Case Analysis Stabilizing Factors in International Conflict Resolution Beverly Crawford

Why are international agreements so fragile? Why do they often seem less stable and effective than domestic agreements? The prolonged stalemate in North­South negotiations, the disintegration of SALT, the disappointing results of the Law of the Sea negotiations all attest to the fragility of international agreements. The security and welfare of the world's population now rests on the peaceful settlement of international disputes. Yet, because animosities among states can be so intense, the prospects for success and stability of agreements seem much dimmer in the international arena than in the domestic realm. Can anything be done to make international negotiations more effective, robust and stable?

My purpose here is to address this question by analyzing NATO negotiations over trade with the Soviet Union that preceded and followed the Trans-Siberian pipeline dispute between the United States and its European allies in 1982. European firms agreed to build the Soviet pipeline with U.S. technology and equipment, in exchange for supplies of natural gas from the Soviets. The United States opposed both the technology exports and the gas imports, and therefore attempted to halt the pipeline's construction. European states refused to comply, and a crisis erupted in the alliance.

Initially the dispute tested the stability of a previously negotiated relation­ship among NATO countries with regard to East-West trade. It then led to further negotiations which in fact strengthened that earlier relationship. It thus illus­trates both the conditions under which international agreements are ineffective in preventing a crisis and the conditions under which more stable agreements can be negotiated. By stable agreements, I mean those to which all parties are committed, those which are resilient in crisis, and those which prevent conflict and promote cooperation among negotiating parties. The case highlights three conditions of the dispute settlement process required for stable agreements: ( 1) a commitment on the part of all negotiating parties to reach a negotiated

settlement of the dispute; ( 2) a negotiating formula based on either a common definition of the negotiating

problem and shared meanings of key issues, or agreement to search for a negotiated solution which will bridge a clear conflict of interests;

( 3) the reduction of pressure tactics on the part of both powerful and weaker parties in the negotiating process.

Beverly Crawford is Assistant Professor in the Graduate School of Public and International Affairs, University of Pittsburgh, and Visiting Assistant Professor on the Politics Board at the University of California, Santa Cruz, Santa Cruz California, 95064. She is completing a book on Western vulnerabil­ity in East-West trade.

0748-4526/87!1000·0333SOS.00/0 < 1987 Plenum Publishing Corporation NegotiLltion]ournal October 1987 333

Three Approaches to Stable International Negotiations Despite the fact that they may be somewhat controversial, there is nothing new or surprising about these requirements for stability. Nor is the list above exhaus­tive. Yet there is considerable disagreement among analysts about whether and how these particular requirements can be met in international politics. Three perspectives vie for dominance: the "realist," the "process-oriented," and the "institutional" views.

Those who support the realist position argue that peaceful dispute settle­ment in world politics is difficult and likely to be unstable. Because the interna­tional system is anarchic-that is, because it is essentially competitive and lacks a central governing authority over states to enforce agreements--they can defect from those agreements with impunity. Unregulated competition fosters mistrust; thus the possibility of defection, cheating and deception hovers over every agreement. Furthermore, states are insecure; without the protection of a central authority, their chief concern is to amass power to assure their survival and maintain their sovereignty.

Even among states which share common interests, such as allies and trading partners, cooperation is generally the second-best alternative to going it alone. States dislike making commitments to compromise because it means giving up some unilateral control or part of their "sovereignty." The condition of anarchy helps us understand why states would rather escalate international disputes in the hope of "winning" than negotiate for a mutually acceptable resolution of conflict (Waltz, 1979).

From a realist perspective, the only limit to dispute escalation is the power of competing states. The outcome, then, of any international negotiation is best explained by power asymmetries among the negotiating parties (Krasner, 1985). Its substance conforms most closely to the preferences of the "strong," despite the fact that the "weak" are often able to build coalitions and pursue clever tactics to extract concessions. And the strong use their power to enforce commitment to the agreement they prefer.

How is that power exercised in negotiations? Three strategies dominate: ( 1) the exercise of "leadership;" ( 2) offers of compensation; and ( 3) threats and use of coercion.

Leadership is usually exercised through a unilateral symbolic action designed to underline a commitment to a particular goal. The intent is to signal to other parties that the leader means business and that they should follow. Compensation requires the expenditure of resources, i.e., "carrots" to those who would comply in order to compensate for losses incurred. Coercion is the most costly strategy and entails punishment for noncompliance.

