SYSTEM STRUCTURE AND STATE STRATEGY: ADDING HEDGING TO THE MENU

BROCK F. TESSMAN1 University of Georgia This paper presents strategic hedging as a way to conceptualize much of the strategic behavior currently employed by second-tier states like China Russia, and France. Hedging is an alternative to existing strategies like balancing, bandwagoning, and buckpassing. Like those existing strategies, hedging is driven by structural incentives associated with the current polarity of the international system, and power concentration trends within it. Hedging will be most prevalent in international systems that are defined by a leading state that, while in a position of power preponderance, is also in the process of relative decline. Strategic hedging behavior is effective for second-tier states in such deconcentrating unipolar systems because it avoids outright confrontation with the system leader in the short term, while still increasing the hedging states ability to survive such a direct military confrontation should it occur in the long run. Strategic hedging behavior can also be used to insure the hedging state against security threats that might result from the loss of public goods or subsidies that are currently being provided by the system leader. In this article, I define strategic hedging behavior, present a mechanism for identifying empirical evidence of strategic hedging, and apply that mechanism to three case studies: Chinese energy security strategy, the Sino-Russian strategic partnership, and French opposition to the 2003 U.S. invasion of Iraq.

Brock F. Tessman is an Assistant Professor of International Affairs and Associate Director of the Center for the Study of Global Issues (Globis) at the University of Georgia. The author would like to thank Patricia Sullivan, Darius Ornston, Markus Crepaz, T.V. Paul, William Wohlforth, Robert Pape and other members of the Soft Balancing and International Relations panel at the 2010 Meeting of the International Studies Association in New Orleans (February 17-20, 2010) for their valuable comments on earlier versions of this paper. The author is also grateful for the research assistance provided by Holger Meyer and Leah Carmichael.

Existing concepts like balancing, bandwagoning, and buckpassing do not account for much of the strategic behavior currently employed by second-tier states like China Russia, and France. Chinas global energy security strategy, the emergence of the Shanghai Cooperation Organization (SCO), and French opposition to the 2003 U.S.-led invasion of Iraq exemplify behavior that is simultaneously less confrontational than traditional balancing, less cooperative than bandwagoning, and more proactive than buckpassing. This paper presents the idea of strategic hedging as a way to conceptualize this general type of behavior, and develops a basic theory of state behavior that uses current system polarity and trends in system concentration in order to predict the relative prevalence of balancing, bandwagoning, buckpassing, and hedging strategies in four different system types. I argue that hedging will be most prevalent in systems that are unipolar and in the process of power deconcentration. These systems are defined by a leading state that enjoys power preponderance, but is clearly in relative decline. For second-tier states, strategic hedging behavior is effective because it avoids outright confrontation with the system leader in the short term, while still increasing the hedging states ability to survive such a direct military confrontation should it occur in the long run. Strategic hedging behavior can also be used to insure the hedging state against security threats that might result from the loss of public goods or subsidies that are currently being provided by the system leader. This paper has four sections. I begin by establishing the theoretical foundation of my argument: structural considerations are a primary influence on state strategic choice. Although various factors may condition (and in some cases alter) the relationship between system structure and state strategy, second-tier states will be drawn toward

certain core strategies based on incentive structures that are derived from two factors related to the distribution of material capabilities in the international system: current polarity and expectations regarding power concentration. Given this basic theory of state behavior, I highlight the incentive structures that characterize four different system types: concentrating multipolar, deconcentrating multipolar, concentrating unipolar, and deconcentrating unipolar. Balancing and buckpassing strategies are identified as core strategies for second-tier states in concentrating and deconcentrating multipolar systems, respectively, but are shown to be ineffective under conditions of unipolarity. I argue that bandwagoning is the core strategy for second-tier states in concentrating unipolar systems in which the leading state is increasingly dominant, but that it is much less attractive in deconcentrating unipolar systems in which there are far fewer incentives for second-tier states to seek profit or security from bandwagoning with a declining system leader. Consequently, none of the major existing approaches to state strategy balancing, buckpassing, or bandwagoning are likely to be widespread in systems with a preponderant but declining system leader. I use the second section of this paper to introduce strategic hedging as the core strategy for second-tier states in such deconcentrating unipolar systems. I sketch out the specific structural incentives that lead to different types of strategic hedging, and then provide an identification mechanism that can be used to distinguish hedging from other types of strategic behavior. In the third section, I apply the identification mechanism to three case studies: Chinese energy security strategy, the strategic relationship between Russia and China, and French opposition to the 2003 U.S. invasion of Iraq. While I find the first two to be examples of strategic hedging behavior, I classify the third as behavior that is better labeled as either

soft balancing or normal diplomatic friction. A brief concluding section offers a basic roadmap for further development of the strategic hedging approach, along with some policy prescriptions for leading states that are seeking to counter a hedging strategy.

SYSTEM STRUCTURE AND STRATEGIC CHOICE

For major powers, basic strategic incentives can be derived from structural considerations related to the current and projected distribution of power in the international system. Regardless of system type, states are motivated by the search for security within the context of structural anarchy. Security-maximizing behavior will help states minimize immediate threats and maximize immediate opportunities, but it will also help them prepare for threats and opportunities that they believe are likely to emerge in the future. Immediate threats and opportunities will depend largely on factors related to current system polarity, while perceptions about future threats and opportunities will be driven by expectations regarding trends in power concentration and, eventually, the transformation of the system from one type of polarity to another. Although this paper outlines a rather direct relationship between system structure and state strategy, it is important to note that specific strategic choices will not always align with the core strategy associated with each system type. Ceteris paribus, structural incentives related to the current and projected global distribution of power will draw second-tier states toward a core strategy for that system type. All other things are not always equal, however, and it is important to note that specific strategic choices will be influenced considerably by conditioning factors that are not directly related to polarity or

power concentration: geography, ideology, nuclear weapons, state capacity, and the rise of threatening powers may pull a second-tier state away from the relevant core strategy and push it toward a different option that fits its particular circumstances.2 For example, second-tier states will not always pursue the core strategy of hedging in a deconcentrating unipolar system. If second-tier state B is in close geographic proximity to rapidly rising, threatening second-tier state C, it may choose to bandwagon with system leader A, balance against rising power C, and entirely avoid any hedging strategies.3 Likewise, states may sometimes employ hedging strategies in systems that are not deconcentrating or unipolar. Conditioning factors may exert more influence on state strategic choice in some system types than in others.4 The extent to which strategic choice is affected by conditioning factors will determine the relative strength of the core strategy that is identified for each system type. For instance, the core strategy for concentrating multipolar systems is balancing, but it is a relatively weak core strategy because specific strategic choices will be highly influenced by conditioning factors such as geographic proximity, ideological similarity, and economic interdependence.5 Strong ideological
2

The role of conditioning factors may be similar to the domestic and individual-level variables that neoclassical realists use as complements to power-based explanations of foreign policy. For more on neoclassical realism as a theory of foreign policy, see Gideon Rose, Neoclassical Realism and Theories of Foreign Policy, World Politics 51, no. 1 (1998): 144-172; and Steven E. Lobell, Norrinn M. Ripsman, and Jeffrey W. Taliaferro, Neoclassical Realism, the State, and Foreign Policy (New York: Cambridge University Press, 2009). 3 This might be even more likely if the second-tier state (B) considers the current system leader (A) to be relatively benign in contrast to threatening, rising power (C). This hypothetical scenario might be particularly relevant to the actual strategic choices made by second-tier states like Japan, which may very well perceive greater threat from a rising China than from the United States. 4 Of course, some conditioning factors may serve to reinforce the core strategy. It is also important to note that multiple conditioning factors are likely to influence strategic choice simultaneously in any given situation. If those factors act as countervailing vectors, they will offset each other and the state will continue to find the core strategy to be most appealing. 5 Other conditioning factors may also come into play: economic interdependence with a rising system leader in a concentrating multipolar system may lead a second-tier state to favor bandwagoning over balancing. In a deconcentrating multipolar system, the same factor may push states to engage in a certain type of strategic hedging rather than buckpassing. Specific interpretations will depend on assumptions about the relationship between interdependence and war. See, Dale C. Copeland, "Economic

connections between the second-tier state and the rising system leader, may, for instance, lead the second-tier state to choose a bandwagoning strategy rather than one that involves balancing against the rising leader. Unipolar systems, both concentrating and deconcentrating, are defined by the power preponderance of the system leader. This preponderance restricts the range of strategic choices available to second-tier states and leads to stronger core strategies that are hard for second-tier states to sidestep, even when accounting for various conditioning factors. Although a thorough investigation of the interaction between core strategies and conditioning factors is one step beyond the focus of this particular paper, it is vital to note that the interaction is an important one, and that it can play a significant role in a particular strategic choice for a specific actor at a specific point in time. The relationship between current polarity, power concentration trends, conditionings factors, and state strategy is depicted in Figure 1.

[INSERT FIGURE 1 ABOUT HERE]

Current Polarity and Strategic Options System polarity profoundly influences the immediate threats and opportunities present for major powers.6 For second-tier states, unipolar and multipolar systems produce particularly disparate strategic environments. Multipolar systems, defined
Interdependence and War: A Theory of Trade Expectations," International Security 20, no.4 (Spring 1996): 5-41. 6 See, for example, Kenneth N. Waltz, Theory of International Politics (New York, Random House, 1979); Ted Hopf, "Polarity, the Offense Defense Balance, and War," The American Political Science Review 85, no. 2 (1991): 475-493; Benjamin A. Most and Harvey Starr, "Polarity, Preponderance and Power Parity in the Generation of International Conflict," International Interactions 13, no. 3 (1987): 225-262; and William R. Thompson, "Polarity, the Long Cycle, and Global Power Warfare," Journal of Conflict Resolution 30, no. 4 (1986): 587-615.

literally, contain more than one significant concentration of power.7 From a structural perspective, the primary immediate threat for states in such a system is the emergence of another state or coalition that may be able to achieve power preponderance. Traditional balance of power theory holds that power imbalances are inherently threatening to weaker states, and that those states will react by developing defensive alliances (external balancing) or engaging in intense arms build-ups (internal balancing) in order to counter the superior power of the system leader.8 Variations of traditional balance of power theory reject the idea that stronger powers are inherently threatening to weaker states, and argue that specific factors like nuclear deterrence, geography, economic policy, and regime type determine the level of threat posed by rising powers and the resulting balancing response by other states. The recent absence of balancing against the United States has been attributed to some of these additional considerations, particularly the acquisition of nuclear weapons by most major powers and the non-threatening nature of U.S. hegemony. 9

For the purposes of this comparative analysis, I allow the conceptual umbrella of multipolarity to cover bipolar systems as well as more traditional multipolar systems with three or more concentrations of power. 8 The tendency toward balancing behavior is highlighted as a core element of the structural realist approach to international relations. See Waltz, Theory of International Politics. Waltz went on to predict that, in the aftermath of the Cold War, new balancers would emerge to challenge the United States. See, Kenneth N. Waltz, Structural Realism After the Cold War, International Security 25, no. 1 (Summer 2000): 5-41. The distinction between internal and external balancing is originally captured by Waltz (1979), but it is important to note that Waltz saw balancing as an automatic international outcome, not a conscious, manually driven foreign policy strategy. For differences between manual and automatic balancing see, Inis Claude, Power and International Relations (New York: Random House, 1962). 9 The security-enhancing effects of nuclear deterrence are outlined well by Kenneth Waltz. See, Kenneth N. Waltz, The Spread of Nuclear Weapons: More May be Better (London: International Institute for Strategic Studies, 1981). Stephen Walt expands upon the logic of balancing, but argues that states are unlikely to balance against capability concentration if that concentration is not threatening due to geographical, ideational, or other circumstances. See, Stephen M. Walt, "Alliance Formation and the Balance of World Power," International Security 9, no. 4 (Spring 1985): 3-43; and Stephen M. Walt, The Origins of Alliances (Ithaca: Cornell University Press, 1987). For more recent application to U.S. foreign policy, see Alliances, Threats, and US Grand Strategy: A Reply to Kaufmann and Labs." Security Studies 1, no. 3 (1992): 448482; and "Keeping the World Off Balance: Self-Restraint in American Foreign Policy," in America Unrivaled: The Future of the Balance of Power, ed., G. John Ikenberry (Ithaca: Cornell University Press, 2002) 121154.

