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CIAO DATE: 6/00
Vol. 9, Nos. 1/2 (Autumn 1999-Winter 2000)
The article explores the degree to which diplomacy that improves trade expectations can help states to end enduring rivalries and establish a solid basis for future peace. States often face a "trade-security dilemma," whereby trade restrictions drive dependent states to expand, which only leads to a cycle of further trade cut-offs and aggressive expansion. The trade-security spiral can move in a peace-inducing direction, however, if less dependent states are willing to commit to higher trade, in return for a moderation in the dependent state's foreign policy. Costly signaling models are used to establish the conditions under which commitments to future trade can lead to the resolution of a great-power rivalry. The argument is applied to two important cases: the development of detente in the early 1970s (and its subsequent failure by 1975); and the end of the cold war. I show that peace emerged when the United States proved willing to commit to strong future trade in return for a tempering of Soviet foreign policy.
Expectations of protracted attrition wars, more than expectations of peacetime protectionism, heighten incentives for trade-dependent states to seize economically valuable territories. Since conventional defense dominance lengthens wars, it is not as peace-causing as standard formulations of offense-defense theory suggests. Offense-defense theory and economic interdependence theories of conflict thus should be qualified to take account of the conditions leading to autarky-seeking. Militarism and recent experience with long attrition wars exaggerate the perception of these conditions, with analogous effects. Recent historical research on German and Japanese grand strategies prior to both world wars provides support for these hypotheses.
In the past fifty years, preferential trading arrangements (PTAs) have become increasingly ubiquitous in international politics. Dozens have formed since the Second World War and nearly every member of the World Trade Organization is party to at least one. Despite the proliferation of studies concerning the economic implications of PTAs, little attention has been given to the political consequences of these international institutions. This lack of research is significant since the impact of these arrangements bears heavily on long-standing debates concerning the relationship between international trade and political conflict. This article provides preliminary evidence that PTA membership tends to inhibit interstate conflict. We outline several mechanisms through which PTAs may achieve this end, and our statistical analysis of military disputes of the post-Second World War era supports this argument. Specifically, we find that pairs of countries that belong to the same PTA are considerably less likely to become involved in military disputes.
This article addresses the ways that economic incentives shape national interests and foreign policies, applying arguments that are derived from Albert Hirschman's National Power and the Structure of Foreign Trade. While National Power is best known for its argument that asymmetric economic relations create coercive power, we explore Hirschman's insight that international economic relations profoundly influence domestic politics. Foreign policies, and the configuration of interests that underlie them, emerge from domestic political struggles. International economic opportunities and the foreign economic policies of other states affect those struggles and, in turn, the trajectory of a state's foreign policy. We consider three cases that elaborate this Hirschmanesque insight: relations between the United States and the Hawaiian Kingdom in the second half of the nineteenth century; relations between Austria, Czechoslovakia, and the League of Nations in interwar Europe; and relations between Ukraine and Russia in post-Soviet Eurasia.
This article assesses the U.S. policy of engagement with China by drawing on theory, historical examples, and an analysis of the Chinese political economy. It is argued that the cultivation of economic ties will influence a nondemocracy to pursue more cooperative than conflictual foreign policies to the extent internationalist economic interests have political power in the nondemocratic polity. In addition, if a democracy cultivates extensive economic ties with a nondemocratic potential adversary, that will generate domestic political constraints which will make it difficult for democratic leaders to balance against and deter those adversaries should the need arise. Our analysis of the Chinese political economy shows that internationalist economic concerns carry a great deal of political weight in China. We also see the risks to the United States of expanding economic ties with China as minimal. Hence, the United States should foster economic ties with China.
International relations theorists know surprisingly little about the role of economic inducements, or carrots, as compared with economic sanctions. This article analyzes the conditions under which carrots are feasible and/or preferable. Because of the high transaction costs of exchange in an anarchic world, there are significant impediments to the regular use of inducements. Carrots will be more likely and more successful in situations where transaction costs are reduced, such as between democratic dyads or within international regimes. However, even in cases where the use of inducements is a feasible option, it may not be the sender's preferred choice. If the sender anticipates frequent conflicts with the receiver, it will be reluctant to proffer a carrot, for fear of weakening its bargaining position in the future. Even in cases where the two states have relatively harmonious relations, senders may prefer using economic or military coercion instead of inducements as a method of extracting concessions, because it is more cost-effective. Thus, carrots are often proffered as a second-best option. This argument is tested using data on U.S. offers of sanctions and bribes from 1948 to 1992, as well as a review of U.S. nonproliferation policy on the Korean peninsula in 1975 and 1994.
Much of the literature on economic sanctions consists of a debate between those who believe that sanctions are effective, and those who believe that they are futile. To the extent that researchers investigate why sanctions often fail, they concentrate largely on economic reasons why sanctions failed to cause sufficient pain. In this article, conversely, we investigate the political conditions under which sanctions can work. We argue that sanctions can coerce a target state to comply with a sender's demands only when the domestic and international political costs of non-compliance are sufficiently high. Moreover, even significant political costs of non-compliance may be insufficient to achieve the desired policy ends, if the corresponding political costs of changing behavior are high enough to make the costs of non-compliance acceptable or if the target state is well insulated from societal groups. We detail the domestic and international sources of the political costs of non-compliance. Finally, we test this hypothesis with three case studies of successful sanctions episodes: British sanctions against the Soviet Union in 1933, threatened Arab world sanctions against Canada in 1979, and Indian sanctions against Nepal from 1988-90. In each case, we find that strategic and domestic political incentives caused the economic threat to resonate with the target governments.
This article demonstrates the importance of judging economic sanctions only against the entire array of objectives that governments seek to achieve by reinterpreting one of the most spectacular cases of sanctions failure, the oil embargo of Rhodesia. Using recently declassified British documents, this chapter shows that the primary target of the embargo was not white Rhodesia, but black Africa. Britain did not believe the embargo would end the Rhodesian crisis. Rather, it imposed the embargo to demonstrate credibly Britain's commitment to majority rule, divert black African pressure for more drastic actions against Rhodesia, and to preserve the Commonwealth. Moreover, British policy was severely limited by an explicit, hitherto secret, and highly successful South African threat to impose sanctions against Britain should South Africa’s own oil trade be disrupted. The oil embargo of Rhodesia demonstrates that governments can use economic sanctions to achieve important foreign policy goals.