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Negotiating with Iran: Credible Commitment Problems?

The United States, the rest of the permanent members of the United Nations Security Council, Germany, and Iran are in Kazakhstan this week, negotiating over the Iranian nuclear program. The West wants it to stop, fearing it will eventually yield a nuclear weapon. Iran continues to claim that its program is purely for scientific and energy purposes. No one believes that. The United States’ focus has therefore been figuring out how to convince Iran to let it go.

Unfortunately, the dialogue in the U.S. has been hopelessly misguided. In this post, I will make two claims: (1) the United States can always offer sufficient concessions to induce Iran to end its program; (2) Iran does not believe the United States can credibly commit to these concessions over the long term, thus explaining Iran’s obstinate behavior. The policy implication is obvious: if we want Iran to stop proliferating, we need to stop pretending that it is difficult to buy Iranian compliance and start seriously questioning our own commitment to giving Iran a good deal.

I discuss claim (1) in the main theoretical chapter of my dissertation. Many years ago, I saw President Obama making a speech about getting Iran to join “the community of nations” and give up its nuclear program. From my knowledge of the existing political science literature, I figured it would be easy to show that no such agreement would work. After all, if you were Iran, why would accept concessions and not build when you could accept concessions and build anyway? The temptation to shift power seemingly destroys the possibility of negotiated settlements.

However, I was unequivocally wrong. The conversation about Iranian duplicity (and my own initial intuition) fails to properly analyze Iranian incentives. Nuclear weapons are costly. If Iran is offered most of the concessions it expects to receive if it were to proliferate, it has no further incentive to develop a bomb. Sure, Iran could continue proliferating, but it ultimately will not receive any more than the United States is already giving it. However, it will have to pay the cost of the weapons, which is a complete waste at that point.

Meanwhile, the United States has incentive to make this sort of “butter-for-bombs” offer. Although the U.S. would like to offer no concessions, such a strategy is naive, since this would induce Iran proliferate. On the other hand, offering the butter-for-bombs deal ensures that Iran will not build nuclear weapons. Moreover, since Iran is not paying the cost of proliferation, there is extra pie to go around. The United States can extract it.

The paper linked above gives the details. Surprisingly, these agreements work under very loose conditions. They work in an infinitely repeated interaction; they work when Iran could freely renege on the deal without any recourse from the United States; and they work even when the United States is completely incapable of observing Iranian nuclear progress. Butter-for-bombs is all about getting the incentives right. Offer Iran enough, and you do not have to worry about the deal falling through under any circumstance.

One important assumption of the above model is that the United States’ ability to launch preventive war remains constant through time. What happens if we relax this assumption? Another chapter from my dissertation asks this exact question. I show that if the United States goes from being unable to credibly threaten preventive war one day to being able to credibly threaten preventive war the next day, bargaining breaks down, and Iran develops nuclear weapons. But the blame goes squarely on the United States.

To understand why, suppose we reach the future time when the United States can credibly threaten preventive war. At this point, Iran cannot develop nuclear weapons. If it were to, the United States would respond by launching preventive war. Iran would not receive the benefits of nuclear proliferation but still waste the cost it paid to develop nuclear technology. Internalizing this, Iran will not proliferate. But because Iran will not proliferate, the United States has no reason to make those butter-for-bombs offers from before. Instead, it can offer no concessions and still induce Iranian compliance, as Iran does not have any better options.

Now think about how this endgame affects bargaining today. The United States would like Iran to accept a butter-for-bombs agreement and avoid proliferation. But consider the problem from the Iranian perspective. If Iran accepts those concessions today, then it advances to that future world where the United States can effectively leverage preventive war. At that point, the concessions stop. Alternatively, Iran could pay a cost upfront, proliferate today, and leverage the additional power to force the United States to continue giving concessions into the future. Needless to say, the second option looks a lot more attractive. Thus, bargaining breaks down, and Iran proliferates.

The problem here is not Iran’s stubbornness. Rather, it is the United States’ inability to credibly commit to continue providing concessions in the future. If the U.S. could, then Iran would have no reason to proliferate. (This was shown in claim 1.) However, Iran expects the United States to renege on the concessions, which in turn causes the proliferation behavior.

One might object that the United States would never take advantage of its strength in that manner. To anyone who doubts that, I point to May of 2003. This was the perhaps the height of American power. Things were going well in Afghanistan, we had just run over Saddam Hussein’s army, and the Iraqi insurgency had not yet begun. Iran felt enclosed. Rather than panicking, Iran extended an olive branch. Tehran sent the Swedish ambassador (who takes care of American interests in Iran) over Washington with a sweeping offer. Iran essentially waved a white flag and put everything on the table. Their demands in return were minimal: they wanted a prison swap and normalized relations. If this type of proposal arrived today, it would be magical Christmas land in DC.