From the realist perspective, any state can pursue these strategies, and all of them do at one time or another, but dominant states use them most effectively because they have the most power to implement them. Their use in negotiations, however, does not produce stable agreements. As power shifts, original agree­ments tend to break dow.n, because there is no authority over the negotiating parties to enforce them (Gilpin, 1981 ). Thus, from a realist perspective, there is little hope for stability in any international dispute settlement process.

The "process-oriented" approach rejects these gloomy conclusions. It argues

334 Beverly Crawford Stabilizing Factors

that the way states behave in their attempt to settle international disputes is constrained but not determined by the nature of the international system. Despite anarchy and power inequalities, states can pursue specific negotiating strategies that will lead to stable agreements. Because some aspects of the negotiating process leading to stable dispute settlement are common to negotia­tions at all levels (Fisher, 1985 ), international negotiators can draw upon insights from other fields of negotiation (e. g, labor disputes, congressional bargaining, or family quarrels) for advice on effective strategies to reach stable agreements.

There is controversy, however, among adherents of this approach as to whether competitive or problem-solving negotiating strategies can best enhance stable agreement (Murray, 1986). The competitive position advocates some of the strategies discussed above: punishment for noncooperation with negotiating demands in the form of blackmail and coercion, and rewards for cooperation in the form of side payments and backscratching ( Oye, 1979 ). These are time-worn negotiating tactics. But from a problem-solving perspective, these tactics can be construed as "pressure" and influence attempts that poison the negotiating atmosphere and breed a climate of mistrust which can lead to half-hearted compliance and cheating on the agreement.

One game theoretic strand of the competitive approach, advocates a tit-for­tat strategy of reciprocity in which negotiators reward cooperation and punish noncooperation (Axelrod, 1984). This strategy, however, can have an "echo effect" in which threats and punishments are met with escalating threats and punishments from the other side (Axelrod and Keohane, 1985; Fisher, 1985). The problem-solving approach focuses instead on the search for joint gains and common interests; mutually acceptable compromises attained by establishing objective criteria to evaluate a negotiating problem; and jointly searching for information to resolve uncertainty and clear up misunderstanding (Haas, 1980; Keohane, 1982; Crawford and Lenway 1985).

In the face of this disagreement over the most effective and stable dispute settlement processes, the institutional perspective argues that particular negoti­ating strategies are less important to stability than the institutional framework in which they are practiced. From this perspective, dispute settlement is most stable when states are interdependent (Keohane and Nye, 1977).

Interdependence implies both exchange relationships and reliance on com­mon resources. This limits the benefits states can gain from dispute escalation. Interdependent states want something that can only be achieved with the cooperation of others. In general, interdependent states do not resort to force to solve disputes. Nor do they defect from a negotiated agreement. Interdepend­ence thus creates incentives for self-interested states to seek new, non-conflictual or more cooperative forms of interaction. These claims are especially interesting because interdependence is a model that is widely acknowledged to represent large portions of contemporary international relations. But interdependence under anarchy can also lead to exploitation, coercion, and more intense conflict. For stability to be achieved, interdependence must be managed-that is, the terms of such relationships must be negotiated.

International institutions represent the outcome of those negotiated rela­tionships. They are composed of mutually accepted norms, rules, and proce­dures that provide a structured political environment and a set of guidelines for negotiations within a particular issue area.

Negotiatwn]ournal October 1987 335

What is important is not which strategies (competitive or problem-solving) are used in negotiations, but that all parties agree to follow certain rules and procedures in their interactions. The institutions in which these rules and procedures are embedded are commonly called international "regimes" (Krasner, 1982). International regimes intervene between the structure of power and the process of inter-governmental negotiation, in order to provide guidelines of interaction for the negotiating parties. These norms perform the same function for states as "boiler-plate" language in labor negotiations. They assure that the parties will perceive the negotiated outcome as legitimate and that every aspect of a new cooperative arrangement need not be renegotiated from scratch. They thus provide models of cooperative behavior that members can adopt in new situations. Above all, international regimes institutionalize a commitment to agree among their members, enhancing expectations for a negotiated settlement of disputes.

