage in international conflict are examined; the large number of such states that may not have engaged in conflict are ignored. Models are also skewed to imply that democratization is the sole stimulus for external conflict; in the cases described above, the limited character of democracy and the lingering power of military and bureaucratic elites could be assigned equal or greater importance. The foreign policy behavior of regimes in the absence of political liberalization-a crucial counterfactual-is not considered.

One compelling (perhaps overwhelming) source of evidence is completely omitted in alarmist accounts of the foreign policies of liberalizing or transitional regimes: the latest wave of democratization, which has resulted in more transitional or democratizing regimes than at any other time in this century. Nevertheless, with the exception of a few cases in the former Soviet Union and the former Yugoslavia, instances of an upsurge in interstate violence connected to this wave of democratization are virtually absent. In some regions of widespread democratization, such as Latin America, many previous territorial disputes have subsided in importance and important measures of disarmament-negotiated and unilateral-have occurred.

Transitional regimes-defined as liberalizing states in which a new political equilibrium remains elusive-may display foreign policies that do not match the strong findings of the "3D" specialists. Several transitional dynamics may overturn the characteristic behavior of more established or institutionalized democratic regimes. Nevertheless, the category of transitional regimes requires careful definition and disaggregation; not all transitional regimes display the same foreign policies across regions or across time.

Economic Liberalization and Its Foreign Policy EffectsIn classic descriptions of the pacific union of liberal states, economic exchange among those states played a prominent role. The widespread adoption of programs of economic liberalization, only occasionally coupled with political opening, calls into question the easy assumption that economically open states will characteristically possess liberal democratic regimes and that the foreign policy effects of economic liberalization will necessarily reinforce those of liberal institutions and norms. The posited linkages, both positive and negative, between economic and political liberalization remain controversial. ₄₇ Economic liberalization was defined to include dimensions of foreign economic policy-trade liberalization and reducing foreign investment controls, for example. Taking those foreign policy consequences as given, economic liberalization may also produce second-order foreign policy effects. One cluster of such effects may influence the involvement of states in international conflict through increasing or decreasing available resources. Here, the consequences of economic liberalization may change over time, offering different incentives and disincentives for conflictual behavior. The resource effects of economic liberalization can be portrayed as a J-curve: declining resources available for external (particularly military) demands as the fiscal effects (typically a decline in government revenues) of economic liberalization take hold and then increasing resources when (and if) the growth effects of policy reforms are felt. Examples of both effects can be cited from current liberalization episodes: a sharp decline in military budgets throughout Latin America and in the former Soviet Union (unless specifically protected by transitional pacts) and increasing military budgets in Southeast Asia and China as rapidly growing economies devote a stable or even declining share of their national income to external purposes. Liberalization may also imply a permanent downward shift in the ability of societies to extract resources for external purposes because of the reduced role of the state, but that effect, if it exists, must be separated from independent shifts in preferences that could also produce reduced spending for military or foreign policy ends.

Economic liberalization also implies an increase in external economic transactions and heightened interdependence with other economies. These effects have attracted the most attention from liberal theorists. Interdependence may increase the vulnerability of a state to the policies of other states. This vulnerability may create potential issue linkage or leverage: economic vulnerability in one issue area is employed in bargaining to obtain offsetting gains in other areas of foreign policy. Through state-to-state bargaining linkages, whether explicitly or implicitly employed, economic interdependence may serve to constrain foreign policy more broadly and to induce a more prudent, less volatile, and less belligerent external posture. These positive results, often assumed by liberal theorists, are more likely in symmetric relations of interdependence; asymmetries of influence may mobilize into politics perceptions of international vulnerability, thus creating more conflict rather than less.

Economic interdependence induced by economic liberalization may also create interests-governmental and nongovernmental-that are affected favorably or unfavorably by international economic exchange. Those groups will in turn have a differential influence on policy, constraining or encouraging foreign policies in directions that will benefit them. For example, Etel Solingen argues that participation in nuclear regimes is closely related to economic liberalization and its supporting coalitions. In part the liberalizers are concerned about the possible economic sanctions that might be deployed against nuclear proliferators (anticipated linkage); the liberalizing coalition's goal of reducing state power also fits with denuclearization, since the nuclear-industrial complex is typically state-dominated. ₄₈ A final and more profound change in foreign policy has also been attributed to economic liberalization: transformation in underlying foreign policy preferences. This transformation can be defined as an elevation at the national level of goals of economic welfare (and a concurrent devaluation of the old values of military status and territorial acquisition). ₄₉ An alternative view emphasizes a decline in ideologically driven or "passionate" foreign policies under the onslaught of the market. Ideology is replaced by a careful reckoning of economic costs and benefits, regardless of regime type. In many respects this transformation (if demonstrated) runs counter to the ideological effects of political liberalization, which predicts international alignment and support on the basis of regime type.

