Borrowing Trouble: Sovereign Credit, Military Regimes, and Conflict

Changes in relative military power in the international system are seen as an impediment to peace. This article will focus on one particular avenue for states to increase their relative military power: sovereign borrowing. States’ ability to borrow inexpensive credit can undermine credible commitments in international relations, but only for those states that habitually use credit for military purposes. I argue that military regimes are more likely to use fiscal resources such as sovereign credit toward military spending, which leads to sudden increases in military power. As a result, adversarial states have incentives to use preventive action against military regimes before these regimes use credit for military purposes. To test this argument, I examine target behavior in militarized disputes as a function of expected borrowing costs credit and regime type. The empirical analysis demonstrates that military regimes, expected to have improved borrowing costs, are more likely to be the target of militarized disputes.