The comfortable assumption runs deep in modern strategic thinking: nations that trade together stay together. Economic interdependence, we're told, creates such mutual benefits that rational actors would never risk disrupting profitable relationships through armed conflict.

This logic underpins decades of Western engagement policy—from integrating China into the World Trade Organization to building energy partnerships with Russia. The theory seemed elegant: weave enough economic threads between potential adversaries, and war becomes too costly to contemplate.

Yet history keeps delivering uncomfortable counterexamples. Nations with deep commercial ties have repeatedly chosen conflict over commerce. Understanding why the liberal peace thesis fails requires examining not just economic incentives, but the strategic calculations, domestic pressures, and breaking points that can override them.

The eve of World War I offers perhaps the most striking refutation of commercial pacifism. In 1914, Britain and Germany were each other's largest trading partners. German banks financed British industry; British ports processed German exports. Financial integration ran so deep that Norman Angell's influential 1910 book The Great Illusion argued that European war had become economically irrational to the point of impossibility.

Within four years, those interdependent economies were locked in industrial-scale slaughter. The profitable relationship proved no barrier when strategic anxieties, alliance commitments, and nationalist pressures aligned toward conflict. Economic rationality, it turned out, was only one input among many.

More recent history reinforces the pattern. Russia and Ukraine maintained substantial trade ties before 2022—Ukraine was Russia's fifth-largest export destination. European energy dependence on Russian gas was supposed to create stabilizing mutual interests. Instead, Moscow calculated that short-term economic pain was acceptable for long-term strategic objectives.

The pattern extends beyond great powers. Argentina and Britain traded actively before the Falklands War. Iraq invaded Kuwait despite the Gulf states' economic importance to Iraqi reconstruction. In each case, leaders decided that non-economic objectives—territorial claims, regime survival, perceived security threats—outweighed commercial considerations.

Takeaway

Economic interdependence creates costs for conflict, but costs are not constraints. When leaders value something more than prosperity, profitable relationships become acceptable casualties.

The standard interdependence argument assumes roughly symmetric relationships—both parties have comparable stakes in maintaining trade, creating mutual deterrence against disruption. Reality rarely cooperates with this assumption.

When dependence runs unevenly, the less vulnerable party gains leverage rather than restraint. Consider how Russia weaponized European gas dependence, or how China's dominance in rare earth processing creates strategic chokepoints. The dependent party faces coercion; the dominant party faces opportunity.

This asymmetry can actually increase conflict risk by enabling economic warfare short of military action. Sanctions, export controls, and supply chain manipulation become tools of statecraft precisely because interdependence creates pressure points. The relationship doesn't prevent conflict—it shapes its form.

Furthermore, awareness of vulnerability can trigger defensive reactions that heighten tensions. When a nation recognizes dangerous dependence, it may seek to reduce exposure through decoupling, reshoring, or developing alternative suppliers. These protective measures themselves create friction, as the dominant partner loses its leverage and both sides face adjustment costs.

Takeaway

Interdependence without symmetry is leverage, not peace. The strategic question isn't whether nations trade, but whether either can afford to stop.

Even genuine mutual dependence has limits. Every economically constrained relationship contains a threshold beyond which non-economic considerations dominate decision-making. Understanding these breaking points matters more than measuring trade volumes.

Several conditions can push nations past economic rationality. Perceived existential threats override commercial calculations—if leaders believe national survival or regime security is at stake, no trade relationship provides sufficient deterrent. Taiwan's strategic significance to both the United States and China illustrates how core security interests can overshadow economic costs.

Domestic political pressures can also overwhelm international economic logic. Leaders facing nationalist mobilization, electoral challenges, or internal legitimacy crises may find that the political costs of not acting exceed the economic costs of conflict. Economic interdependence assumes rational state actors, but states contain competing interests and pressures.

Finally, time horizons matter. A nation willing to accept short-term economic damage for long-term strategic positioning will calculate differently than one prioritizing immediate prosperity. Authoritarian regimes with longer effective planning horizons may be more willing to absorb transitional costs that democratic leaders cannot survive politically.

Takeaway

Every trade relationship has a price at which leaders will accept disruption. The failure to identify these breaking points is the failure to understand when interdependence stops working.

Economic interdependence is real, and it does raise the costs of conflict. But elevated costs are not prohibitive constraints. They're variables in complex strategic calculations that include security threats, domestic politics, ideological commitments, and time horizons.

The policy implication isn't that economic engagement is useless—it can create genuine incentives for cooperation and channels for communication. But treating trade ties as conflict prevention misunderstands how nations actually make decisions about war and peace.

A clearer framework recognizes interdependence as one factor among many, asks where asymmetries create leverage rather than restraint, and identifies the breaking points where economic logic gives way to other imperatives. That's less comforting than believing commerce guarantees peace, but considerably more useful for understanding the world as it operates.