Constructing causal links between economic liberalization and changes in conflict behavior and foreign policy orientation is difficult, particularly in those cases when internal political and international changes move states in the same direction. One additional and widespread foreign policy consequence of economic liberalization is central to the essays in this volume: the adoption of external cooperative strategies and engagement with international institutions to manage the effects of growing external economic ties.

International collaboration and institutional engagement follow from four internal dynamics induced by economic liberalization. First, political elites may discover that programs of economic liberalization benefit from (or require) additional credibility supplied by international institutions; part of that added credibility is provided by the resources of those institutions. ₅₀ International engagement may also serve to bind succeeding governments to a liberal economic program in the face of shifting political incentives or elite preferences. The credibility rationale for international institutional ties is likely to be strongest at the beginning of a program of economic liberalization, when institutional and group beneficiaries of the program are likely to be weak, and in regimes that have little past record of carrying out liberal economic programs.

Economic liberalization also impels states toward cooperative strategies through reshuffling the influence of domestic economic institutions. Those institutions representing the old, closed economic order may enter a cumulative decline that magnifies the impact of interests pressing for more liberalization. Coincident with the decline or transformation of institutions designed for a less liberal economic order, new domestic institutions are created or elevated. New foreign trade and export promotion agencies may assume prominent roles in foreign economic policy, edging out more traditional bureaucracies, such as foreign ministries. Central banks have also assumed prominent roles under economic liberalization, as Sylvia Maxfield's account of Mexican liberalization documents, since central banks are often assigned the role of gatekeeper between international and domestic financial markets. Domestic institutions favored by liberalization will often seek collaborative transgovernmental arrangements with their counterparts in order to strengthen their policy position internally and reassert their position vis-á-vis private actors internationally.

New economic interests, created by programs of economic liberalization, may make their weight felt in the foreign policy process; on the other side of foreign policy battles will be those interests that are threatened by the increase in international competition and seek to roll back or limit the extent of such programs. Those groups supporting the liberalization program may align themselves with international institutions in order to strengthen their credibility as reformers and increase the deterrent threat against those advocating a rollback of reform. At the same time, opponents of economic opening can use the intervention of international actors, whether other governments, foreign investors, or international institutions, as a weapon in a nationalist campaign against economic liberalization.

Finally, spillover effects from the consequences of economic liberalization in other issue areas will often result in a ratcheting up of international institution building in order to deal with cross-issue disturbances. The connections between national macroeconomic management and exchange rates or between trade and financial reforms may push states toward reinforcing existing multilateral arrangements or constructing new ones.

The Foreign Policy Consequencesof Political and Economic LiberalizationAlthough research on regime change and foreign policy is in its infancy, one island of investigation has attracted intensive scholarly attention: the distinctive foreign policies of democratic dyads. That distinctiveness expands in scope yet remains subject to challenge by skeptics. Competing models contend as explanations for both aggregate and case study data. The first three essays of this volume scrutinize the 3D findings and assess existing and alternative explanations for those results. Kurt Taylor Gaubatz, Lisa Martin, and Joanne Gowa suggest additions to the scope of those findings, delineate an institu tional path toward constructing a model for democratic constraints, and suggest flaws in the existing explanatory alternatives.

The uncertain politics of the former Soviet Union and the violence in what was once Yugoslavia has heightened attention to the differences between established liberal democracies and liberalizing or transitional regimes. The latter risk definition by tautology (i.e., by distinctive foreign policies that diverge from recognized democratic regimes). Boundaries are difficult to set: when is consolidation completed and a democratic (or market-oriented) transition ended? Both historical cases and contemporary evidence suggest that considerable variation characterizes such regimes and their foreign policies. Here, as in the analysis of authoritarian and democratic regimes, more refined institutional analysis is required.