Thus, while there are incentives for some states to engage in outright balancing in reaction to the threat posed by a more powerful state, there may also be incentives for countries to free ride on the balancing efforts of others by employing a buckpassing strategy. Buckpassing may be most attractive to second-tier states in multipolar systems with a large number of other potential balancers, if the stronger power is geographically distant, and if there is thought to be a defensive advantage in military conflicts.10 Moreover, while a rising power may threaten some actors in a multipolar system, it may also serve as a short-term opportunity for others. In fact, there are strong incentives for states to bandwagon with the rising power under conditions of multipolarity. There may be a chance to share in the spoils of war by actively joining an increasingly powerful revisionist state in the early or late stages of conflict, or even through passive support via diplomatic alignment.11 In other words, multipolarity not only generates structural incentives for balancing and buckpassing, it also provides incentives for some states to bandwagon with strong, growing powers because of opportunities for profit. If actors in a multipolar system are likely to be threatened by the emergence of a more powerful rival, actors in a unipolar system must deal with a status quo in which a

10

See, Thomas J. Christensen and Jack Snyder. "Chain Gangs and Passed Bucks: Predicting Alliance Patterns in Multipolarity." International Organization 44, no. 2 (2009): 137-168. Christensen and Snyder argue that balance of power theory does not account for the full range of foreign policy strategies available to states. They explain the prevalence of chain-ganging behavior prior to World War One, and buckpassing strategies in the run up to World War Two. The latter is more attractive when leaders perceive a defensive military advantage. Jennifer Lind applies the theory to the case of Japanese foreign policy during the Cold War. See, Jennifer M. Lind, "Pacifism Or Passing the Buck? Testing Theories of Japanese Security Policy." International Security 29, no. 1 (Summer 2004): 92-121. Buckpassing can also be predatory in a way that closely resembles bandwagoning. In this case, states align with the stronger side, but avoid contributing to the alliance while still seeking to share in the spoils of victory. See, Randall L. Schweller, "Bandwagoning for Profit: Bringing the Revisionist State Back In," International Security 19, no. 1 (Summer 1994): 72107. States may also seek to buckpass by hiding from potential threats by removing themselves from the political fray. See, Paul Schroeder "Historical Reality Vs. Neo-Realist Theory." International Security 19, no. 1 (Summer1994): 108-148. 11 Randall Schweller labels this phenomenon as predatory buckpassing, and attributes a jackal-like disposition to states that are apt to engage in it. See, Schweller, Bandwagoning for Profit, p. 103.

single state has already achieved unquestioned dominance. In such a system, the primary immediate threat for all second-tier states is the possibility of a direct confrontation with the vastly superior leading power. There are almost no incentives for second-tier states to engage in either internal or external hard balancing, though the former may be slightly more likely than the latter: while both strategies run the risk of provoking the leading state, external balancing will be exceedingly unlikely because it requires coordination among several states, and because it will likely entail very high costs and have very little chance to succeed.12 As already mentioned, the empirical record of the current unipolar era offers little or no evidence of traditional balancing against the United States.13 Given the low likelihood of balancing behavior, buckpassing strategies are also essentially irrelevant, as there are not many incentives to free ride if there are few, if any balancing efforts to free ride upon.14 As a result, second-tier states in unipolar systems are only able to cope with the immediate threat of confrontation with the dominant power by employing a strategy that is based on conflict avoidance. Of all the major strategies,
12

William Wohlforth and Stephen Brooks provide a structural understanding of balancing disincentives, focusing on the role of power preponderance (both in absolute terms and in terms of comprehensiveness), as well as coordination problems, the predominance of local threats over global threats, geographic distance, and potential aid from the system leader as factors that discourage balancing behavior. See, William C. Wohlforth, "The Stability of a Unipolar World," International Security 24, no. 1 (1999): 5-41; William C. Wohlforth "US Strategy in a Unipolar World," in America Unrivaled: The Future of the Balance of Power (2002): 98118; and Stephen M. Brooks and William C. Wohlforth, World Out of Balance: International Relations and the Challenge of American Primacy (Princeton: Princeton University Press, 2008). 13 The absence of empirical support for balancing propositions is highlighted by, among others, Richard Ned Lebow, The Long Peace, the End of the Cold War, and the Failure of Realism, International Organization 48, no. 2 (Spring 1994): 249-277; John Vasquez, The Realist Paradigm and Degenerative Versus Progressive Research Programs: An Appraisal of Neotraditional Research in Waltzs Balancing Proposition, American Political Science Review 91, no. 4 (Winter 1997): 899-912; and T.V. Paul, The Enduring Axioms of Balance of Power Theory and Their Contemporary Relevance, in Balance of Power: Theory and Practice in the Twenty-First Century, ed. T.V. Paul, James J. Wirtz, and Michael Fortmann (Palo Alto: Stanford University Press, 2004), 1-25. Richard Rosecrance and Paul Schroeder address the historical lack of balancing. See, respectively, Richard Rosecrance, Is There a Balance of Power? in Realism and the Balancing of Power: A New Debate, eds. John A. Vasquez and Colin Elman (Saddle River: Prentice Hall, 2003), 154-165; and Paul Schroder, The Transformation of European Politics, 17631848 (Oxford: Oxford University Press, 1994). 14 An exception is Schwellers predatory buckpassing behavior.

bandwagoning is most effective at accomplishing this. Bandwagoning strategies involve cooperation with the leading state in order to avoid attack from that state, or in order to share in the spoils of victory.15 In the short-term, bandwagoning can also serve as a form of strategic surrender.16

Power Concentration and Strategic Choice While an assessment of current system polarity can help define the basic strategic options available to states, strategic choice is also driven by expectations about long-term threats and opportunities. At the structural level, these expectations are based on projections regarding the future polarity of the international system. If polarity is defined by the number of top-tier major powers that are active in the international system, then changes in polarity are almost always driven by fluctuations in the systemic concentration of power.17 As systemic concentration increases, there are fewer and fewer major powers. If concentration is high enough, the system will contain only one top-tier power and will

15

The idea of bandwagoning was first presented in rough terms, and only as the antithesis of balancing behavior. Among others, see Waltz, Theory of International Politics, Arnold Wolfers, "The Balance of Power in Theory and Practice," in Discord and Collaboration: Essays on International Politics, ed. Arnold Wolfers (Baltimore: The Johns Hopkins University Press, 1962), 124; and Stephen M. Walt, "Testing Theories of Alliance Formation: The Case of Southwest Asia," International Organization 43, no. 2 (Spring 1988): pp. 275- 316. The concept is later developed more thoroughly in order to account for profit motives, domestic political incentives, regional dynamics, and the historical record from both recent and more distant periods. See, respectively, Randall L. Schweller, "Bandwagoning for Profit: Bringing the Revisionist State Back In," Deborah Welch Larson, Bandwagoning Images in American Foreign Policy, in Dominoes and Bandwagons: Strategic Beliefs and Great Power Competition in the Eurasian Rimland, eds. Robert Jervis and Jack Snyder (New York: Oxford University Press, 1991), 85-111; Jack S. Levy and Michael M. Barnett, "Domestic Sources of Alliances and Alignments: The Case of Egypt, 1962-1973," International Organization 45, no. 3 (Summer 1991): 369- 395; Stephen R. David, Choosing Sides: Alignment and Realignment in the Third World (Baltimore: The Johns Hopkins University Press, 1991); Robert G. Kaufman, "To Balance or to Bandwagon? Alignment Decisions in 1930s Europe," Security Studies 1, no. 3 (Spring 1992): 417-447; and Paul Schroeder "Historical Reality Vs. Neo-Realist Theory." 16 For bandwagoning as a form of strategic surrender, see Walt, "Alliance Formation and the Balance of World Power," pp. 7-8. 17 This is a matter of some debate among scholars, with Mansfield (1993) showing that polarity and concentration, while related, can change independently. See, Edward D. Mansfield, "Concentration, Polarity, and the Distribution of Power." International Studies Quarterly 37, no. 1 (1993): 105-128.

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be considered unipolar. Conversely, systemic deconcentration will most likely indicate the diffusion of power among actors and an increasing number of actors that are, relatively speaking, major powers. States will perceive different long-term threats and opportunities based on prevailing perceptions about system concentration. In multipolar systems, significant power concentration signals the emergence of a potentially dominant power and, all things being equal, increases the balancing incentives for second-tier states that hope to prevent the rising power from achieving power preponderance. As such, balancing serves as a core strategy for second-tier states in a concentrating multipolar system. Importantly, however, not all states will feel threatened by the rising power. Instead they may detect the opportunity for profit via a bandwagoning strategy, or the chance to avoid the costs of balancing by using a buckpassing strategy to free ride on the balancing efforts of other major powers. The presence of attractive alternative options means that balancing should be considered a relatively weak core strategy. Of course, the actual probability that a state will choose an alternative strategy of bandwagoning or buckpassing will depend on the conditioning factors that are relevant to its situation. Multipolar systems in the process of deconcentration will offer very few incentives for the type of bandwagoning behavior described above. By definition, multipolar systems are unlikely to have a leading state that is dominant enough to offer second-tier states the type of spoils, or pose the type of threats that might engender bandwagoning behavior. The process of power deconcentration signals a trend toward parity rather than preponderance, and means that there are fewer incentives to engage in bandwagoning. Deconcentrating multipolar systems do, however, offer significant

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incentives for balancing, especially among second-tier states that seek to directly challenge the declining system leader for reasons related to historical rivalry, territorial revisionism, or geographic proximity. For most states, however, buckpassing will be the most attractive strategy, as systems in deconcentration are not characterized by rising states and the concomitant possibility that they will present an existential threat once they achieve power preponderance. Absent this imminent threat, most second-tier states will seek to avoid the costs associated with traditional balancing strategies by letting other, more threatened states work to actively counter the already declining power of the system leader. As a result, buckpassing should be considered the core strategy in deconcentrating multipolar systems. The fact that there are easily identifiable incentives for some states to engage in balancing, however, means that should also be considered a relatively weak core strategy. What are the core strategies for second-tier states in unipolar systems? For reasons presented earlier in this section, balancing and buckpassing are both unlikely to emerge as viable strategies under conditions of unipolarity. The former is too costly and is unlikely to be effective. Consequently, the latter is unlikely to be an option. There are very strong incentives and ample opportunities for second-tier states to engage bandwagoning behavior within the context of unipolar systems that contain a preponderant power that is still widening the capability gap between itself and other major powers. Bandwagoning is a relatively strong core strategy in concentrating unipolar systems. This is not only because alternatives like balancing and buckpassing are unattractive, but also because bandwagoning has both short-term and long-term appeal. Still-growing but already dominant system leaders will often seek to revise

