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Moral hazard: Japan-South Korea relations and international relations theory

Moral hazard: Japan-South Korea relations and international relations theory

I have been trying for a while to explain South Korea-Japan tensions from a theoretical perspective (see for example here, here and here). Given their location right next to China, North Korea, and Russia, as well as their alliance relationships with the US, one would think they would be allies, but they aren't. I'm increasingly using the idea of 'moral hazard' to explain their lack of an alliance: both are 'insured' by the US against more serious threats, so they can say all kinds of crazy stuff about each other with no consequence.

Alliances are an old topic in international relations theory. Going back to Stephen Walt, Thomas Christensen and Jack Snyder, and who knows how many other realists, a basic alliance concern has been either the 'abandonment of the client' or the 'entrapment of the patron'.

Abandonment is when a patron does not help an client in a conflict, and the client is forced to capitulate to a threat or bandwagon with it. A recent Asia Pacific example would be the Philippines' conflict with China over the Scarborough Shoal. The US was simply unwilling to be pushed into a potential conflict with China. The Philippines therefore was forced to accept Chinese control and has sought a tighter relationship with Japan to compensate.

Entrapment, conversely, is where a reckless client chain-gangs a patron, against its wishes, into a conflict. Examples include Austria-Hungary and Germany in World War I, North Korea with and the Soviet Union and Communist China in the Korean War, and Cuba and the USSR (almost) in the Cuban Missile Crisis. Abe's Japan and the US in the stand-off with China is perhaps a more recent example. [fold]

In each case, a smaller, weaker state picks a fight with a larger opponent, confident that a larger ally, a patron, will back it up. Even though the small ally picks the fight with the opponent, the patron also broadly views the opponent as an enemy. That makes it easier for the patron to get sucked in.

Some part of the domestic-level game in the patron's politics has already been won by the small state. It has allies in the patron's foreign policy decision-making process who share its threat assessment and help entrap the patron. Israel-Iran is a really good example: US neoconservatives and hawks have aligned with Benjamin Netanyahu against their own president.

However, this entrapment dynamic does not really capture the Japan-South Korea relationship. That relationship is better characterised this way: one ally picking a fight with another ally, putting the patron in an adjudication dilemma. 'Moral hazard' is a term which captures the dilemma in play here. Both clients are insured by the same patron, so they feel free to take risks in their relationship with each other. Because the patron's elites do not view either client as an enemy, each client knows that the patron will not get chain-ganged in, no matter how much they raise a fuss in their relationship with the other. The Greece-Turkey relationship within NATO is another example.

The use of 'moral hazard' is a possible theoretical addition to the alliance literature with a nice empirical focus on Asia. This model captures Japan and Korea, in focusing on inter-allied bickering, rather than ally-opponent bickering, and it carves out a third theoretical position, distinct from the traditional ideas of entrapment or abandonment.

Too much of the literature focuses on hub-and-spoke management and confrontation with China. The moral hazard idea captures inter-allied relations, which does not get nearly so much attention. 

Photo by Flickr user ..tmh.

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