Allies and rivals: Politics, markets, and grand strategy

The dissertation discusses the impact of political-strategic calculations on the economic relations between great powers. It argues that the foreign economic policies of great powers are integral parts of the grand strategies that such powers develop to survive as great powers. More concretely, the argument is that in situations where the need for military support from (potential) allies is high should war break out, foreign economic policies will discriminate in favor of such allies. They will be granted various kinds of economic concessions such as trade preferences, preferential access to capital markets, and foreign aid. The main function of economic concessions like these is to signal one's intentions to the ally. Since uncertainty about intentions often undermines (alliance) relationships among great powers, greater certainty is likely to strengthen (alliance) ties, and thus improve the grantor's strategic situation. In contrast, rivals may be discriminated against through the imposition of economic sanctions. In this case, the purpose is to deter the rival from encroaching on one's interests. Where need for allied support is low, foreign economic policies are likely to be nondiscriminatory. The only exception is that sanctions are still possible. Military strategy and war plans provide the indicators of strategic need.; The impact of these kinds of political-strategic calculations on the degree of country-specific economic discrimination is shown both through longitudinal and cross-sectional historical case studies. I provide studies of the political and economic relationships between France and Russia and between Germany and Austria Hungary before World War I, of British relations with the Dominions and with Germany, France, and the United States in the interwar period, and of United States political and economic relations with Western Europe and Japan in the decade after World War II. The cases show the generalizability of the argument and also enable me to control for competing explanations. The argument is shown to hold in both multipolar and bipolar international systems, for states with widely differing domestic political systems, and for states with both offensive and defensive military doctrines.