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various political, territorial, and economic aspects of the pre-existing international status quo, and second-tier states with similar aspirations for revisionism will be inherently attracted to the broader policy objectives identified by those states. If the newly minted system leader is expected to have an extended tenure as the dominant state in a unipolar system, second-tier states will have additional incentives to ride the wave of the future, and bandwagon as a sort of long-term investment in the benefits of a positive relationship with a leading state. But not all unipolar systems are characterized by a leading state that is still in the process of expanding its material advantage over other key actors in the system. Moreover, not all system leaders are expected to remain ascendant for the foreseeable future. Just like multipolar systems, unipolar systems may be in the process of power concentration or power deconcentration. Typically, power concentration is most significant and steady when the new system leader emerges and asserts is dominance over other actors. But over time, the empirical record suggests that a process of power deconcentration will set in as the system leader begins to show signs of relative decline and its advantage over second-tier states begins to erode. This process of power

deconcentration is driven by a wide range of factors including: imperial and military overstretch, the general burdens of economic hegemony, free riding by secondary powers, the emergence of new leading sectors of the global economy, and uneven population growth across countries.18

18

These factors are discussed in greater depth in a wide range of literature on the rise and fall of great powers. For more on each factor see, respectively, Paul Kennedy, The Rise and Fall of the Great Powers: Economic Change and Military Conflict from 1500 to 2000 (New York: Random House, 1987); Robert Gilpin, War and Change in International Politics (Princeton: Princeton University Press, 1981); George Modelski, Long Cycles in World Politics (Seattle: University of Washington Press, 1987); George Modelski and William R. Thompson, Leading Sectors and World Powers: The Coevolution of Global

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What are the basic structural incentives for second-tier states in unipolar systems that are in the process of power deconcentration? The overwhelming gap in material capabilities between the leading and second-tier states means that balancing and buckpassing are still unlikely. And while bandwagoning out of fear, or as a form of strategic surrender, is still an attractive strategy in a deconcentrating unipolar system, the idea of bandwagoning for profit is less appealing once the duration of the leading states dominance is called into question. As the trend of deconcentration becomes apparent to other actors, they will be less likely to bandwagon in hopes of sharing the spoils, because there will be far fewer spoils for the system leader to share. Short-term or predatory bandwagoning may still occur within the context of a specific war coalition, especially early in the process of deconcentration. There will be far fewer states, however, that are willing to make long-term strategic choices that align them with a declining power. Wave of the future bandwagoning will be extremely unlikely once it is clear that the days of unipolarity are numbered. Given the somewhat weak incentives for bandwagoning and the absence of balancing or buckpassing incentives, it is hard to identify a viable core strategy for second-tier states in a deconcentrating unipolar system. This could signal that such systems are simply strategically ambiguous for second-tier states in a way that the other three system types are not. But the idea of structural exceptionalism should only be accepted after confirming that the absence of an identifiable core strategy for second-tier states in deconcentrating unipolar systems is not simply the result of conceptual underdevelopment. In the rest of this paper, I argue that the relationship between system structure and state strategy is, in fact, conceptually

Politics and Economics (Columbia, SC: University of South Carolina Press, 1996); and A.F.K. Organski, World Politics (New York: Knopf, 1958).

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underdeveloped. I address this underdevelopment by introducing, defining, and illustrating the concept of strategic hedging as a core strategy for second-tier states in deconcentrating unipolar systems. More broadly, I present strategic hedging as an effective complement to the existing concepts of balancing, buckpassing, and bandwagoning, and as a way to complete the connection between system structure and strategic choice that is depicted in Table 1.

[INSERT TABLE 1 ABOUT HERE]

STRATEGIC HEDGING IN INTERNATIONAL RELATIONS

Strategic hedging behavior helps second-tier states cope with the threats and constraints they are likely to encounter under conditions of unipolarity, while simultaneously preparing them for new threats and opportunities that are likely to emerge as the system leader falls farther into relative decline. As a result, strategic hedging will be particularly attractive to second-tier states in a deconcentrating unipolar system such as the one that has characterized the early 21st Century. The primary short-term threat (at least at the system level) for second-tier states in any unipolar system is armed confrontation with the system leader. While strategic hedging may involve some enhancement of military capabilities, it falls well short of the internal or external hard balancing that might provoke the system leader and lead to a dispute, crisis, or armed confrontation. Strategic hedging also serves to minimize longterm threats and maximize long-term opportunities that are likely to emerge as the system

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begins the transformation toward multipolarity. As the process of deconcentration unfolds, the probability (and utility) of military confrontation with the system leader may increase. The leading state may target second-tier states as part of a preventive war designed to forestall further decline, or the second-tier state could achieve rough power parity with the leader and sense an opportunity for aggression. Either way, one common form of strategic hedging behavior improves the long-term ability of the hedging state to successfully compete during a potential militarized dispute with the system leader, but does so while consciously avoiding any sort of provocation that might spark a military confrontation in the short term. This kind of behavior is called Type A hedging. Type A strategic hedging will explicitly and observably increase the leverage of the hedging state should it someday enter into a militarized dispute with the system leader. While Type A hedging may be economic, diplomatic, or even military in form, it will always fall short of what would be considered hard internal or external balancing. Possible examples of Type A hedging might include the diversification of energy supplies as a way to reduce vulnerability to embargos or blockades, or the development or acquisition of technologies that bolster military capabilities which have been specifically identified as valuable within the context of a potential confrontation with the system leader. Strategic hedging may also address a different long-term threat faced by secondtier states in a unipolar system: the potential loss of public goods or subsidies currently being provided by the system leader. Examples of public goods that a leading state might provide for other countries include protection of key sea lines of communication (SLOC) or transportation bottlenecks, support of the international monetary system, and global

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counter-proliferation or counter-terrorism efforts.19 The system leader may cease provision of a global public good voluntarily if the cost-benefit ratio of providing it becomes less favorable, or involuntarily in the face of dwindling resources. Both reasons for termination are more likely to exist as the leading state falls further into relative decline. Second-tier states may also enjoy direct subsidies from the system leader in the form of economic aid, military aid, outright military protection (conventional or nuclear), or technology transfers. Like provision of public goods, subsidies may be terminated as the declining leader makes hard choices about resource allocation. Actions that address the potential loss of pubic goods or subsidies currently provided by the system leader might be considered a form of Type B hedging. Type B hedging may involve the search for other providers of the goods or subsidies, the development of independent provision capabilities, or progress toward decreased reliance on the goods or subsidies. Examples of Type B hedging might include the establishment of regional organizations that can provide security-related public goods that might disappear in the face of retrenchment by the system leader, the development of independent naval capabilities that are sufficient for protection of key shipping routes and bottlenecks that are important to hedging state, or reduced reliance on direct defense subsidies (troops, bases, nuclear umbrellas) being provided by system leader to the hedging state. This last example of Type B hedging might be particularly attractive to second-tier states that are allied with the system leader but threatened by the rise of another, more threatening power. In this scenario, secondtier states may engage in Type B hedging because they are worried that, as it falls further

19

For more on global public goods, see Joseph S. Nye, United States Leadership and 21st Century Global Public Goods, Hampton Roads International Security Quarterly 9, no. 2 (2009): 49-52; and Inge Kaul, Isabelle Grunberg, and Marc A. Stern, Global Public Goods: International Cooperation in the 21st Century. (New York: United Nations Development Program, 1999).

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into decline, the system leader will be both less willing and less able to offer protection against the increasingly powerful and threatening country. The concept of hedging is not new to international relations in general, or even the study of strategic behavior specifically. Existing uses of hedging emphasize the way in which second-tier and minor powers seek to avoid excessive security dependence on a single Great Power. Hedging has been used to conceptualize the desire of many Southeast Asian states to strike a middle path in relations with both China and the United States, and the European Unions decision to develop some independent military capabilities in order to avoid too much reliance on U.S. forces.20 John Ciorciari focuses on limited alignments as a way for developing countries to find a balance between the risks associated with full alignment with Great Powers and the vulnerability that accompanies genuine non-alignment.21 These treatments use hedging in somewhat the same way I do here, but whereas existing work focuses on hedging bets by striking a middle ground between actors, or between alignment and non-alignment, the strategic hedging approach I present here is about hedging bets by allowing states to balance between the constraints associated with current polarity and the threats and opportunities they predict will emerge as a result of power deconcentration. Beyond hedging, other concepts such as binding, transcending, specialization, leash slipping and soft balancing have already been used to describe the strategic behavior of second-tier states in the current deconcentrating unipolar system. To a certain

20

See, Evelyn Goh, Great Powers and Hierarchical Order in Southeast Asia: Analyzing Regional Security Strategies, International Security 32, no. 3 (Winter 2007/2008): 113-157; and Robert J. Art, Europe Hedges its Security Bets, in Balance of Power: Theory and Practice in the 21st Century, eds., T.V. Paul, James J. Wirtz and Michel Fortmann (Palo Alto, CA: Stanford University Press, 2004) 21 See, John D. Ciorciari, The Limits of Alignment: Southeast Asia and the Great Powers since 1975 (Washington: Georgetown University Press, 2010).

18

degree, these concepts do account for some of the specific strategic choices being made by China, Russia, France, and other states in recent years. The effort in this paper, however, is to identify a core strategy for second-tier states in deconcentrating unipolar systems. For various reasons, existing concepts fall short of this objective. The strategies of binding, transcending, and specialization involve using a wide array of tools in order to accomplish state objectives: the binding power of institutional connections, normative appeal to common religious or cultural standards, and specific areas of leverage within dyadic trade relationships.22 But they are more dependent on specific institutional, normative, or trade relationships rather than system-level incentives based on current polarity or power concentration trends. As such, they may very well be attractive options for specific states faced with very particular conditioning factors, but because they are not driven primarily by broad, systemic incentives related to the material distribution of power, they are incapable of serving as core strategies in the same way that balancing, buckpassing or bandwagoning can. Christopher Layne, Robert Art, and Barry Posen suggest that second-tier states engage in leash slipping in order to maintain security autonomy in the face of superior rivals.23 Layne cites three examples of leash slipping: Great Britains attempt to emerge

22

Joseph Grieco and Daniel Deudney explore institutional binding as a strategic choice in modern Europe and the post-independence United States, respectively. See, Daniel H. Deudney, "The Philadelphian System: Sovereignty, Arms Control, and Balance of Power in the American States-Union, Circa 1787 1861." International Organization 49, no. 2 (1995): 191-228; and Joseph M. Grieco, "The Maastricht Treaty, Economic and Monetary Union and the Neo-Realist Research Programme." Review of International Studies 21, no.1 (1995): 21-40. Paul Schroeder highlights the ability of states to transcend conflict by appealing to normative or religious common ground, and to make minimize threats by making themselves economically indispensable to the stronger state through specialization and interdependence. Ja Ian Chong identifies a number of other strategic options, most notably that of buffering, which closely resembles what others called soft balancing. See, Ja Ian Chong, Revisiting Responses To Power Preponderance: Going Beyond The Balancing-Bandwagoning Dichotomy, Institute of Defence and Strategic Studies Singapore, Working Paper no. 54 (November 2003); and Paul Schroeder "Historical Reality Vs. Neo-Realist Theory." 23 See, Christopher Layne, The Unipolar Illusion Revisited: The Coming End of the United States Unipolar Moment International Security 31 no. 2, (Fall 2006): 7-41; Art, Europe Hedges its Security

