The crisis in Ukraine confounds our understanding of the relationship between economic interdependence and conflict. EU-Russian energy interdependence has kept conflict from escalating, as both sides are keenly aware of the costs of disrupting their mutually beneficial relations. Europe has been reluctant to apply economic sanctions for fear of disrupting energy flows from Russia and Russia has curbed its support for separatist rebels in the East, fearful of the damage sanctions could cause its economy. However, growing interdependence in the years leading up to the crisis did not stop Russia and Europe from adopting adversarial policies that are at the root of the current crisis. Both sides’ efforts to include Ukraine in competing regional integration projects destabilized the country and moved it to the brink of civil war. The article explores the relationship between economic interdependence and conflict from the perspective of EU-Russian energy relations. It finds that rather than embracing interdependence, both sides have seen it as a threat to their security and have adopted policies to reduce their exposure. These policies threaten the other side because they can turn the relationship into one of asymmetrical interdependence -- where one side is less dependent on the relationship and therefore gains political leverage over the other. As a result the energy relationship looks like a classic security dilemma - where neither side can improve its own security without threatening the security of the other side. These findings help dispel commonly held notions about the pacific effects of interdependence and show that interdependence can exacerbate tensions and promote conflict -- particularly when it is focused on one area and falls short of complex interdependence. Western policymakers should heed this lesson as they design policies of economic engagement towards "rogue states" such as North Korea or emerging rivals such as China.
Russia and NATO have failed to establish binding institutional arrangements and they are now locked in increasingly dangerous security competition. A closer look at two issue areas where their efforts at binding have failed—NATO enlargement and missile defence—shows that Russia and NATO find themselves facing a ‘catch 22’. They need binding arrangements to overcome the relative gains problems that inhibit security cooperation, yet their concerns about relative gains prevent them from establishing these arrangements in the first place. To overcome this dilemma, NATO and Russia have to craft binding arrangements that seriously address each side’s concerns about relative gains. Less formal and institutionalized binding arrangements may better serve this goal. Such arrangements will not put an immediate end to security competition, but they will help them build a higher level of trust, allowing them to gradually develop deeper and more comprehensive binding arrangements.