Five of the essays discuss the implications of political liberalization and democratic consolidation for foreign policy. Their cases are dispersed in time and across regions. Lisa Martin reaches back in time to consider the first liberalizing regimes and the ways in which foreign policy became part of a struggle over a new institutional equilibrium. Lisa Anderson and Jeffrey Herbst explore the likely foreign policy consequences of political opening in two regions-the Middle East and sub-Saharan Africa-that have little previous experience of democracy, regimes whose elites resist and obstruct the construction of new democratic rules of the game. Victor Pérez-Díaz and Juan Carlos Rodríguez explain the rapid transition of Spanish foreign policy to that of an established European democracy. Ronald Linden conducts a similar survey of the foreign policy consequences of political liberalization in East Europe, a more recent and perhaps more fragile development. These investigations outline distinctions among transitional regimes and explain their characteristic foreign policies.

Economic liberalization is more widespread than political liberalization, and its foreign policy effects may be more systematic, although they have attracted less attention from investigators. Economic integration, spurred by programs of economic liberalization, has encouraged new cooperative strategies (or the reinforcement of old ones) and deepened engagement with international institutions.

Three of the essays trace the relations between economic liberalization, foreign economic policies of international collaboration, and institutional choices at the international level. Pérez-Díaz and Rodríguez document the importance of international institutional anchors for political and economic liberalization in Spain. Jeffry Frieden models European economic and monetary integration, offering an interest-based model for the pattern of European institution building across time. Sylvia Maxfield examines a key liberalizer in the developing world, Mexico, and suggests the avenues by which economic liberalization changes the policy preferences of key groups and the government.

The foreign policies of liberal and liberalizing states have become an important question of foreign policy priority in established liberal democracies like the United States. If there are benign effects in a world of democratic states, then policies to promote democratization should be reinforced. If transitional regimes exhibit conflict-prone foreign policies or if economic liberalization is deepened by institutional engagement, additional policy prescriptions may follow. The concluding essay summarizes the findings of the contributors, situates those findings in the existing debate over liberal regimes and their external behavior, and draws policy conclusions for programs of democratic support.

The author wishes to thank the University of California Pacific Rim Research Program for its support of this project and also Barton Fisher and Timothy Johnson for their research assistance. Judith Goldstein, Robert O. Keohane, Bruce Russett, Lisa Martin, Jeffrey Herbst, and other members of the Social Science Research Council Liberalization and Foreign Policy project provided helpful comments on earlier versions of this introduction.

Note 1: See, for example, Stephen Van Evera, "Primed for Peace: Europe After the Cold War," and F. Stephen Larrabee, "Long Memories and Short Fuses: Change and Instability in the Balkans," International Security 15, 3 (Winter 1990/91): 26-28, 43-44, 60-65. Back.

Note 2: The debates over the theoretical implications of the end of the Cold War include Richard Ned Lebow and Janice Stein, We All Lost the Cold War (Princeton: Princeton University Press, 1994), and William C. Wohlforth, "Realism and the End of the Cold War," International Security 19, 3 (Winter 1994/95): 91-129. For one effort to redefine liberalism as a plausible contender with neorealism, see Andrew Moravscik, "Liberalism and International Relations Theory" (unpublished paper, September 1991). Back.

Note 3: Howard J. Wiarda, The Democratic Revolution in Latin America (New York: Holmes and Meier, 1990), p. 270. Back.

Note 4: O'Donnell and Schmitter, for example, have defined liberalization and democratization as two distinct processes-the former a "micro" extension of rights to individuals and groups, the latter a "macro" process of broadened political participation. Limitations on either liberalization or democratization lead to the categories of "liberalized authoritarianism" (dictablandas) and "limited democracies" (democraduras); see Guillermo O'Donnell and Philippe Schmitter, Transitions from Authoritarian Rule (Baltimore: Johns Hopkins University Press, 1986), pp. 7-11. Back.

Note 5: For a widely accepted definition of liberal democracy, see Robert A. Dahl, Democracy and Its Critics (New Haven: Yale University Press, 1989), pp. 220-221. Back.

Note 6: Although the two faces have been joined in many economic reform programs of the 1980s, historically they have not always been closely connected. The inner face of nineteenth-century American capitalism was liberal; its outer face was highly protectionist. Japan and the East Asian newly industrializing nations in the 1970s also demonstrated an inner face of economic policy that was far more liberal than their external economic policies. Back.

Note 7: Lisa L. Martin, "Legislative Influence and International Engagement," ch. 2 in this volume. Back.

Note 8: Josef Joffe, "Tocqueville Revisited: Are Good Democracies Bad Players in the Game of Nations?" Washington Quarterly (Winter 1988): 161-189. Back.