19

as a third force in world politics during the 1950s, French development of an independent nuclear force around the same time, and the more recent attempts by the European Union to build a common security force. Even if more powerful states are not currently threatening, weaker actors will seek insurance against the possibility that they might become aggressive in the future. As Art explains, leash slipping is a way for second-tier states to allay concerns about the adverse effects of that states rise on its general position, both political and economic, in the international arena. This concern also may, but need not, include a worry that the rising state could cause security problems in the future, although not necessarily war.24 Based on the existing conceptualization and illustrative cases identified by its proponents, the strategy of leash slipping will seemingly be equally attractive to second-tier states across all system types. Because states engage in leash slipping against both allies and enemies, against rising and declining states, and in both multipolar and unipolar systems, it is less connected to any particular structural context than to the basic instinct of states to seek security in the face of power inferiority. For its part, the concept of soft balancing has been used quite frequently to explain the institutional and diplomatic strategies, which are intended to constrain U.S. power through the use of territorial denial, entangling diplomacy, economic strengthening, and signaling of resolve to participate in a balancing coalition.25 As an

Bets; and Barry R. Posen, European Union Security and Defense Policy: Response to Unipolarity? Security Studies 15 no. 2 (2006): 149-186. 24 See Art, Europe Hedges its Security Bets, 180. 25 See, respectively, T. V. Paul, "Soft Balancing in the Age of U.S. Primacy," International Security 30, no. 1 (Summer 2005), p. 58 and Robert Pape, "Soft Balancing against the United States," International Security 30, no. 1 (Summer 2005), p. 36. For general soft balancing arguments see Robert J. Art, "Correspondence: Striking the Balance," International Security 30, no. 3 (Winter 2005/06): 177-185; Pape, "Soft Balancing against the United States," pp. 7-45; Paul, "Soft Balancing in the Age of U.S. Primacy, pp. 46-71; and Stephen Walt, "Keeping the World Off Balance: Self-Restraint and U.S. Foreign Policy" in America

20

extension of traditional balance of power theory, soft balancing is meant to counter the preponderance of the system leader while avoiding the confrontation associated with an extensive arms build up or the development of a defensive military alliance aimed at the system leader. Proponents have identified several examples of soft balancing behavior, including Russian arms sales to Iran, French opposition to the 2003 U.S. invasion of Iraq, and the formation of the European Security and Defense Policy (ESDP). Critics argue, however, that soft balancing is hard to distinguish from the normal rough-and-tumble of major power politics, otherwise known as normal diplomatic friction.26 In order for soft balancing to be considered as an effective complement to traditional balance of power theory, the concept needs to address behavior that is primarily driven by the desire to counter the strength of the system leader, and not behavior that is largely the result of specific policy differences, domestic political incentives, economic interests, or regional dynamics.27 In other words, critics assert that soft balancing does not have a clear enough connection with the type of structural incentives that lead states to strategically employ balancing, bandwagoning, and buckpassing behavior. While it is likely that soft balancing and strategic hedging will account for some of the same behavior, they are distinct in a number of significant ways. Most importantly,

Unrivaled: The Future of the Balance of Power, ed., G. John Ikenberry (Ithaca: Cornell University Press, 2002). Applications of soft balancing logic to more specific issues like East Asian security and U.N. voting patterns can be found in Yuen Foong Khong, "Coping with Strategic Uncertainty: The Role of Institutions and Soft Balancing in Southeast Asia's Post-Cold War Strategy," in Rethinking Security in East Asia: Identity, Power and Efficiency, eds., Peter J. Katzenstein and J.J. Suh Allen Carlson (Stanford, California: Stanford University Press, 2004); and Erik Voeten, "Resisting the Lonely Superpower: Responses of States in the United Nations to U.S. Dominance," Journal of Politics 66, no. 3 (May 2004): 729-754. 26 See, Keir A. Lieber and Gerard Alexander, "Waiting for Balancing: Why the World Is Not Pushing Back," International Security 30, no. 1 (Summer 2005): 109-139. 27 Critics point out that, as currently conceived, soft balancing neglects its balance of power roots, which emphasize a structural understanding of state behavior and the systemic tendency toward balancing as a natural law of international relations. See Stephen G. Brooks and William C. Wohlforth, "Hard Times for Soft Balancing," International Security 30, no. 1 (Summer 2005): 72-108; and Lieber and Alexander, "Waiting for Balancing," pp. 109-139.

21

strategic hedging is defined with conceptual clarity in mind. This gives hedging a clearer connection with specific structural incentives, and a more coherent strategic rationale. Hedging reflects the strategic calculus of second-tier states that are confronted not only with unipolarity, but also a system that is in the process of power deconcentration. As such, it is more consistent with the two structural elements incorporated into the theory of state behavior developed earlier in this paper. Soft balancing is certainly attractive for second-tier states in unipolar systems, because they do not have the material capabilities or coordination capabilities to engage in traditional external or internal balancing. But it will be equally attractive to second-tier states in either concentrating or deconcentrating unipolar systems. In fact, it would seemingly be appropriate for any state that suffers from inferior capabilities vis--vis another country. In other words, soft balancing is not only hard to distinguish from normal diplomatic friction, but it is hard to connect with any particular set of structural incentives. Strategic hedging is also distinct from soft balancing in the way that the behavior in question targets the system leader. While soft balancing is directly at the system leader in an effort to constrain its ability to exercise power, strategic hedging is a more indirect approach; it explicitly avoids confrontation while also preparing the second-tier state for a wide range of eventualities that might occur as the system leader falls further into relative decline. Hedging is also conceptually distinct from soft balancing because of the specific objectives the strategy is meant to accomplish. While soft balancing is intended to broadly constrain the system leaders power, hedging is specifically oriented toward one of two goals: increasing long-term military leverage in ways that are particularly relevant

22

to the way in which a confrontation between the second-tier state and system leader is likely to play out, or finding alternative methods for obtaining identifiable public goods or subsidies that the second-tier state currently receives from the system leader. In this way, hedging has a specific strategic rationale that soft balancing may lack. Soft balancing may be successful in constraining the power of the system leader, and even laying the foundation for coordination and eventual hard balancing. There are specific and considerable costs, however, that may accrue directly to a state that employs a soft balancing strategy. In addition to the initial costs of policy coordination and implementation, provocation of the system leader might have additional drawbacks such as frayed alliances, diplomatic isolation, and targeting through economic statecraft. Most generally, soft balancing requires that a state accept direct, immediate costs in order to achieve the diffuse benefit of broadly constraining the system leaders power. In short, there is a certain lack of strategic rationale evident in the current conceptualization of soft balancing behavior. While strategic hedging can also involve direct, short-term costs, it is also designed to produce both short and long-term benefits that directly accrue to the hedging state. Furthermore, the objectives of hedging behavior are explicitly tied to threats and opportunities that are more likely to appear in deconcentrating unipolar systems. Finally, strategic hedging is also distinct from soft balancing in the way that the behavior in question targets the system leader. While soft balancing is directly at the system leader in an effort to constrain its ability to exercise power, strategic hedging is a more indirect approach; it explicitly avoids confrontation while also preparing the

23

second-tier state for a wide range of eventualities that might occur as the system leader falls further into relative decline. Strategic hedging is conceptually distinct from normal diplomatic friction. While the ambiguity of soft balancing makes it admittedly hard to separate from the everyday messiness of major power relations, strategic hedging behavior is distinguishable from normal diplomatic friction because it can be identified as part of a coherent long-term plan that is designed to maximize opportunities and minimize threats for a second-tier states in a unipolar system with a leading state that is clearly in relative decline. The long-term plan has concrete, identifiable military or public goods objectives and, in order to be considered an instance of strategic hedging, behavior must be intended to develop or expand the means for achieving those objectives. While it is not always possible to find evidence of intentionality, strategic hedging behavior is also consciously designed, funded, implemented and monitored at the highest levels of government. If normal diplomatic friction can sometimes reflect what are primarily organizational or bureaucratic interests, strategic hedging is designed to primarily reflect the national interest, as defined by the highest levels of governing authority. How can strategic hedging behavior be identified in a way that maximizes objectivity and minimizes ambiguity? I present an identification mechanism in the discussion below and in Figure 2. The mechanism is comprised of three filters. Starting with the universe of state behavior in the international system, the first filter serves to identify behavior that seems to resemble either Type A or Type B strategic hedging. The second and third filters identify behaviors that may initially appear to be strategic

24

hedging, but are better labeled as an example of either hard balancing or non-strategic, normal diplomatic friction. In order to pass through the first filter, behavior must improve, in an observable, significant, and specific way, the competitive ability of the hedging state should it someday enter into a militarized confrontation with the system leader (Type A hedging), and/or improve the ability of the hedging state to cope without global public goods or direct subsidies currently being provided to it by the system leader (Type B hedging). Importantly, the behavior in question can be military in orientation, but it must fall short of what would be considered an example of hard internal or external balancing. With this in mind, the second filter eliminates behavior that includes the formation of an explicit military alliance aimed at the system leader (external balancing), constitutes an extensive arms build-up (internal balancing), or involves the initiation of a militarized interstate dispute.28 The third filter clarifies the strategic aspect of strategic hedging by requiring that the behavior in question address an issue area that has been explicitly acknowledged as a major national security issue by high-ranking (cabinet level or equivalent) government officials in the hedging state. Furthermore, the behavior must be primarily funded by the central government, and must include centralized oversight that could involve executive orders, policy coordination via a dedicated ministry, group or committee, or significant state subsidies or monetary incentives that influence any subnational or private actors that actually carry out the behavior. These requirements are
28

In general, strategic hedging behavior is separated from traditional hard balancing by focusing on intensity. Lieber and Alexander argue that states engage in internal balancing when they invest heavily in defense by transforming their latent power (i.e. economic, technological, social and natural resources) into military capabilities. This behavior is observed in the form of meaningful increases in defense spending as a percentage of GDP. See Lieber and Alexander, Waiting for Balancing, p. 119.

25

meant to filter out behavior that is developed, funded, and executed primarily by corporations or non-governmental organizations that will presumable seek their own interests first, and those of the state secondly, or not at all. Although it is possible, if not likely, that a single action may serve multiple interests at multiple levels, behavior that addresses a major national security issue and is developed, funded, and executed at the highest levels of government is not likely to be absent strategic calculation by the state.29 Consequently, if behavior passes through the third filter, it can be considered part of the states strategic calculus rather than an instance of normal diplomatic friction.

[FIGURE 2 ABOUT HERE]

IDENTIFYING CASES OF STRATEGIC HEDGING BEHAVIOR

How might the mechanism presented above be used in order to identify strategic hedging behavior by second-tier states in the international system? In this section, I apply the identification mechanism to three examples: Chinas global energy strategy, the emergence of a so-called strategic partnership between Russia and China, and French diplomatic opposition to the 2003 U.S. invasion of Iraq. These examples are not drawn as random cases as part of an attempt to demonstrate the prevalence of strategic hedging behavior. Instead, they are chosen because they have been central to previous analyses of competitive behavior in the post-Cold War era, and because they illustrate, respectively, an example of both Type A and Type B strategic hedging, a mixed example with some
29

That said, behavior in question may be secondarily driven by some of the sources of normal diplomatic friction such as: economic interests of domestic actors, regional security concerns, policy differences between the hedging state and the system leader, and popularity with domestic political audiences.