From this perspective, international regimes serve three important func­tions that can enhance stable dispute settlement among states. First, because they provide a forum for ongoing discussion in which negotiators know they will meet one another again, they enhance the importance of the long-term relationship (Fisher and Ury, 1981). Stable dispute settlement within interdependent rela­tionships is most likely to emerge when negotiators believe that they have a future together. They are most likely to believe in a future together when their relation­ship is institutionalized. Because they value their future interactions, the incen­tive to reach agreement in the present is high. Thus a "shadow of the future" is cast on present negotiations, or a direct connection between present negotiating behavior and anticipated future benefits of interaction is established (Axelrod, 1984).

Second, in the diagnostic phase of negotiations, 1 regimes can provide impor­tant information and technical expertise to the negotiating parties. This informa­tion can open up the possibilities for creative solutions to substantive problems. Often if information is generated by the parties themselves, it can be distorted by self-serving interests and is often thought to be a biased instrument of persua­sion. If the facts surrounding a problem are gathered by experts in a "neutral" organization, their credibility is enhanced. Agreement on the facts provides important consensual criteria for arriving at shared meanings of important terms and for evaluating a negotiating problem. Such agreement can also allow for the discovery of overlapping areas in which interests can converge or permit a negotiating formula to bridge conflicts of interest.

Third, strong international regimes can provide a set of rules and proce­dures to limit the demands of the negotiating parties in the formula phase of negotiations when such demands would threaten common interests. They thus constrain states' behavior and mediate the role of power in determining the outcomes of substantive negotiations. Regime norms, rules, and procedures protect a negotiated relationship by providing a legitimate arena for bargaining, trade-offs, and competition among negotiating parties for limited resources. They therefore provide a framework for both competitive as well as problem­solving dispute settlement processes on specific issues within which destabiliz­ing coercive tactics can be minimized.

Given the absence of legitimate enforcement mechanisms in international politics, however, international regimes are notoriously weak in the implementa-

336 Beverly Crawft»"d Stabilizing Factors

tion phase of negotiations (Donnelly, 1986). Particularly weak regimes cannot prevent a crisis; yet a crisis can be important in triggering a renegotiation of the relationship and a strengthening of the regime. Often in the wake of a crisis, regime rules and procedures are broadened to avert a future crisis in the relationship caused by inability of the parties to resolve a substantive disagree­ment. This was clearly the outcome in the Trans-Siberian Pipeline dispute.

The case begins with a discussion of the conflicting stakes and interests in the pipeline construction which led to the dispute. The analysis suggests that, although both the realist and process-oriented perspectives have some explana­tory power with regard to the substantive outcomes of negotiations, the institu­tional perspective provides the most useful guidelines for stability.

The Dispute In the late 1970s, Soviet leaders entered into negotiations with U.S. and West European firms to develop the colossal Uregoi natural gas field in Siberia, the largest gas field in the world. Negotiations centered around the construction of a great pipeline which would stretch from northern Siberia to the Soviet-Czech border. In return for participation in the project, West European countries would receive large and secure supplies of Soviet natural gas for 25 years. The $30 billion project was billed as the biggest East-West trade deal in history.

West European governments and the companies involved in negotiations were excited about the project. The oil shocks of the 1970s had made Europeans painfully aware of their dependence on OPEC for their energy requirements and drove home the lesson that reliance on the politically unstable Arab and Third World nations for vital energy needs was costly and clearly unsafe. European governments became increasingly anxious to diversify energy supplies. Both European and American construction and energy equipment firms, struggling in the midst of a severe recession, saw the Trans-Siberian pipeline project as a way to increase profits and save jobs. West European banks, still awash in petrodollars in need of recycling, were eager to provide financing. The West European govern­ments, each determined to get large export orders for its own firms, began to compete with one another to provide the most attractive export credit subsidies.

Disapprovingly, American government officials closely observed the pro­ject's unfolding. Energy had always been considered a "stragetic material" in U.S. government circles. To import vast quantities of natural gas from an adversary and assist in the development of that adversary's energy resources seemed most unwise. The U.S. Congress had placed strict limits on financing the sale of U. S. energy equipment to the Soviet Union in 1974. And in 1978, President Jimmy Carter restricted altogether the export of energy equipment and technology to the Soviet Union. By the end of the decade, the demise of detente, heightened public awareness of Soviet human rights violations, and the Soviet invasion of Afghanistan had prompted the U.S. to pursue increasingly tighter trade restric­tions on the Soviets and to enlist the European allies in the effort. The proposed Trans-Siberian pipeline deal threatened to undermine this policy. The United States clearly wanted its construction halted.