Note 9: James Ceaser, Liberal Democracy and Political Science (Baltimore: Johns Hopkins University Press, 1990), p. 191. Back.

Note 10: For a critique of this view, see Robert Dahl, Controlling Nuclear Weapons: Democracy Versus Guardianship (Syracuse: Syracuse University Press, 1985). Back.

Note 11: Michael W. Doyle, "Liberalism and World Politics," American Political Science Review 80, 4 (December 1986): 1151-1163. Back.

Note 12: Studies supporting this robust finding include Steve Chan, "Mirror, Mirror on the Wall . . . Are the Freer Countries More Pacific?" Journal of Conflict Resolution 28, 4 (December 1984): 617-648; Michael Doyle, "Kant, Liberal Legacies, and Foreign Affairs: Parts I and II," Philosophy and Public Affairs 12 (1983): 205-235, 323-353; Jack Levy, "The Causes of War: A Review of Theories and Evidence," in Behavior, Society, and Nuclear War (Oxford: Oxford University Press, 1989), pp. 267-271; Bruce Russett, Controlling the Sword (Cambridge: Harvard University Press, 1990), ch. 5; Zeev Maoz and Nasrin Abdolali, "Regime Types and International Conflict, 1816-1976," Journal of Conflict Resolution 33, 1 (March 1989): 3-35; Zeev Maoz and Bruce Russett, "Alliance, Contiguity, Wealth, and Political Stability: Is the Lack of Conflict Among Democracies a Statistical Artifact?" International Interactions 17, 3 (1992): 245-269; Bruce M. Russett, Grasping the Democratic Peace: Principles for a Post-Cold War World (Princeton: Princeton University Press, 1993). Back.

Note 13: Russett, Grasping the Democratic Peace, pp. 43-71, 99-118; Neta C. Crawford, "A Security Regime Among Democracies: Cooperation Among the Iroquois Nation," International Organization 48, 3 (Summer 1994): 345-386. Back.

Note 14: For an exhaustive examination of such conflict relations, see Maoz and Abdolali, "Regime Types and International Conflict"; also Erich Weede, "Democracy and War Involvement," Journal of Conflict Resolution 28, 4 (December 1984): 649-664. Back.

Note 15: A persistent dissenter from this restrictive view of liberal democratic foreign policies is R. J. Rummel; see "Democracies ARE Less Warlike than Other Regimes," European Journal of International Relations 1, 4 (December 1995): 457-479. Back.

Note 16: Randall Schweller argues that a second clear pattern emerges in the waging of preventive wars: democracies do not initiate such conflicts against either democratic or nondemocratic regimes. His coding of preventive wars and power transitions casts considerable doubt on this finding, however; see "Domestic Structure and Preventive War: Are Democracies More Pacific?" World Politics 44, 2 (January 1992): 235-269. Back.

Note 17: John J. Mearsheimer, "Back to the Future: Instability in Europe After the Cold War," International Security 15, 1 (Summer 1990): 5-56; Christopher Layne, "Kant or Cant: The Myth of the Democratic Peace," International Security 19, 2 (Fall 1994): 5-49; David E. Spiro, "The Insignificance of the Liberal Peace," International Security 19, 2 (Fall 1994): 50-86. Back.

Note 18: Maoz and Abdolali, "Regime Types and International Conflict," p. 23. Back.

Note 19: Henry S. Farber and Joanne Gowa, "Polities and Peace," International Security 20, 2 (Fall 1995): 123-146. Back.

Note 20: In particular, immediately before World War II, democracies appear to have formed fewer alliances with one another than would have been expected; Randolph M. Siverson and Juliann Emmons, "Democratic Political Systems and Alliance Choices," Journal of Conflict Resolution 35, 2 (June 1991): 285-306. Back.

Note 21: Anne-Marie Slaughter Burley, "Law Among Liberal States: Liberal Internation- Back.

Note 22: Joanne Gowa, "Democratic States and International Disputes," ch. 3 in thisvolume. Back.

Note 23: Nils Petter Gleditsch, "Democracy and the Future of European Peace," European Journal of International Relations 1, 4 (December 1995): 546-548. Back.

Note 24: Russett, Grasping the Democratic Peace, p. 40. Back.

Note 25: Bruce Bueno de Mesquita and David Lalman, War and Reason, pp. 145-177. Back.

