Guns or Money? Defense Cooperation and Bilateral Lending as Coevolving Networks

How are defense cooperation and economic cooperation related? To answer this question, we analyze the coevolution of defense cooperation agreements (DCAs) and government-to-government loans. We argue that governments pursue two distinct sets of interests. At the bilateral level, governments use issue linkages and side payments to encourage spillover from defense cooperation to economic cooperation, 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 coordinate 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, we develop a longitudinal model of multiplex network coevolution. Overall, the results show that while economic and defense cooperation often reinforce one another, they sometimes conflict in unexpected ways.