From the outset, however, European officials displayed dismay and irritation over U.S. concerns. They believed they were breaking no previously negotiated agreements with the U.S. on East-West trade, and their commercial interests seemed well-served by forging ahead with the pipeline plans. The United States,

Negotiation journal October 1987 337

on the other hand, believed that NATO's security interests would actually be harmed by the pipeline construction. Neither side was in the mood for compro­mise; without a firm commitment to reach an agreement from all parties, a full-fledged dispute over the issue seemed inevitable.

The first move to escalate the conflict was the unilateral imposition of U.S. sanctions. On December 13, 1981, President Reagan reacted to the declaration of martial law in Poland by imposing sanctions on American oil and gas technol­ogy destined for use in the now controversial project. The U.S. had hoped that the Europeans would follow its lead and impose their own sanctions on the export of energy equipment. But they refused. The U.S. responded by extending the sanctions to American firms overseas and to European firms who licensed their energy technology from American companies.

Angry European leaders refused to comply, arguing that the sanction exten­sion violated both international and U.S.law They urged firms exporting pipeline equipment to ignore U.S. sanctions and honor their contracts with the Soviet Union. Tensions mounted within the alliance, and Alexander Haig used the gathering crisis as the occasion to resign his post as Secretary of State. Neverthe­less, President Reagan did not waver from his position.

As the crisis developed, it revealed a deeper conflict between the U.S. and Europe over economic relations with the Soviet bloc. Three separate negotiating issues emerged in the course of the dispute that tested the stability of previous NATO agreements on East-West trade. They were technology transfer, energy dependence, and subsidized export credits. The following discussion traces the interplay between U.S. bargaining strategies and European resistance in the negotiating process, and the role of international regimes in regulating dispute settlement in each of these issues.

Disagreement over Restrictions on the Sale of Energy Technology Despite U.S. disapproval, cooperation in the development of Soviet energy resources had been an important component of European commercial relations with the Soviet Union since the early 1970s. The West German steel industry had supplied the Soviets with large diameter pipe, and the energy equipment came from France, Italy and Britain. These countries had high commercial stakes in the Trans-Siberian pipeline project, but they were dependent on U.S. imports to complete their contracts with the Soviets.

U.S. General Electric had a monopoly on the gas turbine technology, and had licensed the technology to European firms. U.S. officials believed that this tech­nological monopoly would be an important bargaining chip with the Europeans in their effort to halt the pipeline construction. They decided, however, to hold this bargaining chip in reserve and pursue negotiations within the international regime.

The forum chosen by U.S. officials to negotiate restricting energy technol­ogy exports to the Soviets was the Consultative Committee-Coordinating Group (CoCom), the NATO export control regime.z All members ofCoCom, including the United States, had agreed to restrict import to the Soviet Union those goods and technologies which had what they termed "strategic significance." That meant that only those goods would be embargoed which enhanced Soviet military power. U.S. officials began negotiations within CoCom by trying to convince its allies that energy technology should be restricted because of its

US Beverly Crawford Stabilizing Factors

value to the Soviet military. If Europeans could be persuaded to place energy technology on the list of restricted items with "strategic significance," the pipeline construction could be halted.

U.S. negotiators argued that Western energy technology could increase the productivity of the Soviet energy sector, not only releasing resources for military use but also allowing the Soviets to enter major oil and gas fields throughout the World and thus exert their political influence, particularly in the Middle East. Thus, according to the Americans, energy technology had "strategic significance."

Europeans, on the other hand, had a different criterion for strategic signifi­cance with regard to technology. While the U.S. argued that any item which contributed to Soviet industrial power should be considered strategic, West Europeans wished to restrict the use of the term "strategic item" to those goods with direct military significance. Only strategic items defined in this way should be embargoed, since a broader definition would be overly restrictive and diffi­cult to enforce. Energy technology, they argued, had no direct military signifi­cance, and thus should not be an item on the CoCom agenda.