Note 26: Randolph M. Siverson, "Democracies and War Participation: In Defense of the Institutional Constraints Argument," European Journal of International Relations 1, 4 (December 1995): 481-489; Bruce Bueno de Mesquita, "War and the Survival of Political Leaders: A Comparative Study of Regime Types and Political Accountability," American Political Science Review 89, 4 (December 1995): 844-855. Back.

Note 27: David A. Lake, "Powerful Pacifists: Democratic States and War," American Political Science Review 86, 1 (March 1992): 24-37. Back.

Note 28: On this point, see D. Marc Kilgour, "Domestic Political Structure and War Behavior," Journal of Conflict Resolution 35, 2 (June 1991): 266-283. Back.

Note 29: Kurt Taylor Gaubatz, "Election Cycles and War," Journal of Conflict Resolution 35, 2 (June 1991): 212-244. Back.

Note 30: Miroslav Nincic, "U.S. Soviet Policy and the Electoral Connection," World Politics 42, 3 (April 1990): 370-396. Back.

Note 31: This is one interpretation of the findings of T. Clifton Morgan and Sally Howard Campbell, "Domestic Structure, Decisional Constraints, and War," Journal of Conflict Resolution 35, 2 (June 1991): 187-211. Back.

Note 32: See Doyle, "Kant, Liberal Legacies, and Foreign Affairs," p. 230; Doyle, "Liberalism and World Politics," pp. 1160-1161; Russett, Grasping the Democratic Peace, pp. 30-38. Back.

Note 33: Russett, Grasping the Democratic Peace, p. 81. Back.

Note 34: Ibid., p. 27. Back.

Note 35: John M. Owen, "How Liberalism Produces Democratic Peace," International Security 19, 2 (Fall 1994): 87-125. Back.

Note 36: Spiro, "The Insignificance of the Liberal Peace," p. 80; Thomas Risse-Kappen, "Democratic Peace-Warlike Democracies? A Social Constructivist Interpretation of the Liberal Argument," European Journal of International Relations 1, 4 (December 1995): 491-517. Back.

Note 37: For an account of the diminishing level of militarization in disputes between Britain and the United States, see Owen, "How Liberalism Produces Democratic Peace." Back.

Note 38: Russett and Maoz find such a relationship between democracy and conflict behavior (Russett, Grasping the Democratic Peace, p. 86). Back.

Note 39: Gaubatz, "Democratic States and Commitment in International Relations," chapter 1 in this volume. Back.

Note 40: Russett, Grasping the Democratic Peace, p. 27. Back.

Note 41: Lisa Martin, "Legislative Delegation and International Engagement" chapter 2 in this volume. Back.

Note 42: For a description and critique of this theory, see Jack Levy, "The Diversionary Theory of War: A Critique," in Manus I. Midlarsky, ed., Handbook of War Studies (Boston: Unwin Hyman, 1989), pp. 259-288. Back.

Note 43: David MacLaren McDonald, United Government and Foreign Policy in Russia, 1900-1914 (Cambridge: Harvard University Press, 1992), pp. 196-197, 205-206. Back.

Note 44: Ibid., pp. 99, 121-124. Back.

Note 45: For claims of this kind, see Edward D. Mansfield and Jack Snyder, "Democracy". Back.

Note 46: An example of such coding, based on Ted Robert Gurr's Polity II data, is given in Russett, Grasping the Democratic Peace, pp. 94-97. Back.

Note 47: On this question, see "Capitalism, Socialism, and Democracy," special issue of Journal of Democracy 3, 3 (July 1992); Adam Przeworski, Democracy and the Market (Cambridge: Cambridge University Press, 1991); and Stephan Haggard and Robert R. Kaufman, The Political Economy of Democratic Transitions (Princeton: Princeton Univer- Back.

Note 48: Etel Solingen, "The Political Economy of Nuclear Restraint," International Security 19, 2 (Fall 1994): 126-169. Back.

Note 49: This transformation resembles Kant's "cosmopolitan law" and the arguments of such liberals as Richard Cobden in the nineteenth century. Back.

Note 50: Whether international institutions provide policy credibility or national governments offer credibility to international institutions is a knotty issue; see John T. Woolley, "Policy Credibility and European Monetary Institutions," in Alberta M. Sbragia, ed., Euro-politics (Washington, D.C.: Brookings Institution, 1991), pp. 157-190.

Liberalization and Foreign Policy