Fateful Transitions. Daniel M. Kliman

to which the authors’ expansive definition of retrenchment sheds light on the concrete choices that states make during power shifts.

      The new wave of scholarship also offers a more sophisticated treatment of power transitions and war. John Ikenberry points out that the probability of conflict will vary depending on the type of international order a state established before its decline. If the order subordinates other countries, a rising power will have few avenues to secure its interests other than war. But in the case of a “liberal order” that features rules-based governance and well-developed international institutions, an ascendant state will possess avenues to increase its voice and influence and consequently experience fewer pressures to pursue forcible change.³⁴ In a study on the origins of peace, Charles Kupchan argues that the path to reconciliation begins with a unilateral concession and that enduring friendship between nations requires “compatible social orders and cultural commonality.”³⁵ Although his analysis extends beyond power transitions, it contains important insights for how declining and rising states might avoid conflict.

      Robert Art, forecasting the future of U.S.-China relations, observes that insecurity does not invariably accompany transitions of power. He contends that war is most likely when declining and rising states present a real or perceived threat to each other, and that the insecurity of the declining state matters most.³⁶ Asking whether China’s ascendance will result in war, Charles Glaser takes a related approach. In his perspective, the severity of the security dilemma—the cycle of action and reaction in which the pursuit of security by one state triggers a countervailing response from another—can vary during power transitions. When defense and deterrence are easy, and states perceive each other as motivated by a desire for security rather than dominance, changes in the balance of power can unfold with a reduced likelihood of conflict.³⁷ William Wohlforth offers a more pessimistic view of power transitions and war. He asserts that a state’s status depends on its capabilities relative to others. Leveraging research in psychology and sociology, Wohlforth argues that a clear imbalance of power among states promotes acceptance of the status quo. Power transitions muddy once-clear hierarchies and create incentives for status competition, which may translate into conflict.³⁸

      This book builds on the considerable advancements made by the power transitions literature over the past decade. It explains strategy formulation rather than the outbreak of war, and examines the choices of the initially dominant state. The book’s focus on regime type also addresses a major oversight in the current scholarship: how national leaders form beliefs about a new power’s intentions and why these beliefs evolve over time.

      Economic Interdependence

      Statesmen and scholars have long expounded that economic interdependence causes peace. One formulation of this argument points to mutual selfinterest: nations become less inclined to fight wars as the costs of disrupting trade and investment flows increase.³⁹ Other arguments linking commerce to peace focus on the second-order effects of economic interdependence. The exchange of goods and ideas across borders may reshape identities. As they become increasingly cosmopolitan, citizens of commercial states are less likely to view foreigners as inherently threatening.⁴⁰ Trade may also give rise to domestic groups with a vested stake in peace. These groups can leverage their new wealth to lobby for a pacific foreign policy congruent with their commercial interests.⁴¹ Last, economic interdependence may promote peace by offering policymakers a way to credibly telegraph their intentions without resorting to force. A state’s willingness to reduce lucrative trade and investment flows constitutes a powerful signal that alleviates uncertainty about resolve. This in turn diminishes the likelihood of miscalculation during disputes.⁴²

      Statistical research has yielded considerable support for claims about the relationship between economic interdependence and peace. Since the mid-1990s a number of studies have found a significant correlation between high levels of trade between pairs of countries and a diminished propensity for conflict. Oneal and Russett use regression analysis to demonstrate that commercial interdependence is associated with more pacific bilateral relations before World War I, during the interwar period, throughout the Cold War, and after.⁴³ In their book Triangulating Peace, Russett and Oneal again test whether the existence of important economic ties coincides with decreased conflict between states. They find that the probability of violent disputes declines by 43 percent when each country is economically dependent on the other.⁴⁴

      This “commercial peace” is not without critics. Katherine Barbieri uses regression analysis to show that higher economic interdependence enhances the risk of conflict between countries.⁴⁵ Copeland argues that expectations about future trade determine whether commercial ties foster peace or foment war. His logic is that a deep trading relationship can only underpin peace if both states foresee its continuation; if they anticipate a breakdown in future trade, highly dependent states fearing that the resulting economic loss will diminish their relative power may come to regard war as an attractive option.⁴⁶

      Proponents of the commercial peace have refuted each of these critiques. A number of scholars have suggested that Barbieri’s measure of economic interdependence may account for the positive relationship between trade and conflict that she identifies. Oneal and Russett further question the scope of her regression analysis, which includes all potential pairs of countries. They demonstrate that Barbieri’s main finding is a statistical mirage: trade only increases the likelihood of violence between states that lack the proximity or power to fight each other.⁴⁷ Oneal, Russett, and Berbaum test whether expectations of future commerce matter. Their analysis contradicts Copeland’s argument. Historical trends in bilateral trade levels—a key point of reference for national leaders trying to forecast the future—appear to have minimal impact on the frequency of conflict between states.⁴⁸

      Another critique questions whether the line of cause and effect runs from trade to peace or peace to trade. Early arguments of this kind focus on how political relationships between states may facilitate commerce. Gowa and Mansfield contend that allied states are more likely to trade with each other because the gains in national wealth will strengthen their collective capabilities. Surveying most of the twentieth century, they conclude that alliances have a significant and positive influence on bilateral trade flows.⁴⁹ More recent arguments in this vein emphasize the simultaneous interaction between trade and conflict. In separate studies, Omar Keshk, Brian Pollins, and Rafael Reuveny, and Hyung Min Kim and David Rousseau reassess the commercial peace while accounting for reciprocal cause and effect. Both studies show that economic interdependence has no pacific benefit.⁵⁰

      This challenge to the commercial peace has not gone unanswered. In an early survey of the simultaneous interaction between trade and conflict, Soo Yeon Kim determines that the strongest line of cause and effect runs from commerce to peace.⁵¹ Oneal, Russett, and Berbaum likewise demonstrate that while a two-way relationship characterizes trade and conflict, a dispute between states will only depress bilateral commerce for a short period. Controlling for several factors that might influence trade flows, they also find that alliances have no impact on commerce between states.⁵² Last, Havard Hegre, Oneal, and Russett uncover methodological flaws in the two recent studies negating the commercial peace. They “show that the pacific benefit of interdependence is apparent when the influences of size and proximity on interstate conflict are explicitly considered.”⁵³

      A subset of the literature on trade and peace explores how economic interdependence interfaces with domestic politics to shape a state’s strategic choices. Paul Papayoanou maintains that extensive economic ties with a rival power will hinder a state’s capacity to hedge or contain. Groups that directly benefit from commerce with the rival power will be reluctant to view it as hostile and oppose the adoption of confrontational policies. In addition, political leaders will fear the consequences of a more assertive strategy—that the rival power will sever commercial relations, resulting in painful economic dislocation at home. Papayoanou argues that democracies are more vulnerable to both of these dynamics because they accord all interests a voice in the making of foreign policy.⁵⁴ Kevin Narizny advances a related argument. Sectors dependent on an external power for their economic livelihood will champion a foreign policy of accommodation while sectors that compete with that power in third markets will prefer