Within the previously negotiated CoCom regime, the European position was clearly the legitimate one. The criterion for strategic significance of a technology had evolved through a process of consensual definition throughout the 1950s and 1960s. Members of the regime had arrived at a shared meaning of the key terms used in negotiations on specific technology controls. Thus, U.S. demands for energy technology restrictions were not viewed as legitimate in light of previously negotiated agreements. The regime itself acted as a buffer against initial U.S. demands to halt the pipeline construction. But as I will note below; because U.S. negotiators could not "win'' through persuasion within the regime, they escalated the dispute through the use of their one bargaining chip: their monopoly over energy technology and Europe's dependence on U. S. equipment for completion of the pipeline.

Disagreement over Western Europe's Energy Dependence No regime existed, however, to negotiate the regulation of West European energy imports from the Soviet Union. And here the U.S. arguments were the most persistent. U.S. officials argued that with the pipeline's construction, West­ern Europe would become dangerously dependent upon the adversary's energy supply. Reagan administration officials argued that jobs and profits in Europe generated by the pipeline would emanate from Moscow; allowing the Soviets an avenue for political influence in European countries. They also warned of Europe's dangerous vulnerability to the interruption of Soviet natural gas supplies.

West Europeans countered this latter warning with the claim that they were not dependent upon the Soviet Union for energy supplies, particularly Soviet natural gas. Most industries, they said, could switch from gas to oil in a very short time if there were a supply cutoff. Furthermore, their energy plans included a "safety net" in which Norway and the Netherlands would become alternative energy suppliers, if Soviet supplies were curtailed.

Formal negotiations over the energy dependency issue were conducted at the Ottawa Summit in 1981. At the Summit's conclusion, however, no commit­ment to agree on the vulnerability problem was reached, and U.S. negotiators went home to consider their next move. Hardliners in the Reagan administration believed that an embargo on pipeline equipment was the only way to pressure the

Negotiation journal October 1987 339

Europeans not to sign the final contracts with the Soviets. Others suggested compensation: the U.S. would provide alternatives to Soviet natural gas supplies by increasing its coal supply to members of the European Community.

The Europeans, however, were uniformly unreceptive to both the American warnings of an embargo and offers of compensation. With the negotiation of the final pipeline contracts between the Soviet Union and European firms in late 1981, the divergence of the American and European positions on the pipeline appeared unambiguous and irreconcilable.

Note here that U.S.-European discussions on energy vulnerability took place outside any international regime. Negotiations at the Ottawa Summit were ad hoc and not subject to any specific rules. Thus there were no norms, rules or procedures to limit the demands or limit resistance to demands. NATO countries had not constructed a regime to regulate Western energy imports from the Soviet Union. Unlike the issue of technology exports, no common criteria for energy dependence had been hammered out in previous negotiations. Thus, the U.S. believed that its views on energy dependence were the only legitimate ones, and used them to justify the embargo extension to European firms. And Europeans used their opposing beliefs to justify their resistance to U.S. negotiating strategies.

Disagreement over Credit Subsidies The third issue raised by the pipeline construction was that of subsidized financing of the sale of technology and equipment. Beginning in the 1960s, West European governments competed heavily with one another to provide the most attractive credit terms in their trade with the Soviet Union. Each scrambled to outdo the others to increase exports with credit expansion, low-interest loans, and loan guarantees. It was not long before the United States, in the face of mounting East European and Soviet debt, began to argue against the subsidies.

U.S. officials demanded that all NATO countries cut credit lines to the Soviet bloc. They argued that overextended European banks would become channels of Soviet influence with their own governments. They claimed that it made no economic sense to subsidize the Soviet economy with low-interest loans and endless credit when such a high proportion of its resources were devoted to military spending. They feared that the East would have a bargaining advantage in the debtor-creditor relationship. The pipeline provided a good occasion to publicize these arguments and a perfect focus for changes the U.S. wanted in overall East-West trade credit arrangements. (Interest rates for the sale of pipe­line equipment had been set at 7.8% by the French and 8% by Italy and the Federal Republic of Germany, while the prevailing market rate was 11%.)

But these interest rates were within the guidelines of the export credit coordination regime known as the "Consensus." In informal discussions with U.S. officials, Europeans stated that they would be willing to renegotiate these regime guidelines on the basis of what they considered to be sound business practice. On that basis, they agreed to raise interest rates to the Soviets (as well as to other borrowers), but they were unwilling to cut lending simply for political reasons.

