Abstract: While there is increasing recognition that petro-states are more aggressive than their counter- parts in using military force to resolve interstate disputes, it remains unclear why economic dependence on oil revenue leads to such belligerence. I argue that to unravel this puzzle one must integrate insights from the resource curse and commercial peace literatures. The unique political economy of petro-states is explained by the Dutch disease phenomena: a strong demand for oil results in an overvalued currency and deindustrialization by reducing the competitiveness of domestic manufactured and agricultural goods. These effects are en- hanced by nationalization of the petroleum industry, making the state the primary client for the service sector. Consequently, oil dependence results in a smaller and less influential private sector. This corresponds with the causal mechanism of the commercial peace, which asserts that the power of business interests incentivizes governments to avoid militarized conflict with economically interdependent states. Petro-states, however, are less constrained by these commercial elites. Therefore, the pacific effects of economic interdependence are absent in bilateral relationships that include a petro-state. Regression analyses confirm this thesis with respect to both militarized disputes with fatalities and on the overall severity level of interstate conflicts. The relationship between commercial elites and security pol- icymaking is further illustrated through a case study of Venezuela’s public-private sector relations and their impact on the Venezuela – Colombia rivalry. By integrating the domestic and international bargaining process, these results explain the link between oil dependence and the threat to interstate peace.
Abstract: This paper weighs in on the enduring empirical debate between liberals, who argue that trade acts as a suppressor of militarized disputes, and those whose results fail to find any substantive relationship between these two variables. Recently researchers have turned to simultaneous equation models to deal with the endogeneity of trade and conflict. Relying on the latest insights from identification theory for two stage least square models, this paper contends that the two most recent models Keshk, Pollins, and Rueveny (2004) and Hegre, Oneal and Russet (2010) are both misspecified, leading to biased results. I then use their data to create a better specified model affirming that an increase in total trade between a dyad will reduce the probability that the dyad will engage in a conflict with fatalities.