The Neglected Dimension of Commercial Liberalism: Economic Cooperation and Transition to Peace
| Published date | 01 May 2006 |
| Author | Galia Press-Barnathan |
| Date | 01 May 2006 |
| DOI | 10.1177/0022343306063931 |
| Subject Matter | Articles |
261
Introduction
In recent years, there has been a growing body
of literature examining the validity of the
thesis of commercial liberalism, namely, that
there is a positive link between trade (or
economic interdependence) and peace. This
article seeks to contribute to this ongoing
debate by exploring the often-neglected
positive side of the commercial liberal
argument, namely, how economics can
actually promote peaceful relations. The goal
of this article is to offer a theoretical frame-
work that explains the conditions under
which economic linkages can serve as an
effective tool to help develop peaceful
relations between former enemies. It distin-
guishes between two stages in the transition
to peace: (I) the initial decision to sign a peace
treaty (the achievement of cold peace); and
(II) the process of normalization of the
relations (the development of normal and
possibly warm peace). In each stage, I suggest,
economic factors play a different role. In this
context, I offer hypotheses about the impact
of three factors: the balance between
domestic winners and losers, the economic
power disparities between the two former
enemies, and the impact of third-party
© 2006 Journal of Peace Research,
vol. 43, no. 3, 2006, pp. 261–278
Sage Publications (London, Thousand Oaks, CA
and New Delhi) http://jpr.sagepub.com
DOI 10.1177/0022343306063931
The Neglected Dimension of Commercial
Liberalism: Economic Cooperation and Transition
to Peace*
GALIA PRESS-BARNATHAN
Department of International Relations, Hebrew University of Jerusalem
This article examines the role of economic factors in facilitating the transition to peace between former
enemies. It examines a less developed angle of the commercial liberalism approach, namely, when and
how economic incentives can play a positive role in the process of building peace, rather than the standard
focus on how economic interaction can reduce the likelihood of armed conflicts. It does so by
distinguishing between two stages in the transition to peace: Stage I of a peace treaty (cold peace) and
Stage II (normalization and movement toward warm peace), and by examining the role of economic
factors in each of them. The article examines the impact of three factors: (1) the domestic balance of
winners and losers from the process; (2) the economic power disparities between the two parties; and
(3) the role of third-party (economic) involvement. There are different dynamics in the two stages in the
transition to peace, and understanding them also has important practical implications for decision-
makers who want to promote peace. These arguments are examined in a qualitative comparative analy-
sis of the transitions to peace between Egypt and Israel, Jordan and Israel, and Japan and the Philippines
and Indonesia. The qualitative method provides a better understanding of the various causal mechan-
isms linking economic considerations, political considerations, and transition from conflict to peace.
* I thank the Israeli Science Foundation for its generous
financial support for this project. Thanks to Arie Kacowicz,
Korina Kagan, Fred Chernoff, and the reviewers of JPRfor
their helpful comments; and to Gallia Lindenstraus, Limor
Lavi, and Rony Silfen for their invaluable research assist-
ance. Comments are welcomed to mspress@mscc.huji.ac.il.
involvement. I examine the hypotheses
through a qualitative cross-regional compari-
son of transitions to peace in the Middle East,
between Egypt and Israel and between Jordan
and Israel, and in Asia, between Japan and the
Philippines and Indonesia.
What Is Missing from the Current
Debate
The trade–conflict debate is old and well
documented (see Barbieri & Schneider,
1999; Barbieri, 2002). It is also one of the
underlying debates between liberal and
realist scholars. Liberals suggest a strong,
positive link between the expansion of trade
between states and peace, following several
causal paths that have been widely discussed
elsewhere (see Polachek, 1980; Rosecrance,
1986; Morrow, 2003; Stein, 2003; Levy,
2003; Gartzke, Li & Boehmer, 2001; Haas,
1958; Deutsch et al., 1957). Realists, on the
other hand, are skeptical about these argu-
ments, suggesting that either trade has little
or no impact on serious, high-politics issues,
or trade raises the potential for conflict,
owing to uneven gains (e.g. Waltz, 1970;
Barbieri, 2002; Hirschman, 1945/1980;
Abdelal & Kirshner, 1999–2000).
What would be the implications of these
arguments for the role of economic factors in
the transition to peace between former
enemies? Liberals will argue that economic
cooperation is a good starting point for
building cooperation on higher and broader
political and security issues. Realists will
argue that such a role would be very limited.
The realist premises are accentuated when
discussing relations between two recent
enemies, because concerns about relative
gains are likely to be greater, given the recent
memory of conflict, trust is less likely to
exist, and between two such societies little
familiarity is likely to be found. Realists
would argue that the road to peacemaking
runs through the resolution of the major
political and security obstacles. Even success-
ful economic cooperation is unlikely to have
a significant effect on the state of the conflict
as a whole.
The extensive literature, however, remains
inconclusive with regard to the relations
between trade and conflict (e.g. Polachek,
1980; Barbieri & Schneider, 1999; Russett
& Oneal, 2001; Barbieri, 2002). This litera-
ture, dominated by quantitative methods, is
becoming increasingly complex and refined
(e.g. Polachek, Robst & Chang, 1999;
Bearce, 2003; McDonald, 2004). However,
to better understand the causal mechanisms
through which increased trade relations may
or may not influence the likelihood of
violent conflict, it is important to examine
the trade and peace question also through
qualitative case studies (see Mansfield &
Pollins, 2003a: 20; Ripsman & Blanchard,
2003). With few exceptions (Copeland,
1996; Papayoanou, 1999; Ripsman & Blan-
chard, 1996/97), this route has not been
pursued. What is common to the qualitative
attempts to examine the trade–peace link is
their emphasis on the impact of foreign trade
on the calculations of various domestic
actors. The domestic scene has recently
gained importance also in the quantitative
literature (e.g. Hegre, 2000; McDonald,
2004; Simmons, 2003), but in-depth case
studies are better for shedding light on the
politics underlying the trade and peace link.
Most of the existing work, quantitative
and qualitative, focuses on whether high
levels of interdependence can constrain
states, at times of crisis, from turning to
violent means in order to resolve their differ-
ences. This focus, while important, explores
only the negative side of the liberal thesis. It
ignores the positive, constructive side – that
economic interaction can bring about peace
or help upgrade peace. Furthermore, by
focusing on the impact of existing levels of
interdependence, this literature neglects the
dilemmas of statesmen within former
journal of PEACE RESEARCH volume 43 / number 3 / may 2006
262
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