Because the U.S. wanted credit lines cut, however, Reagan administration officials raised the issue again at the Versailles Summit of]une, 1982. Here, the U.S. extracted an agreement from France to tighten its credit restrictions on its Soviet trade in exchange for more U.S. intervention in international financial

340 Beverly Crawford Stabilizing Factors

markets to stabilize exchange rates. Summit negotiators later revealed, however, that the United States never believed that international monetary stability could be achieved through financial market intervention, and that France was not prepared to back out of important credit negotiations with the Soviet Union. Such a shaky agreement would clearly be short -lived. In the wake of the meetings, President Mitterrand stated that France would not support economic warfare against the Soviet Union; he later revealed that France had concluded a secret bilateral agreement with the USSR on credit. U.S. officials were now incensed. Shortly after Mitterand's revelation, the Reagan administration extended the pipeline sanctions to cover products sold by European subsidiaries and licensees of U.S. firms.

As with CoCom, the United States was not satisfied with the existing regime negotiations as they related to the Trans-Siberian pipeline construction. U.S. officials thus acted outside of the regime in ad hoc negotiations at the Versailles Summit to exert pressure. Clearly the previously negotiated agreements within existing institutions were not strong enough to avert the crisis. Ironically, how­ever, the dispute itself threatened the future of the relationship enough that the parties began to take measures to strengthen the regime in order to avert future crises of this kind.

The Crisis and a Renewed Search for Agreement One by one, European governments instructed their firms not to comply with the sanction extension. In response, the United States government began to penalize those firms. Secretary of State Alexander Haig resigned in protest. All observers agreed that a crisis was brewing in NATO and that the Soviets were the main beneficiaries. Not only were the Soviets getting their pipeline, but also western unity was weakened by the deepening dispute. Everyone concerned began to perceive that there were worse alternatives to a negotiated solution.

By November 13, 1982, negotiations over the lifting of sanctions were completed, and a tentative formula was found to settle the dispute. Europeans had refused to make any concessions to the U.S. which would affect the pipeline construction, but they did agree to renegotiate the terms of their relationship within the NATO East-West trade regimes. This would begin with a number of formal studies conducted within those regimes on various aspects of East-West trade. With this agreement to "study the issues further," the sanctions which had been imposed on European firms were formally lifted.

The negotiated settlement varied along three dimensions. With regard to technology transfer, CoCom members renewed their commitment to existing norms of restricting only military strategic technology. Although the regime was not strong enough to avert the crisis, it proved resilient in the face of it. And its continued strength has been important in providing and revising guidelines for controlling the sale of Western technology to the Soviet Union.

In the other two issue areas, the settlement involved a set of further negotiations to strengthen the relationship. Negotiations on energy dependence were conducted within the framework of a broader international regime, the International Energy Agency (lEA). In order to develop a better knowledge base for these negotiations, the lEA conducted studies on European natural gas supply and demand. These studies recommended that no single European country depend on one gas supplier for more than 30% of its annual gas needs. The

Negotiation journal October 1987 341

disputed pipeline would supply almost 30% of Western Europe's natural gas needs, and its protection from further dispute was assured. The lEA study evoked a "pledge" from lEA members to avoid "over-dependence" on one natural gas supplier. Europeans, however, refused to limit themselves to a 30% quota from any country.

The lEA studies placed the debate on a more factual level than it had been before the pipeline dispute, and moved the parties toward a more consensual definition of the criteria for dependence. As of this writing, however, the negoti­ating parties have not reached final agreement on a criteria for "dependence." Thus, it is likely that future disagreements over energy dependence may arise if the Europeans participate in additional energy projects with the Soviet Union.

With regard to credits, a formula was found within the regime to bridge conflicts of interests. While the United States wanted to use the regulation of official export credits for political leverage in relations with the Soviet Union, Europeans wanted to reduce export credit competition among themselves and ensure that interest rate levels reflected sound business practices. The solution to the conflict was to raise interest rates on official loans to the Soviet Union, bringing them more in line with market rates. A conflict of goals persisted, but the U.S. now recognized that its goals could be partially met through the formula of raising interest rates on official credits to nearly market rates, thus limiting "subsidies."