26

Type A and Type B hedging, as well as an example of behavior that is not considered to be an instance of strategic hedging.30 As such, the basic purpose of the very brief analyses that follow is to demonstrate how the identification mechanism can distinguish strategic hedging behavior from that which is not, and how certain behavior can be defined as one type of hedging but not the other.

Chinese Energy Security Strategy Chinas ongoing energy security strategy is a clear example of both Type A and Type B strategic hedging behavior. Although there is a clear incentive for the P.R.C. (Peoples Republic of China) to develop a global energy strategy in order to fuel the domestic economic growth that is necessary for political stability, significant elements of Beijings approach to energy security are designed to reduce vulnerabilities that the United States would likely try to exploit during future crises or militarized disputes. Chinas energy policies also help it prepare for future scenarios that do not include a confrontation with the U.S., but rather the termination of public goods (most important being sea lane protection and stability operations in the Middle East) currently being provided by Washington. The P.R.C. is increasingly dependent on energy imports. It became a net oil importer in 1991, and by 2008 it imported about 3.6 million barrels of oil per day; by 2020, it is projected to import somewhere between 60 and 80 percent of the oil it will

30

French opposition to the Iraq invasion and the Sino-Russian relationship have been labeled as example of soft balancing behavior by some, but others say that they are better examples of simple policy differences or action that is dictated by economic interests. Similarly, Chinas energy security strategy has been interpreted differently by those that perceive it as part of a coordinated effort to overtake the United States on the world stage, and those that see it as largely motivated by profit-seeking by Chinas National Oil Companies (NOCs).

27

consume.31 Domestic supplies of natural gas and coal are abundant, but it appears as though Chinas ability to meet domestic demand for energy will depend on its success in expanding imports for the foreseeable future.32 Its dependence on imported energy leaves the P.R.C. vulnerable to supply disruptions that could occur during an armed confrontation with a strong naval power like the United States, because of instability in supplier states, or in the event that key transportation routes were blocked because of piracy, terrorism, or natural disaster. With this vulnerability in mind, there are four basic goals that Beijing associates with improving energy security: increasing diversity in supply sources, developing more import avenues, building a strategic petroleum reserve (SPR), and crafting stronger ties with important supplier states. These objectives fall in line with Type A strategic hedging because they are all likely to improve the ability of the P.R.C. to compete during a confrontation with the United States that involves the threat or actual use of force. Just as there are myriad opportunities for engagement and cooperation between China and the United States, there are multiple scenarios that may one day lead the two countries into a militarized crisis. Destabilization of the Korean Peninsula, controversy over human rights violations, intense trade disputes, currency manipulation, confrontations with third parties such as Japan, and, of course, the Taiwan question may all serve as sources of conflict in the future. According to a long tradition of scholarship in the hegemonic stability and power transition research programs, one would generally expect the likelihood of
31

Figures in this paragraph are drawn from Erica S. Downs and the 2009 report of the International Energy Agency. See, Erica S. Downs, The Brookings Foreign Policy Studies Energy Security Series: China (Washington: Brookings Institution, 2006): 1; and International Energy Agency, Key World Energy Statistics (Paris: International Energy Agency, 2009). 32 For further discussion, see Erica S. Downs, The Chinese Energy Security Debate, The China Quarterly 177 (2004): 21-41; and David Zweig and Jianhi Bi, China's Global Hunt for Energy, Foreign Affairs 84, no. 5 (2005): 25-38.

28

confrontation to increase as China and the United States approach a state of rough power parity.33 Despite the variety of issues that might be at the core of any potential dispute, both American and Chinese planners agree that a significant focus of U.S. strategy would be an effort to deny the P.R.C. access to the raw materials it depends on.34 In any sort of protracted crisis, Chinas success would depend on its ability to maintain energy supplies necessary for its military and economy to continue to function. This would require that the Peoples Liberation Army Navy (PLAN) be able to protect ships bound for China all along extended sea lines of communication and through key choke points like the Straits of Malacca and the Lombok Straits.35 This issue is recognized as vital to the national security interest of the P.R.C., and has been recognized at the highest level of Chinese leadership. In a notable speech in late 2003, President Hu identified Chinas Malacca Dilemma, and asserted that certain major powers were attempting to dominate the Straits.36 Prominent scholars and policy makers echo Hus line of thinking. Zhang Yuncheng argues that, Whoever controls the Straits of Malacca and the Indian Ocean could block Chinas oil transport route, while Yang Yi warned that, If we do not have

33

Broad treatments can be found in A.F.K. Organski and Jacek Kugler, The War Ledger (Chicago: University of Chicago Press, 1980) and Robert Gilpin, War and Change in International Politics (New York: Cambridge University Press, 1981). Using Gross National Income (The World Banks new method of calculating GDP at purchasing power parity) as a measure of power, the PRC is currently at $7.97 trillion, while the US has a GNI of $14.23 trillion. According to a Goldman Sachs Senior Executive, the 2008-2009 economic crisis accelerated the shift of power from West to East, and one should see Chinese GDP matching that of the US by as early as 2027. See, Rana Foroohar, Power Up, Newsweek Online. March 21, 2009. Available at http://www.newsweek.com/2009/03/20/power-up.html. (Accessed June 21, 2010). 34 See, James Kurth, The New Maritime Strategy: Confronting Peer Competitors, Rogue States, and Transnational Insurgents, Orbis 51, no. 4 (2007): 585-600. 35 On Chinese strategy in the face of a crisis, see Jacqueline Newmyer, Oil, Arms, and Influence: The Indirect Strategy Behind Chinese Military Modernization, Orbis 53, no. 2 (2009): 205-219. 36 Jason Blazevic, Defensive Realism in the Indian Ocean: Oil, Sea Lanes and the Security Dilemma, China Security 5, no. 3 (2009), p. 62.

29

any conflicts of interest with the U.S., we can go along for the ride. As soon as a conflict occurs, however, it will be disastrous.37 Chinas energy security strategy addresses the Malacca Dilemma in a number of ways, but the general focus is on diversification of supply sources and import avenues. Instead of fighting for control of key chokepoints and SLOCs, the P.R.C. can make them less significant in a crisis by increasing the geographical diversity of its energy supply. New ports, pipelines and other transportation links in places like Myanmar, Russia, Central Asia and Gwadar, Pakistan make U.S. interdiction at least more difficult, if not impossible. Even more important, new overland pipelines are capable of bringing in oil and gas from Central Asia and eastern Siberia without traversing vulnerable waterways. Even if the US chose to stop short of a quarantine or blockade, it would likely seek to isolate the P.R.C. diplomatically and economically by pressuring key energy suppliers to restrict exports to China. By increasing the number of its supplier countries, the P.R.C. is less vulnerable to this approach than it would be if it relied heavily on one or two countries like Saudi Arabia or Iraq. The economic value that Chinese oil imports represent to countries like Iran, Angola, Kazakhstan and Venezuela, along with the economic assistance and military aid that is often part of Chinas oil diplomacy make it less likely that these states would actively side with the U.S. in most plausible crisis scenarios.38 As such, the strategy of diversifying supply sources and import avenues makes it harder for the U.S. to unilaterally block all the necessary pipelines and ports, while also

37

See Blazevic, Defensive Realism in the Indian Ocean, p. 62; and Downs, Brookings Energy Security Series: China, p. 14. 38 For a critical analysis of Beijings links with energy exporters, see Hongyi Lai, Chinas Oil Diplomacy: Is it a Global Security Threat? Third World Quarterly 28, no. 3 (2007): 519-537.

30

creating a favorable set of economic, military and political relationships with key supplier states that will have significant incentives to maintain oil exports to China. Moreover, Beijing is in the final stages of filling a 90-day Strategic Petroleum Reserve (SPR) that will act as further insurance against any U.S. attempts at supply disruption that might take place during a short or medium-term crisis between Beijing and Washington. Chinas energy security does not just revolve around the possibility of an adversarial relationship with the United States. In fact, much of Beijings emphasis on diversifying supply sources and import avenues has more to do with fears surrounding U.S. decline rather than concerns over a potential confrontation with the United States. Currently, the United States plays the primary role in providing important public goods in regions that are crucial to Chinese interests. Although it is beyond the scope of this paper to fully address the role of the U.S. as a provider of global public goods, some obvious examples that are relevant in this context include the protection of key maritime choke points and sea lanes against threats from piracy or terrorism, heavy support for U.N. and N.A.T.O. peacekeeping operations in key oil producing regions, as well as promotion of free trade, and service as a global lender of last resort.39 Should the U.S. react to declining economic prosperity or its worsening balance of payments situation by retrenching militarily or engaging in economic protectionism, however, it will likely reduce or eliminate its contribution to several public goods upon which the P.R.C. currently relies. For example, the absence or reduction of U.S. naval forces in Southeast Asia may increase the frequency of pirate attacks against shipping in places such as the Malacca
39

See Joseph S. Nye, United States Leadership and 21st Century Global Public Goods, pp. 49-52 for more detailed discussion of the United States as a provider of global public goods in the Twenty-First Century.

31

Straits, which would undoubtedly affect oil imports bound for China. A reduced U.S. military presence in the Persian Gulf, or diminished support for peacekeeping missions may increase political instability and lead to supply disruptions in a particular country like Sudan or rapidly rising prices on the global oil market in general. The price of oil could also rise if diminished U.S. counter-terrorism operations allow for a significant terror attack against a key oil field in Iraq, Russia or Saudi Arabia. In such a scenario, Chinas energy investments may give it some immunity to price fluctuations, or at least allow it to benefit by selling the oil it has rights to at an elevated market price.40 As a whole, Chinas energy security strategy appears to be a strong example of both Type A and Type B strategic hedging. Within the context of the identification mechanism presented in the previous section, it is safe to say that Chinas behavior passes through the first filter. Diversification of supply sources and import avenues, and the development of a strategic petroleum reserve help to reduce the extent to which China would be vulnerable to any attempts by the U.S. to interrupt energy imports during a militarized dispute. Even absent a confrontation with the U.S., Chinas energy security strategies are an example of Type B hedging: they help prepare the P.R.C. for a future scenario in which the U.S. reduces its global presence to the extent that it stops providing some or all of the public goods which China currently enjoys. Before the Chinese behavior discussed above can be considered an example of strategic hedging, however, it must be pass through the second and third filters. In order to do so, it must be ruled out as a potential case of internal or external balancing, and it must also be clearly identified as the result of strategic coordination at the highest levels
40

Erica S. Downs provides an extended discussion of Chinese equity oil investments and their impact on the global energy market. See, Erica S. Downs, The Fact and Fiction of Sino-African Energy Relations, China Security 3, no. 3 (2007), pp. 42-68.

