Interdependence, War, and Economic Statecraft. Cooperation through Coercion

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1 Interdependence, War, and Economic Statecraft Cooperation through Coercion

2 When one state threatens another state, how do we know it is serious and when it is cheap talking? Cheap talk is not rare in IR. Saddam used it all the time in response to US threats.

3 Interactions of Interdependence Interdependence results in more interactions and potential conflicts Liberalism promises peace through economic and social interdependence The key then is to understand how interdependence creates more conflicts, but ones that should less likely escalate to war.

4 Carrot or the Stick? The more powerful a country is economically, the more it may induce cooperation in other states through either the use of economic incentives or other coercive measures. Of course, the combination of economic threats with the possibility of military force is a dual weapon.

5 The Utility of War War is a sub-optimal outcome: there is usually room for a compromise or option that is more desirable than war. States would rather have opponents acquiesce than stand resolute. Failure of bargaining: war generally results from miscalculation and lack of information about when opponents will back down.

6 The Utility of War Consequently, war may result when opponents lack the means to gauge the resolve of each side, like in a game of chicken not knowing when to veer off the road. Thus, increased interactions provides information about potential opponents, but also alternative means of coercion.

7 The Utility of War Alternative means (options) of coercion may also make war unnecessary: Trade Sanctions: Bilateral or Multilateral (even through IGOs) embargoes and boycotts Economic Destabilization currency attacks Block Credits/Loans: Bilateral (sanctions) or through IMF, IBRD, etc. Freeze Assets

8 Signaling These weapons of economic statecraft provide information to both parties in a dyadic conflict. The initiator demonstrates resolve to harm target economically, or even to harm both parties. When the initiator may even harm itself, then this a bold move that must be seen as a serious signal of intent and resolve.

9 Signaling Thus, the behavior of the initiator of economic coercion is one demonstration of resolve, but this is also the case of the target. If the target does not back down, then the initiator may have some sense that the target may even be willing to fight a war. If so, the initiator needs to decide if a war is worth fighting.

10 Success of Sanctions? Critics (some Realists) claim economic sanctions are generally ineffective. But this is false and based on simplification of the goals of a given use of sanctions. Sanctions may seek to force a change in target country policy, or maybe just to increase the costs and create havoc.

11 Success of Sanctions? Case of Iran: Sanctions could not completely reverse Iranian policy or remove Islamic Fundamentalist government, but made life more difficult for Iran and reduced effectiveness of military that was reliant on US for spare parts. Iran has since taken small steps to improve relations with the West and USA.

12 Success of Sanctions? Case of Libya: Like Iran, sanctions have been seen as unsuccessful, at least until lately. Sanctions against Libya for support of terrorism were multilateral through UN, including ban on air travel. Libya was economically isolated and has now recently declared it will no longer seek WMD or support terrorism.

13 Success of Sanctions? Case of Iraq: Sanctions fail to completely change policies of Iraq. However, cost of WMD programs increased and military suffered, and the economy was in disarray, which undermined domestic support for Saddam s s regime. Iraq s s willingness to put up with sanctions also was a signal of Saddam s s resolve to fight.

14 Success of Sanctions? Case of North Korea: In this case sanctions may have failed or backfired to date. This is a point of debate. Sanctions may have made North Korea more desperate and take on a more belligerent stand and indication of willingness to risk war.