Finally, in all three issue areas, pressure tactics were reduced as participants searched for a mutually acceptable joint solution. Both U.S. and European negotiators recognized that the use of pressure on both sides had escalated the conflict to the point where the future of the relationship had been threatened.

Seeking dispute settlement, the parties moved to a set of problem-solving strategies in the search for common definitions, common criteria for evaluation of the issues, and common interests, while still maintaining a forum within the regimes for competition, bargaining and tradeoffs. Implicit in the final agreement was the view that future disputes should be settled by agreement on the facts about dependence and strategic technology transfer, or compromise when no agreement on the facts was possible. These procedures now seemed preferable to power struggles among the participants.

Conclusions and Recommendations From the realist perspective, U.S. behavior can best be explained by its powerful position under international anarchy. Throughout the crisis, U.S. officials pur­sued a series of escalating strategies, not to reach compromise through the negotiating process, but to secure compliance with its own goals. To exert "leadership," the United States began with a unilateral embargo on energy equipment bound for the Soviet Union, in the hope that European leaders would follow with an embargo of their own. Substantive differences, however, were too great to be overcome with persuasion of this sort.

The U.S. then offered to compensate for the loss of the pipeline by increasing coal exports to Europe. This was not, however, an offer of direct compensation for turning down the lucrative pipeline contracts, but rather a more general suggestion for meeting Europe's increased energy needs. It thus did not address the fundamental interests of pipe and equipment firms. The timing of this strategy, too, was inappropriate. Contractual negotiations with the Russians were

Beverly Crawford Stabilizing Factors

well underway It would have been necessary to offer compensation much earlier in order to have reduced European incentives to enter into contractual negotia­tions in the first place. Finally, the U.S. used coercion when it threatened to withdraw needed resources if the Europeans did not comply with U.S. demands. The U.S. penalized European firms that did not go along with the sanction extension, but Europeans still did not change their preferences.

The realist perspective can explain the pursuit of these bargaining strate­gies, the escalating dispute, and why regimes were not strong enough to avert the crisis. It cannot, however, explain why these strategies were ineffective or why the outcome resulted in a new set of negotiations to strengthen the relation­ship. The U.S. was clearly the most powerful actor, but its strategies failed to stop the pipeline. Why?

A process-oriented approach offers· a more complete explariation. As a result of European recalcitrance, the U.S. negotiators recognized that the con­flict threatened mutual interests and the future of the relationship. Furthermore, they were not achieving the desired payoffs from the strategies they employed. Both the U.S. and Europe shared a mutual interest in alliance cohesion. Recogni­tion of mutual interests suggested limited gains from unregulated conflict. The failure of competitive strategies led to the pursuit of problem-solving strategies.

But this is still not the whole story Certainly a problem-solving process was emphasized after the crisis, but competitive processes still persisted. How did negotiators achieve stability?

The institutional perspective can be helpful in addressing this question, and generating more general recommendations for stability in international negotia­tions. First, international regimes muted the effects of U.S. pressure tactics. U.S. demands could be ignored because they could not be legitimately negotiated within the regimes that provided a framework for NATO East-West trade negotiations.

In particular, regime norms were biased against coercive behavior in negoti­ations. This is clearly because coercion is perceived as an ineffective strategy within an ongoing relationship. It threatens the relationship's overall tone and reduces the potential for agreement in specific issue areas. Coerced parties may learn that they can do without withheld resources, or they may search for alternative ways to meet their needs. Incentives to defect and cheat are high, thus destabilizing agreements.

The process of dispute resolution on specific issues tends to structure the parties' attitudes toward one another (Walton and McKersie, 1965 ). Coercion in negotiations can sour relationships. As international relations become increas­ingly interdependent, in effect forcing states to enter ongoing relationships, negotiators must learn lo reduce their reliance on coercive negotiating tactics. Coercion may be useful in achieving one's goals in a one-time negotiating encounter, but its practice does not make for stable agreements. The conduct of negotiations within international regimes can help reduce the use of coercive tactics.

Secondly, in this case international regimes also served as a set of organiza­tions to generate information and provide a negotiating framework for dispute settlement. At the heart of European resistance to U.S. pressure were conflicting perceptions of the strategic significance of energy technology exports, energy dependence, and the political role of official export credits. These conflicts were

Negotiation journal October 1987 343

resolved through the generation of information by the regimes that reconciled competing views and provided formulas to bridge clear conflicts of interest.