32

of Chinese government. In other words, Chinese energy security strategy must be shown to exist as something less intense than traditional hard balancing, but more coherent than what could be called normal diplomatic friction. Is Chinas energy security strategy an example of either internal or external hard balancing? Upon inspection, the answer is unequivocally negative. Surely, there is some debate about Chinas larger efforts at military modernization, and whether it constitutes the firsts signs of internal balancing. China military spending increased by at least 10 percent in the two decades from 1989 to 2009, though in 2010 it only grew by 7.5 percent.41 Significant attention was given to bolstering the Peoples Liberation Army Navy (PLAN) during this time period, and it is possible to attribute this to Beijings desire to protect the sea routes it uses to import its energy. But Chinas naval buildup is much more focused on anti-access tools like submarines rather than force projection tools like aircraft carriers. In this sense, it appears that any naval buildup that is occurring is designed primarily with Taiwan in mind rather than the defense of distant import routes.42 Chinas energy security strategy also falls short of a well-established threshold for external balancing. Although the P.R.C. has used oil diplomacy as a way to strengthen ties with supplier states, there is thus far no evidence that China seeks to form explicit military alliances directed at the United States as part of its global energy security strategy. Arms sales have sometimes served as a side payment to energy-rich states that facilitate investment deals and also ensure the security of those investments. Tanks and
41

Military spending figures for 2010 are taken from Michael Wines and Jonathan Ansfield, China Says It Is Slowing Down Military Spending, New York Times, March 4, 2010: A7. Chinas military buildup, even if it were directly related to Chinas energy security, would not meet constitute the meaningful increase in military spending as a percentage of GDP that Lieber and Alexander present as their definition of internal balancing. According to the World Bank, Chinese military spending was less than two percent of its GDP in 2008, and has stayed within a narrow range of 1.5 percent to 2.5 percent of GDP for each of the past 20 years. See, World Bank, World Development Indicators 2009: China. 42 See Lai, Chinas Global Oil Diplomacy, p. 531.

33

combat aircraft have been sent to Sudan in the aftermath of oil deals, but most sales to developing countries like Iran and Angola actually predate Chinas first overseas investments.43 Most importantly, in no case have energy deals or arms sales actually led to a formalized military alliance between the P.R.C. and the energy supplier. It is likely that arms sales are just used as deal sweeteners the weapons and technologies involved are typically outdated and they are likely less attractive to states than the strictly financial and political incentives that are usually also offered.44 In summary, while the Chinese may seek to secure their overseas energy investments via hard balancing or outright confrontation under more favorable conditions in the future, their present approach falls well short of what can be called traditional hard balancing. But is there really a coherent strategy behind Chinas energy policies? Balancing, buckpassing, and bandwagoning strategies are all developed and coordinated at the highest levels of government as a way to maximize the national security of the country in question. Do leaders in Beijing engage energy security at the strategic level? Despite the relative autonomy of Chinas National Oil Companies (NOCs) when it comes to implementation, evidence suggests that the government considers energy security to be of the highest importance, and that it is in the process of further centralizing decision making authority on energy-related issues.45 In 1997, shortly after China became a net oil importer, Premier Li Peng developed his Policy on Energy Resources, which called for any and all means including

43

For more details see, Chinas Overseas Investments in Oil and Gas Production. Report Prepared for the US-China Economic and Security Review Commission. (New York: Eurasia Group, 2007). 44 See, Erica S. Downs, The Brookings Foreign Policy Studies Energy Security Series: China, p. 42. 45 See, for example, Edward Cunningham, Chinas Energy Governance: Perception and Reality, MIT Center for International Studies Audit of the Conventional Wisdom 07-04, March, 2007; and Trevor Houser, The Roots of Chinese Oil Investment Abroad, Asia Policy 5 (January 2008): 141-166.

34

lobbying, financial aid and information exchange to achieve the broader goal of diversifying the sources of Chinas energy supply.46 More recently, President Hus elaboration on his countrys Malacca Dilemma suggests a keen awareness of, and anxiety over Chinas energy security challenges. Bureaucratically, there has been real consolidation of control over energy policy since 2008. After years of delegating decisions about energy policy to lower levels of the National Defense and Reform Commission (NDRC), the formation of the National Energy Agency (NEA) in 2008 indicated some centralization of authority. But the NEA was replaced two years later by an even more powerful super ministry called the National Energy Commission (NEC). The NEC is charged with developing, implementing and reviewing Chinas domestic and international energy security strategy, and was formed despite the opposition of the NDRC and the NOCs.47 That, and the fact that its 21 members include high ranking members of the military, national intelligence agencies, and Premier Wen Jiabao, suggest that the NEC is a clear victory for the interests of the central government, which is intent on tightening control over energy policy in the years ahead.48 The NEC may also seek to reinvigorate traditional top-down methods of controlling energy investments, including direct financing, permit approval, and penalty enforcement. Any additional oversight from the NEC will complement what is already an important role for Beijing in guiding the overseas activities of the NOCs. The government provides funding for the vast majority of deal sweeteners that the NOCs use in order to secure overseas deals and most
46

The text of the speech is reported by Xinhua, and accessed through the World News Connection. See, Li Peng, Chinas Policy on Energy Resources. http://wnc.fedworld.gov (Document ID: drchi119-n-97001) (Accessed June 18, 2010). 47 See, Zhiyue Bo, Chinas New National Energy Commission: Policy Implications, East Asian Institute Brief 504 (Singapore: East Asian Institute, February 5, 2010). 48 Keith Bradsher, Security Tops Environment in China Energy Plan, New York Times. (June 17, 2010): B1.

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major overseas mergers and acquisitions. In many cases Beijing provides direct grants, debt relief and military assistance to energy suppliers on its own. In some cases, the government even uses highly visible political meetings or summits in order to facilitate important deals. President Hu was personally involved in important negotiations between China National Petroleum Corporation (CNPC) and PetroKazakhstan.49 Motivations that would lead to normal diplomatic friction, such as economic interests, regional dynamics, policy issues, and domestic politics also influence Chinas energy security policies. But these influences are at best complementary to the coherent energy security strategy developed, funded, and monitored at the highest levels of government in Beijing. Thus, according to the identification mechanism outlined here, Chinas global energy strategy should definitely be considered an example of strategic hedging rather than an instance of ad hoc, non-strategic, normal diplomatic friction.

The Sino-Russian Strategic Relationship There is no doubt that relations between Russian and China are significantly warmer today than they were during the last two decades of the Cold War. The two countries have resolved most of their border disputes, signed the 2001 Treaty on GoodNeighborliness, Friendship and Cooperation, and are co-leaders of the Shanghai Cooperation Organization (SCO). Russia is also the leading arms supplier to the P.R.C..50 How should recent Sino-Russian relations be defined? There is little consensus in the existing literature. Soft balancing proponents interpret the strengthened relationship as

49

The preceding paragraph draws heavily from arguments made in Edward Cunningham, Chinas Energy Governance, and Erica S. Downs, The Brookings Foreign Policy Studies Energy Security Series: China. 50 Data on arms transfers are taken from the Stockholm International Peace Research Institute (SIPRI), which maintains an online database at http://www.sipri.org.

36

part of an overall effort by Moscow and Beijing to engage in soft balancing against the United States. According to T.V. Paul, the desire to soft balance was borne out of general concerns about U.S. power preponderance and specific objections to U.S. interventionism, which were exacerbated by the 1999 NATO operations in Kosovo.51 Critics argue, however, that the 2001 Treaty, the establishment of the SCO, and the arms trade between Russia and China have very little to do with the United States or its policies in Kosovo or elsewhere. Instead, Brooks and Wohlforth attribute growing diplomatic ties to a common interest in subduing radical Islamism in Central Asia (a goal that the United States shares), and explain the booming arms trade as a result of Russias need to find external demand for its extensive domestic arms industry.52 Given the difficulty that others have had in conceptualizing the current Sino-Russian relationship, it is not surprising that it is a somewhat complicated illustration of strategic hedging behavior: it is an example of Type A hedging with respect to China, but not with respect to Russia. It is an example of Type B hedging for both countries. Between 2000 and 2009, Russia accounted for well over 75 percent of Chinese arms imports, with deals including surface-to-air missiles, attack helicopters, anti-ship missiles, destroyers and submarines.53 Many of these weapons systems would be useful for China in case of a confrontation with the United States in the Taiwan Straits or another coastal area. It is true that the vast majority of the weapons sent to the P.R.C. are from the Soviet era, as Moscow has been reluctant to share its most advanced systems out

51

Paul and others also include India in the discussion of Sino-Russian relations, and interpret warming relations between the three countries as the emergence of a strategic triangle of states that may be interested in countering U.S. strength in Asia. 52 See Brooks and Wohlforth, Hard Times for Soft Balancing, pp. 83-88. 53 The full register of Russian arms exports can be downloaded as part of the SIPRI Arms Transfer Database. Accessible at: http://www.sipri.org/research/armaments/transfers/databases/armstransfers.

37

of fear that the Peoples Liberation Army (PLA) will replicate Russian technology on its own and begin to produce (and potentially export) its own sophisticated weaponry without the need to rely on Russian imports. Indeed, there has been a drastic reduction in arms transfers from Russia to China since 2006, mostly due to the fact that the P.R.C.s own arms industry is increasingly capable of producing the kinds of weapons that Moscow is actually willing to send its way.54 This suggests that China only imports arms from Moscow in order to develop basic domestic capabilities that can be used to develop its own arms export industry. But those earlier imports were crucial in accelerating the development of a domestic arms industry that is capable of producing the type of missiles, ships, and submarines that will significantly improve Chinese military and antiaccess capabilities in the Taiwan Straits area. As a result, Chinas military imports from Russia constitute the kind of observable, significant, and specific improvement in military competitiveness that strategic hedging is meant to encompass. What about the Russian side of the relationship? Russias enormously influential arms industry saw domestic orders drop by more than 90 percent after the Cold War, and exports to China were one way to compensate for sagging demand at home.55 Maintenance of a domestic arms industry may someday come in handy as a competitive asset in a confrontation with the United States, but Russia gains no specific advantage by exporting weapons to China. In fact, recent trend suggest that India has replaced China as

54

There is also concern in Russia that the Chinese will develop their own production capabilities and then undercut Russian arms sales on the international market. This apparently happened in 2009, when Iran turned down delivery of a Russian air defense system in favor of a cheaper Chinese system that the PRC had modeled after the Russian product. For more on the shrinking arms trade between Russia and China, see Richard Weitz, Why China Snubs Russian Arms, The Diplomat, April 5, 2010: http://thediplomat.com/2010/04/05/why-china-snubs-russian-arms/ (Accessed August 19, 2010). 55 Brooks and Wohlforth, Hard Times for Soft Balancing, p. 87.

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the largest recipient of Russian arms.56 As Brooks and Wohlforth argue, it appears that Russia arms transfers to China are driven primarily by the desire to maintain production and employment stability in an important part of the Russia economy that was not being supported by domestic demand.57 In summary, the so-called strategic partnership between China and Russia does serve as an example of Type A strategic hedging with respect to the former, but not the latter. The diplomatic and institutional aspects of the Sino-Russian partnership clearly fall short of qualification as Type A hedging. Neither the 2001 Treaty on Good Neighborliness nor the SCO contain provisions that increase the competitive ability of either Russia or China in the context of a militarized dispute with Washington. The SCO Charter does include a statement that member states will seek to promote political multipolarity and economic and information globalization, but there are no stipulations regarding common defense in light of a confrontation with the United States. There is only an agreement to consult one another on security matters.58 Russian and Chinese participation in the Shanghai Cooperation Organization does, however, constitute a form of Type B strategic hedging. The SCOs counterterrorism element, the Regional Counter-terrorism Structure (RCTS), may be preparing to step in as the primary counter-terrorism and counter-extremism force in Central Asia if the United States decides to reduce its own role in the region. The RCTS lists as its first objective, Maintaining working relations with competent institutions of the member

56

India has replaced China as the largest recipient of arms exports, and has also purchased more technologically sophisticated systems like the Sukhoi-30 fighter aircraft. Yearly averages are taken from SIPRI. 57 Brooks and Wohlforth, Hard Times for Soft Balancing, p. 87. 58 Analysis and quotes based on information taken from the Charter of the Shanghai Cooperation Organization. Accessed online at: http://www.sectsco.org/EN/show.asp?id=69).

