Naval Power and Effects of Third-Party Trade on Conflict

• DOI: 10.1177/0022002720958180
• Author: Nizan Feldman,Ehud Eiran,Aviad Rubin
• Date: 01 February 2021
• Published date: 01 February 2021
• Subject Matter: Articles

Article

Naval Power and Effects

of Third-Party Trade

on Conflict

Nizan Feldman

1

, Ehud Eiran

2

, and Aviad Rubin

3

Abstract

This study argues that the effect of third-party trade on dyadic conflicts is conditional

on the naval power of both the potential conflict initiator and its target state. This

conditional effect occurs mainly because naval power allows trade-integrated

initiators to reduce their trade dependence on a given trade partner and its allies

more easily. At the same time, the target’s naval power increases the costs that

conflict inflict on the initiator’s trade. As maritime trade accounts for about

80 percent of world trade volume, naval capability has an important effect on

combatant states’ ability to substitute trading partners during a conflict and to

mitigate trade-related costs, thereby affecting the relationship between third-party

trade and conflict. The findings of our statistical analyses support our theoretical

expectation that the pacifying effect of third-party trade diminishes as the initiator’s

naval power increases, yet increases as the naval power of the potential target

increases.

Keywords

naval power, third-party trade, conflict

1

Division of International Relations, School of Political Science, Maritime Policy and Strategy Research

Center, University of Haifa, Israel

2

Division of International Relations, School of Political Science, University of Haifa, Israel

3

Division of Government and Political Theory, School of Political Science, University of Haifa, Israel

Corresponding Author:

Nizan Feldman, Division of International Relations, School of Political Science, University of Haifa, Haifa,

31905 Israel.

Email: nfeldman@poli.haifa.ac.il

Journal of Conflict Resolution

2021, Vol. 65(2-3) 342-371

ªThe Author(s) 2020

Article reuse guidelines:

sagepub.com/journals-permissions

DOI: 10.1177/0022002720958180

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Introduction

Over 80 percent of world merchandise trade volume and about 70 percent of global

trade value is conducted by sea (UNCTAD 2018). Yet, the literature paid little atten-

tion to naval power’s influence on the trade-conflict nexus. In this study we argue that

the naval power of dyad states influences the extent to which third-party trade affects

the likelihood of conflict between the dyad. This follows mainly because combatants’

naval capabilities are key in determining their ability to substitute trade during con-

flict and to mitigate trade-related costs. Therefore, a rise in states’ naval power

counteracts the deterrent power of trade integration, which has been emphasized in

the recent literature focusing on third-party trade’s role in mitigating conflict.

Building on the logic of opportunity costs, many studies argue that, similarly to

bilateral trade, third-party trade and other aspects of global economic integration

have a pacifying effect on conflict.

1

Integrating into the world economy reduces the

probability of conflict because it heightens countries’ concerns regarding its poten-

tial loss of trade with third parties and consequent loss of income caused by armed

conflict (Gartzke and Li 2003a; Russett and Oneal 2001). Critics, however, argue

that as states become more integrated within the world economy, it is easier for

them to find alternatives for trade with adversaries that they may lose. High levels

of trade openness and the multilateral nature of the globalized trade system reduce

the income losses caused by taking belligerent measures against an individual trade

partner (Schneider 2014), consequently increasing the likelihood of dyadic conflict

(Martin, Mayer, and Thoenig 2008).

Yet others argue that tension between the substitution effect and conflict’s poten-

tial obstruction to third-party trade makes the opportunity costs explanation ambig-

uous (Kinne 2014). Many studies have therefore highlighted other channels through

which third-party trade discourages conflict. A growing number of studies have

employed social network analysis, demonstrating that the probability of conflict is

lower among dyads that have many trading partners in common and that are con-

nected through trade networks (Dorussen and Ward 2010; Kinne 2012; Lupu and

Tragg 2013; Maoz 2009). An additional explanation for the pacifying effect of trade

integration is that economic openness enables states in crisis to send “costly signals”

and express their resolve to use force, without resorting to the use of force (Gartzke

and Li 2003b; Gartzke, Li, and Boehamer 2001).

2

Most of the studies that associate more third-party trade, trade links, or integra-

tion in the global trade system, with a lower likelihood of armed conflict, implicitly

or explicitly assume that dyadic conflicts hamper trade with at lea st some third

parties. Nonetheless, the potential damage that conflicts might cause to third-party

trade is not uniformly distributed across states (Gowa and Hicks 2017, 655). Recent

literature has therefore highlighted the need to identify variables that affect

the degree to which combatants can reduce trade-related costs of conflict and sub-

stitute a portion of their pre-conflict trade (Kleinberg, Robinson, and French 2012;

Gartzke and Westerwinter 2016; Gowa and Hicks 2017).

Feldman et al. 343