Third, regimes, as institutionalized fora for ongoing negotiations, reminded negotiators that they had a future together. A "shadow of the future" on present negotiations increases the commitment to agree on substantive issues rather than escalate the dispute in order to "win." The commitment to agree is perhaps the most important factor in reaching stable agreements (Zartman, 1985). Negotiators recognized that they could enhance that commitment when they moved the discussion of energy dependence from a series of ad hoc meetings to ongoing negotiation in the International Energy Agency.

In sum, regimes enhance the stability of international negotiations by pro­viding a set of norms, rules and procedures that:

• reduce the role of coercion and pressure in the search for agreement; • generate information and foster shared meanings for joint diagnosis of a

problem; and • facilitate the commitment to agree. This analysis suggests that the institutional approach to stable dispute settlement may have important implications for other areas of international negotiation, i.e., the Middle East peace process, and arms control negotiations. Future analysis of international dispute settlement should take into account not only the interna­tional power structure and strategies used in the negotiating process, but also the role that international regimes have played or could play in the future to facilitate stable, robust agreements.

NOTES

The author acknowledges the assistance of Martin Staniland and financial support from the PEW Initiative in Diplomatic Training in the preparation of this article.

1. I am following William Zartman and Maureen R. Berman's three-fold distinction of negotiating phases, each requiring somewhat different behaviors on the part of negotiators. In the diagnostic phase, negotiators should use and generate information to evaluate a negotiating problem. In the formula phase, they should engage in bargaining and tradeoffs to reach a consensual problem definition and joint solution. In the implementation phase, they should focus on overcoming obstacles to successfully carrying out the joint solution. See Zartman and Berman, 1982.

2. CoCom includes all NATO countries excluding Iceland and including japan.

REFERENCES

Axelrod, R. ( 1984 ). Tbe evolution of cooperation. New York: Basic Books. ---------- and Keohane, R. 0. ( 1985). ''Achieving cooperation under anarchy: Strategies and insti­

tutions." In Cooperation under anarchy, ed. K.A. Oye, Princeton; Princeton University Press. Crawford, B. and Lenway, S. (1985). "Decision modes and regime change." World Politics 37:375-402. Donnelly,). ( 1986). "International human rights: A regime analysis." International Organization

40:599-642. Fisher, R. "Beyond YES." (1985). Negotiation]ournal1:67-77. ----------and Brown, S. (1985). "Building a U.S.-Soviet working relationship." Negotiation journal

1:307-315. ---------- and Ury, W. L. ( 1981 ). Getting to YES. Boston: Houghton Mi1flin. Gilpin, R. ( 1981 ). War and change in world politics. Cambridge: Cambridge University Press.

Beverly Crawjbrd Stabilizing Factors

Haas, Ernst B. ( 1980 ). "Why collaborate? Issue linkage and international regimes." World Politics 32:357-405.

Keohane, R. 0. ( 1982). "The demand for international regimes." International Organization 36:325-55.

Keohane, R. and Nye,J. (1977). Power and interdependence. Boston: Little, Brown. Krasner, S. D. ( 1982) "Structural causes and regime consequences: Regimes as intervening variables."

International Organization 36:185-86. ----------. ( 1985) Strnctural conflict. Berkeley: University of California Press. Murray, J. S. ( 1986) "Understanding competing theories of negotiation." Negotiation journal

2:179-86. Oye, K. A. ( 1979 ). "The domain of choice: international constraints and the Carter administration

foreign policy." In Eagle entangled: U.S. foreign policy in a complex world, eds. K. A. Oye, D. Rothchild, and R.]. Lieber. New York: Longman.

Walton, R. E. and McKersie, R. B. ( 1965 ). A behavioral theory of labor negotiations. New York: McGraw-Hill.

Waltz, K. ( 1979) Theory of international politics. Reading, Mass.: Addison-Wesley. Zartman, I.W. (1985). "Negotiating from asymmetry; The North-South stalemate." Negotiation

]ourna/1:121-137. ---------- and Bennan M. R. ( 1982). 7be practical negotiator. New Haven: Yale University Press.

Negotiation journal October 1987 345