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states and international organizations tackling issues of fighting terrorism, separatism and extremism.59 There is no doubt that Russia and China perceive a common threat from Islamist movements in Central Asia, and the separatist movements in Chechnya and Xinjiang are particularly threatening to Moscow and Beijing, respectively. U.S. withdrawal from Central Asia certainly depends on specific outcomes in Afghanistan and Pakistan, such as the May 2011 death of Osama bin Laden. But background domestic pressure to economize American foreign policy in light of soaring deficits and economic stagnation at home is also important to consider. These processes reflect an overall decline in U.S. power, and connect Russian and Chinese concerns about U.S. withdrawal to system structure in a fairly straightforward way. If one takes the view that U.S.-led interventions in Central Asia and the Middle East have provided a public good in the form of suppressing Islamic extremism for the benefit of all states in the region, then it may be possible to see the RCTS as an insurance policy that could step in and safeguard Russian and Chinese interests if the U.S. presence were largely, or completely removed from the region. There are two reasons one might discount the RCTS as a form of Type B strategic hedging. First, the RCTS was founded as part of the original SCO Charter in June 2001, before the September 11th attacks that led to U.S. intervention in Afghanistan. This means that the SCOs counter-terrorism efforts actually pre-date the so-called U.S. war against terrorism, and thus it is hard to define the RCTS as a precaution against potential U.S. withdrawal from the region. Second, many would argue that the U.S. regional presence does anything but provide a public good to countries like Russia and China. Indeed, one

59

Declaration found on the homepage of the Executive Committee of Regional Counter-Terrorism Structure (http://www.sectsco.org/EN/AntiTerrorism.asp).

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of the SCOs primary objectives is to remove U.S. military bases in Central Asia. The 2005 eviction of U.S. forces from the Karshi-Kharabad airbase in Uzbekistan came just weeks after the SCO member states called for the removal of American forces from the region as soon as possible.60 This implies that Russia and China may be more hopeful, rather than fearful about the end of U.S. military activities in the region, and the elimination of any so-called public goods that they may perceive it as providing. Still, the general thrust of the RCTS (and perhaps the SCO in general) is to provide regional solutions to various forms of instability that, up to this point, the United States and its NATO allies have primarily taken responsibility for. Efforts at counterterrorism are front and center for Russia and China; Russian President Dmitry Medvedev submitted the Shanghai Cooperation Organization Convention Against Terrorism to the Russian Duma for ratification in June 2010.61 One month before that, Pakistani Foreign Minister Makhdoom Qureshi met RCTS Executive Director Jenishbek Jumanbekov both made pledges to drastically increase cooperation on counter-terrorism efforts within Pakistan.62 This could signal a re-orientation in Pakistani counter-terrorism efforts, especially given the extremely negative perception of U.S. drone strikes, which are often conducted unilaterally and have led to a significant number of civilian casualties.63

60

The relevant text from the SCO meeting in Astana reads Taking into account the conclusion of the active military phase of the antiterrorist operation in Afghanistan, the member states of the SCO consider it essential for the appropriate participants in the antiterrorist coalition to decide on the final time frames for the temporary use of the above-mentioned infrastructure objects and the maintenance of military contingents on the territory of SCO member states. See Sergie Blagov, Shanghai Cooperation Organization Summit Suggests new Russia-China Ties, Eurasia Daily Monitor 2, no. 130 (July 2005). 61 Medvedev ratified the convention on October 4, 2010. See, Office of the Russian President, Speeches and News (http://eng.kremlin.ru/news/1055). Accessed October 27, 2010. 62 See, Executive Director, Regional counter-Terrorism Structure of Shanghai Cooperation Organization Call on Foreign Minister, Pakistan Ministry of Foreign Affairs, May 19, 2010. (http://www.mofa.gov.pk/Press_Releases/2010/May/PR_110.htm). Accessed August 19, 2010. 63 Pakistani criticism picked of the drone strikes increased in late 2010, as the frequency and intensity of attacks picked up. See, CNN South Asia, Pakistan Criticizes 'Unjustified' US Drone Strikes, October 7, 2010: http://www.bbc.co.uk/news/world-south-asia-11490722. Accessed October 26, 2010.

41

Pakistan is also closer to full membership in the SCO; Russian opposition had been the primary roadblock, but apparently the 2010 SCO Summit saw Moscow change its position and support Pakistani admission, along with India.64 These developments suggest the potential for a greater security role for the SCO and RCTS in Central Asia. While the U.S. and NATO force is still the most significant in the region, the SCO does seem primed to step up as the primary multinational security force in Central Asia should the NATO operations in Afghanistan be scaled back or eliminated.65 As such, the counter-terrorism efforts of the RCTS, and the SCOs growing security responsibilities in Central Asia meet the requirements for classification as Type B strategic hedging. Before it can be considered as such, however, the RCTS must pass through the second and third filters that comprise the strategic hedging identification mechanism. Is the RCTS, or the SCO in general, part of an emerging set of internal or external hard balancing strategies being employed by Moscow and Beijing? Lieber and Alexander define internal hard balancing as a significant translation of latent economic, social, natural resource or economic strength into military capabilities that can be directly employed against a stronger actor, marked by meaningfully increased defense spending, the implementation of conscriptionor substantially expanded investment in military research and technology.66 Russian military expenditures, after plummeting at the end of

64

See, Stephen Blank, Interest in SCO Membership Grows Among Observers and Outsiders, Eurasianet, June 7, 2010 (http://www.eurasianet.org/node/61235). Accessed August 14, 2010. 65 Skeptics point out that the SCO was slow to react to the summer 2010 violence in Kyrgyzstan. This cast doubt upon the ability of the organization to take on stabilizing operations in the region, especially because the violence broke out while SCO members and observers were all meeting in Tashkent. Although SCO observers were on hand to witness the June 27 constitutional referendum, the initial reaction from the SCO was passive, stressing only the mutual support of state sovereignty, independence and territorial integrity, and general willingness to provide the Kyrgyz Republic with necessary support and assistance in solving this problem. For full text of the SCO statement, see Tashkent Declaration of SCO Heads of State Council Meeting, (http://www.sectsco.org/EN/show.asp?id=224). 66 See, Lieber and Alexander, Waiting for Balancing, pp. 118-122.

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the Cold War, have remained constant, between 3.5 percent and 4.5 percent of GDP since the founding of the SCO.67 In China, the PLA is in the process of a long-term modernization program, but it is unclear whether the build-up is sufficient to be considered a case of traditional hard balancing. The PRC has been remarkably consistent in its military spending. As a portion of GDP, military spending has stayed between 1.96 percent and 2.13 percent between 2001 and 2008.68 Even if the PRC is involved in internal balancing, it is hard to argue that its participation in the SCO is an important component of that strategy. Due to its status as an Intergovernmental Organization (IGO), it is plausible to view the Shanghai Cooperation Organization an example of external hard balancing. In order for it to qualify as such, however, the SCO would need to be primarily a military alliance, with a stated purpose of targeting the United States. There is clearly a military component to the SCO. Besides the growing security role of the RCTS, the SCO signed an agreement with the Collective Security Treaty Organization (CSTO) in 2007 that broadened security cooperation between the two groups.69 Moreover, Russia, China, and other SCO members have conducted several joint military exercises as part of the SCO framework. But all of these developments are geared toward addressing regional security concerns, and not to counter U.S. interests, allies, or assets. Despite the SCOs stated objective of promoting political multipolarity, and its rejection of a U.S. application for observer status in 2005, the organization has made numerous statements reiterating that it

67

Data on Russian military expenditures as a percentage of GDP are taken from the World Banks 2010 World Development Indicators: Russia (http://www.worldbank,org). Accessed September 26, 2010. 68 World Bank, 2010 World Development Indicators: China 69 See, Security Alliances Led by Russia, China Link Up, The Daily Times, October 6, 2007: http://www.dailytimes.com.pk/default.asp?page=2007%5C10%5C06%5Cstory_6-10-2007_pg4_3 (Accessed October 24, 2010).

43

is not directed at the United States or its interests.70 The United States was even invited to attend the 2010 SCO Summit in Tashkent, though not in any formal capacity. In the end, despite its unquestionable military characteristics, the SCO does not constitute an act of external hard balancing by Russia or China against the United States. The SCO is one of, if not the primary security tool available to Russia and China in Central Asia. Their participation in the SCO, and dedication to the RCTS, easily meets the third requirement of the strategic hedging mechanism: that behavior be strategic in the sense that it is recognized as relevant to an important national security issue and that the behavior be developed, funded, and coordinated at the highest levels of government. Russian and Chinese heads of state are consistent and active participants in every SCO summit, and have made numerous statements regarding the centrality of the SCO to regional security. As Vladimir Putin noted before the 2006 SCO Summit, the SCO represents a new model of successful international cooperation.71 In his speech at the 2010 Summit, Dmitry Medvedev emphasized the global and regional importance of the SCO by stating that, the world recognizes the authority of the SCO in fighting what our Chinese partners call three powers of evil: terrorism, extremism and separatism, and that it should play an active part in helping the friendly people of Afghanistan to build an independent, peaceful, neutral and flourishing country.72 In 2007, after attending a massive, nine-day counter-terrorism exercises held in Russia's Urals mountains that included troops from China, Russia, Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan,
70

After signing a treaty that linked the SCO and the CSTO in 2007, then-SCO General Secretary Nikolai Bordyuzha claimed that We have no plans to compete with NATO; on the contrary, we are striving to cooperate with NATO. 71 See, Vladimir Putin, SCO: a New Model of Successful International Cooperation, Moscow, June 14, 2006: http://www.kremlin.ru/eng/sdocs/speeches.shtml (Accessed August 22, 2010). 72 Dmitry Medvedev, Speech at Meeting of Shanghai Cooperation Organization Council of Heads of State, June 11, 2010, Tashkent, Uzbekistan: http://eng.kremlin.ru/transcripts/419 (Accessed August 25, 2010).

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Chinese President Hu highlighted the need to boost the efficiency of SCO member states in the fight against terrorism, and has repeatedly identified the SCO as a crucial tool in combating terrorism, extremism and separatism.73 Within the general context of Sino-Russian relations, participation in the SCO and the development of the Regional Counter-terrorism Structure constitute strong examples of Type B strategic hedging. While falling well short of what would be considered an example of traditional hard balancing, the RCTS is an important, strategic counterterrorism tool for both Beijing and Moscow, and it will become even more so if the United States reduces or eliminates its own counter-terrorism operations in Central Asia. In this way, both China and Russia are able to use the RCTS as a way to hedge against the potential loss of public goods currently being provided by the United States in Pakistan, Afghanistan, and other countries in the region.

French Opposition to the 2003 U.S. Invasion of Iraq Unlike the two preceding cases, French opposition to the 2003 U.S. invasion of Iraq is not an example of Type A or Type B strategic hedging. It is likely that French action was motivated by a desire to soft balance against the United States by engaging in diplomatic entanglement, but French strategy was not based on a desire to improve its ability to confront the U.S. with military force or the need to prepare for the elimination of public goods currently being provided by Washington. As such, it is not an example of strategic hedging behavior.

