Diplomatic Relations and Conflict Management: A Dynamic Analysis

Abstract. Are formal diplomatic relations a cause of peace, and if so, why? I analyze this question using new data on the timing of changes in American diplomatic representation abroad in combination with an integrated formal and statistical model of a dynamic decision problem. Unlike reduced form models, the structural approach allows me to disentangle long-run from short-run influences in the reciprocal relationship between diplomatic ties and peace. The estimation results indicate that a reciprocal relationship indeed exists; diplomatic ties increase the US incentive to behave peacefully, and ongoing conflict makes the US more likely to cut off diplomatic relations. A close examination of the structural parameters suggests that this relationship is best explained by diplomatic ties serving as a long-run commitment device: it is costly for the US to maintain diplomatic ties during a time of crisis, so the US will be relatively hesitant to initiate a dispute with a country once it has established a diplomatic presence there.