Trade causes asymmetries that make conflict inevitable, but hundreds of years of data prove that even symmetrical trade is escalatory

Andrej Krickovic, Assistant Professor, , HSE, “When Interdependence Produces Conflict: EU–Russia Energy Relations as a Security Dilemma,” Contemporary Security Policy. 2015. https://www.tandfonline.com/doi/pdf/10.1080/13523260.2015.1012350?needAccess=true

Keohane and Nye’s seminal study of power and interdependence distinguishes between symmetrical interdependence, where two parties are equally dependent on each other and therefore will be equally hurt by a break in the relationship, from asymmetrical interdependence, where one state is substantially more dependent on the other, and can be hurt more by such a break.15 Asymmetrical interdependence gives the less dependent partner in the relationship political leverage over the more dependent partner. It can therefore become a cause for concern that intensifies conflict between states.16 According to Albert Hirschman, Nazi Germany set out to make the smaller countries of Eastern and Southern Europe dependent on trade with Germany (even accepting unfavourable balances of trade with these countries) in order to gain political leverage over them that it could later use to advance its imperialist foreign policy goals.17

In theory symmetrical interdependence eliminates the danger that one side will use the threat of breaking the relationship to manipulate the other because both sides would be equally hurt by any cut in the economic relationship. Under symmetrical interdependence states have the opportunity to reap the benefits from economic interdependence without the fear of being subject to the political manipulation found in asymmetrical relationships.

Does this mean that symmetric interdependence fosters more pacific relations between states? The empirical evidence does not seem to support such a relationship. In her study of 70,000 state dyads over a period of 115 years, Katherine Barbieri finds that symmetrical dependence diminishes conflict only in dyads where dependence is limited, that is, where trade between the countries has a limited significance for the country’s overall trade or GDP. Where interdependence between country dyads is extensive, that is, where trade between the two countries represents a large proportion of their overall external trade or GDP, dyads with symmetrical ties are actually more prone to conflict.18 The Russia–EU energy relationship seems to fall in line with these findings. Neither of the two sides’ fears of dependence has been mollified by the fact that dependence is mutual and both have looked for ways to limit their dependence on the other side.

Why has interdependence not played the pacifying role ascribed to it by liberal theory, even when it is symmetrical? In trying to explain these findings, Barbieri notes that interdependence limits states’ freedom to pursue their national objectives. This can give rise to frustrations that spill over into more intense forms of conflict.19 While this kind of explanation is persuasive, it does not directly challenge the logic behind most causal arguments for why asymmetrical relationships should be more peaceful. This article argues that the causal argument put forward by liberal theories for why symmetrical independence fails to reduce conflict is flawed in that it operates from a static assumption of how states calculate their utility. It assumes that in any dyad a state will make its utility calculations about what policies to adopt vis-a`-vis the other state in the relationship based on the existing level of interdependence between these states.