73

For reactions of Putin and Hu to the military exercises, see, Le Tian, SCO Members Tackle Terrorism, China Daily, August 18, 2007: http://www.chinadaily.com.cn/china/2007-08/18/content_6032772.htm (Accessed August 24, 2010).

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Despite an intense effort to gain support from the United Nations Security Council (UNSC) for its March 2003 invasion of Iraq, the United States (along with Great Britain and other allies) resorted to fighting the war without UN approval.74 Opposition was strong from countries like Germany and Russia, but seemed predicated on factors unrelated to system structure. Domestic political opportunity may have caused German Prime Minister Gerhard Schroeder to very publicly state his refusal to approve the use of force, even if it were sanctioned by the UNSC. Russia was reaping huge economic rewards as part of the oil-for-food program, and stood to benefit even more from advantageous oil contracts promised by Saddam Hussein in the event that UN sanctions were lifted.75 But it was France that spearheaded opposition in the Security Council, ultimately threatening to veto any final resolution that would directly and specifically grant UNSC approval of the use of force. The French also expressed its opposition in other institutional contexts, by attempting to block NATO preparations to defend Turkey in case it was attacked, by trying (but failing) to get the European Union to issue a statement against rushing to war, and by succeeding to get a summit of African states to endorse Frances anti-invasion position.76 The source of French opposition is difficult to pinpoint. Against the backdrop of one-time Foreign Minister Hubert Vedrines concerns about U.S. hyperpower, or
74

For a wide-ranging analysis of tension between the United States and its allies over the Iraq issue, see Jeremy Shapiro, Allies at War: America, Europe, and the Crisis over Iraq (New York: McGraw-Hill, 2004). Evidence and analysis of the French position in particular can be found in the proceedings of a 2003 conference: The United States and France After the War in Iraq, (Washington, D.C.: Center for the United States and France at the Brookings Institution, May 12, 2003: http://www.brookings.edu/events/2003/0512france.aspx (Accessed October 10, 2010). 75 These interpretations of German and Russian motivation can be found in Brooks and Wohlforth, Hard Times for Soft Balancing, pp. 93-97. 76 T.V. Paul discusses these examples in Soft Balancing in the Age of U.S. Primacy, pp. 66-67. For additional details see, respectively, Bradley Graham, U.S. Official Appeals to NATO for Military Support, Washington Post, January 17, 2003; Keith B. Richburg, E.U. Unity on Iraq Proves Short-lived; France again Threatens to Veto U.N. Resolution Mandating Force, Washington Post, February 12, 2003; and Glen Frankel, Chirac Fortifies Antiwar Caucus, Washington Post, February 22, 2003.

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Jacque Chirac and Dominique Villepins stated desires for a multipolar world, there are some clear structural motivations at work. The structural connection makes French behavior during this period perhaps the best example of the soft balancing strategy identified by proponents like T.V. Paul. But is French opposition to the Iraq invasion an example of strategic hedging behavior? If so, French institutional and diplomatic opposition should be driven by the desire to gain a competitive advantage over the United States in case of a militarized dispute between the two countries (Type A hedging), or a desire to insulate France against the possible loss of public goods or side payments currently being provided by the United States (Type B hedging). While French behavior may be an example of hedging bets in a general sense, there is little or no evidence to suggest that French opposition to Washingtons plans in Iraq is an example of either type of what I have outlined here as strategic hedging behavior. Type A hedging is not unimaginable between allies, but it is highly unlikely.77 Despite its maintenance of an independent nuclear deterrent and ongoing tension about French participation in the military wing of NATO, there is no sign that Paris is aiming to improve its ability to confront the United States militarily. Even if it were, there is nothing in the nature of Frances opposition to the Iraq war that would further that objective. In hindsight, a compelling case could be made that hedging states wishing to increase their military leverage vis--vis the U.S. might have actually tried to push Washington into a war and occupation that stood to be long, expensive, and ultimately draining.

77

Alliances that emerge largely based on wartime objectives will see the highest rate of strategic hedging among member states. U.S. and British planning for a second front during World War Two, for example, reflected a desire to increase post-war leverage against the Soviet Union.

47

The case for Type B hedging is also weak. The American military role in Europe does support the collective security of Europe in a way that is commensurate with the notion of providing a public good. It is also true that French leaders (in 2003, and today) may privately fear the removal of U.S. military presence in Europe because of the increased responsibility and expense that would come along with maintaining regional stability and collective security in the absence of U.S. forces. But it is hard to see how opposition to the Iraq war would address such concerns. Instead, it has been the European Security and Defense Policy (ESDP) and the more recent Common Security and Defense Policy (CSDP) that come closest to serving as insurance policies against the loss of U.S. military operations in Europe.78 If anything, French and German opposition to the Iraq war drove a wedge in the Trans-Atlantic relations that is still not fully healed, and thus did more to jeopardize Washingtons interest in supporting European security than promote it.79 There is clear evidence that French opposition to the Iraq war does not constitute an example of either Type A or Type B strategic hedging. Because it does not qualify to pass through the first filter within the strategic hedging identification mechanism, there is no need to apply the second or third filters.80 Table 2 summarizes each of three cases

78

For more on the ESDP as an insurance policy against the withdrawal of U.S. forces, see Robert J. Art, Europe Hedges its Security Bets and Barry Posen, ESDP and the Structure of World Power, pp. 5-17; and as part of the soft balancing debate, see Brooks and Wohlforth, Hard Times for Soft Balancing, pp. 91-93, Lieber and Alexander, Waiting for Balancing, pp. 123-124; Robert J. Art, Correspondence: Striking the Balance, pp. 180-183. 79 See, Elaine Sciolino, French Struggle Now with How to Coexist with Bush, New York Times, February 8, 2005. 80 Were French behavior to meet the first criterion and thus be applied to the latter criteria, it would clearly meet both. Pariss use of international institutions to oppose the U.S. was not a case of internal or external hard balancing, but it was clearly strategic in the sense that it was initiated and implemented by the highest levels of government.

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discussed in this section as they relate to the three filters that comprise the strategic hedging identification mechanism.

[TABLE 2 ABOUT HERE]

DEVELOPING THE STRATEGIC HEDGING APPROACH What principles should guide further development of the strategic hedging approach? First and foremost, there needs to be a solidification of the hard core of a strategic hedging research program. Which assumptions are inherent to the approach and, if falsified, would signal that the research program is degenerative? While the strategic hedging identification mechanism presented in this paper constitutes a solid first step toward achieving this goal, conceptual refinement will allow for more conclusive empirical testing and ultimately, a more progressive research program. A more detailed roadmap can be provided when it comes to specific challenges associated with strategic hedging analyses. Perhaps most important is the need to further develop the relationship between core strategies, conditioning factors, and specific strategic decisions. By adopting an approach similar to that of neoclassical realism, a wide range of variables can be combined with the fundamental structural factors presented here in order to make predictions about how combinations of both will affect state behavior. Of particular importance is deeper investigation into the role of wellestablished conditioning factors related to geography, nuclear weapons, ideational similarity, economic interdependence, and external threats.

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Another important task is to distinguish between what might be called manual and automatic hedging.81 For hedging to be considered manual, states must behave with the explicit intent to hedge. This does not mean that the leaders must consciously conceive of their policies as acts of hedging, but the analyst should seek evidence that links state strategy to the structural incentives associated with the first filter of the identification mechanism presented in this paper. In other words, strategic hedging must be a reaction to concerns about future confrontations with the system leader, or the loss of public goods or subsidies that are currently being provided by the system leader. If behavior seems to accomplish the objectives that one might associate with strategic hedging, but no evidence can be found that links leadership decisions to the incentives described above, then the relevant case may be an example of automatic hedging. Such cases should, at best, serve as complements to examples of manual hedging. Because the goal of the analyst is to demonstrate some measure of intent, strategic hedging studies will, at least initially, be more likely to depend on qualitative investigation rather than large-n statistical analysis. For work that does employ a case study approach, selection should be based on variation in the key explanatory variables presented in this paper: system polarity, concentration trends, and key conditioning factors. Some attention should also be paid to the role of strategic hedging as an independent variable that influences rates of system transformation. For example, if Type A hedging involves a significant shift in relative military capability away from the system leader and toward the hedging state, there is reason to believe that high rates of hedging in the system as whole will lead to more rapid power deconcentration and a faster

81

This of course plays off of Inis Claudes distinction between manual, automatic and semi-automatic balancing. See, Inis Claude, Power and International Relations (New York: Random House, 1962).

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transition from unipolarity to multipolarity. On the other hand, high rates of Type B hedging may actually lessen the burden of public good provision on the system leader, and thus slow down its relative decline and delay the transition toward multipolarity. Further development of this logic may lead to some important insights for scholars that study the fundamental factors that encourage or discourage systemic transformation. Finally, it seems appropriate to address strategic hedging from the perspective of the system leader. What kinds of policies can a system leader adopt in reaction to secondtier states that are employing a hedging strategy against it? A complete answer to this question is clearly beyond the scope of this analysis, but a basic policy recommendation is readily available: The United States or any other system leader cannot eliminate the incentives that produce strategic hedging behavior any more than it can reverse relative decline. Important information about the strategic calculus of the hedging state can be gathered, however, by paying close attention to relative emphasis it places on Type A and Type B hedging. If emphasis is on the former, there is evidence that the hedging state perceives the emergence of a strategic rivalry between it and the system leader. Although the leading state cannot use this information to prevent further hedging, it can adjust its own expectations accordingly and be careful not to mistake the improvement in the hedging states competitive abilities as unrelated to its own relative decline. If emphasis is on Type B hedging, there is evidence that the hedging state is more concerned about the costs it might suffer as the leading state declines rather than any increased opportunities it may gain in terms of competitive leverage. In this scenario, the leading state should consider the advantages of shifting responsibility for the provision of at least some public goods to the hedging state as part of a burden sharing strategy. This

51

approach may be difficult to justify to domestic audiences, but it could have significant economic and military benefits that could greatly slow or even stop process of relative decline.

52

Figure 1: System Structure, Conditioning Factors, and Strategic Choice

CURRENT POLARITY + CONCENTRATION TREND Alternative Strategy #1 Alternative Strategy #3

Conditioning Factor A

CORE STRATEGY

Conditioning Factor C

Conditioning Factor B

Alternative Strategy #2

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Figure 2: A Mechanism for Identifying Strategic Hedging Behavior

UNIVERSE OF STATE BEHAVIOR !

FILTER ONE Does behavior improve the competitive ability of the actor should it enter into a militarized dispute with the system leader? (Type A hedging) OR Does behavior improve the ability of the actor to cope without specific public goods or subsidies that are currently being provided to it by the system leader? (Type B hedging)

YES FILTER TWO Does behavior avoid direct confrontation of the system leader via the formation of an explicit military alliance aimed at the system leader (external balancing), or via a significant arms build-up that is meant to challenge the system leader (internal balancing)?

YES FILTER THREE Is behavior strategic in the sense that it is developed, funded and coordinated at the highest levels of government? Does it involves an issue area that has been explicitly recognized as of major national security interest by the highest levels of government in the relevant state?

YES BEHAVIOR IS AN EXAMPLE OF STRATEGIC HEDGING

54

Table 1: Core Strategies for Second-Tier States in Various System Types

Process of Power Concentration Unipolar System Multipolar System BANDWAGONING BALANCING Process of Power Deconcentration STRATEGIC HEDGING BUCKPASSING

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Table 2: Case Summaries

56