Guns or Money? Defense Co-operation and Bilateral Lending as Coevolving Networks

How are defense co-operation and economic co-operation related? To answer this question, this article analyzes the coevolution of defense co-operation agreements (DCAs) and government-to-government loans. It argues that governments pursue two distinct sets of interests. At the bilateral level, governments use issue linkages and side payments to encourage spillover from defense co-operation to economic co-operation, and vice versa. That is, governments’ bilateral interests in DCAs and loans are largely complementary. However, at the network level, interests may diverge. Specifically, governments use DCAs to build clubs of like-minded defense collaborators or ‘security communities’, while they use loans to impose asymmetric forms of political authority or ‘hierarchies’. In some contexts, these network-level interests are, like bilateral interests, complementary. For example, defense partners rely on loans to co-ordinate their foreign policies and better respond to security threats, and debtors rely on lending patterns to identify suitable defense partners. In other cases, however, these interests strongly conflict. For example, governments that are highly active in the loan network are especially likely to rely on asymmetric exercises of political authority, which is incompatible with the network-level goal of using DCAs to establish communities of defense collaborators. Similarly, governments that are highly active in the DCA network are, due to their complex multilateral political commitments, less vulnerable to the asymmetric influences that loans enable. To empirically test these claims, the study develops a longitudinal model of multiplex network coevolution. Overall, the results show that while economic and defense co-operation often reinforce one another, they sometimes conflict in unexpected ways.