Wednesday 22 Aug 2018 | 00:25 | SYDNEY
Wednesday 22 Aug 2018 | 00:25 | SYDNEY

Do alliances determine trade?


Michael Wesley


This post is part of the Globalisation and war debate thread. To read other posts in this debate, click here.

17 June 2010 17:34

This post is part of the Globalisation and war debate thread. To read other posts in this debate, click here.

Hugh White's point that we shouldn't be so confident about the reduced likelihood of war in the globalised age that we completely stop thinking about it and even planning for it is well taken.

But thinking seriously about war in the globalised age is important for another reason. There's a fair bit of evidence to show that policy-makers' expectations about the likelihood of war have a powerful shaping effect on the patterns and processes of international affairs from era to era.

For example, the 'cult of the offensive' – the expectation that the state which struck first and hardest would prevail in war – had a major impact on European international alignments and enmities at the turn of the 20th century, and ultimately on the onset of the First World War.

During the Cold War, very different expectations about how a battle in Europe would play out led NATO and the Warsaw Pact to adopt very different alliance structures. As David Lake has argued, Moscow’s worries about the thinness of its eastern European defense shield made it concentrate heavily on forward defence and made it vulnerable to allies' defection, resulting in a rigidly hierarchic 'informal empire' in the Warsaw Pact. On the other side of the iron curtain, NATO's greater strategic depth made it less vulnerable to defection and thus more tolerant of a more anarchic alliance.

Expectations of war lead states to shape their international relations around preparing to minimise their losses and maximise their gains in such a contingency. But I'm not sure I agree with Hugh that such shaping of international processes necessarily leads to painful and unpopular compromises of deeply-held national values.

I also greatly enjoyed Mark MarkThirlwell's posts on Pax Mercatoria and would like to raise one more strand of research on trade and security. There's a fair bit of research establishing a pretty convincing correlation between trade and investment flows and security alliances or alignments. This seems to me a dangerous correlation, because with lower levels of trade and investment between enemies, the less there is to lose from going to war.

But China's economic dynamism has in recent years trashed this set of correlations. Australia, Japan, South Korea and Taiwan are all in the unprecedented position in which their most important trading partner is their ally's greatest strategic competitor.

I think this departure holds the key to regional relations in the future. Few countries in this region are completely comfortable with a position of growing dependence on China, and many are solidifying counter-balancing relationships. So we have a situation in which states' two most basic interests – security and prosperity – are pulling in different directions.

And they are doing so in ways that dampen the chances of conflict. Nervousness about dependence on China makes a China-centered alliance confident about muscling up to competitors very unlikely; while the importance of trade and investment links to China means that an alliance to contain China is equally unlikely.

The result will be a very competitive pattern of international relations – but one in which such competition is highly bounded. My money's on a dynamic of intense sphere of interest competition among four great powers, of a type we've never seen before. In fact, Ross, I'll bet the entire non-existent endowment of the Lowy Institute on it.