I’d like to say that the Bush administration gleefully accepted the offer and sent a warm reply. But they didn’t. In fact, they sent no reply at all. They simply ignored it and chastised the Swedish ambassador for bringing it to their attention.

Seriously.

The domestic political consequences in Iran were bad. Moderates held the presidency at that point and pushed for the deal with the Ayatollah’s blessing. After their failure, they were pushed out of government. Mahmound Ahmadinejad’s administration replaced them.

As we all know, America’s position of strength evaporated, leading to the drawn-out insurgency. Iran knows that the decade-plus of war has left us exhausted from conflict. Preventive war is unlikely today. But given enough time, our war-weariness will fade away. Iran is concerned that the United States will immediately switch back to the firm fist of the Bush administration’s years. They see our temporary weakness as now-or-never opportunity to proliferate. And they are going for it.

How do we get out of this mess? It’s possible that we cannot, and we just have to suffer the consequences of another poor foreign policy decision from the Bush years. But if there is any hope of reaching an agreement with Iran, it must come through the United States demonstrating its commitment to ongoing concessions that will not instantly disappear at some later date. Unfortunately, the domestic political dialogue in the U.S. focuses entirely on the credibility Iranian commitments while treating our own as the word of God. This is misguided. And until we can have a serious conversation about our own credibility, we will not make any progress with Iran.

Preemptive War on the Walking Dead

The Walking Dead is cable’s most successful TV show, ever. I’m writing this after “Home,” and I’m going to assume you know what is going on by and large.

Here’s what’s important. As far as we care, there are only two groups of humans left alive. One, the good guys, have fortified themselves inside an abandon jail. The other lives in a walled town called Woodbury. They became aware of each other a few episodes ago, and they have various reasons to dislike each other.

War appears likely and will be devastating to both parties, likely leaving them in a position worse than if they pretended the other simply did not exist. For example, in “Home,” the Woodbury group packs a courier van full of zombies, breaches the jail’s walls, and opens the van for an undead delivery. Now a bunch of flesh-eaters are wandering around the previously secure prison.

Meanwhile, the jail’s de facto leader went on a mysterious shopping spree and came back with a truck full of unknown supplies. I suspect next episode will feature the jail group bombing a hole in Woodbury’s city walls.

All this leads to an important question: why can’t they all just get along? It’s the end of the world for goodness sake!

As someone who studies war, I am sympathetic to the problem. Woodbury and the jail group are capable of imposing great costs on one another merely by allowing zombies to penetrate the other’s camp. The situation seems ripe for a peaceful settlement, since there appear to be agreements both parties prefer to continued conflict.

This is the crux of James Fearon’s Rationalist Explanations for War, one of the most important articles in international relations in the last twenty years. Fearon shows that as long as war is costly and the sides have a rough understanding of how war will play out, then both parties should be willing to sit down at the bargaining table and negotiate a settlement.

However, Fearon notes that first strike advantages kill the attractiveness of such bargains. From the article:

Consider the problem faced by two gunslingers with the following preferences. Each would most prefer to kill the other by stealth, facing no risk of retaliation, but each prefers that both live in peace to a gunfight in which each risks death. There is a bargain here that both sides prefer to “war”…[but] given their preferences, neither person can credibly commit not to defect from the bargain by trying to shoot the other in the back.

The jail birds and Woodbury are in a similar position:

This is a prisoner’s dilemma.[1] Both parties prefer peace to mutual war. But peace is unsustainable because, given that I believe you are going to act peacefully, I prefer taking advantage of you and attacking. This leads to continued conflict until one side has been destroyed (or, in this case, eaten by zombies), leaving both worse off. We call this preemptive war, as the sides are attempting to preempt the other’s attack.

In the real world, countries have tried to reduce the attractiveness of a first strike by creating demilitarized zones between disputed territory, like the one in Korea. But such buffers require manpower to patrol to verify the other party’s compliance. Unfortunately, the zombie apocalypse has left the world short of people–Woodbury has fewer than a hundred, and the jail birds have fewer than ten. As a result, I believe we be witnessing preemptive war for the rest of this season.

[1] Get it? They live in a jail, and they are in a prisoner’s dilemma![2]

[2] I’m lame.

Panetta’s Second-Rate Understanding of Defense Spending

Leon Panetta, the outgoing U.S. Secretary of Defense, made an interesting claim during his exit interview. Automatic defense budget cuts will take place on March 1 unless Congress reworks the Pentagon’s allotment. Panetta urged Congress to act, saying that if the ten year, $500 billion cuts take effect, the U.S will become a “second-rate power” (his words).

$500 billion is a lot of money, so you may be inclined to agree. But anyone who has spent more than ten seconds looking at world defense spending would know the absurdity of Panetta’s claim.

Take a look at this Wikipedia article on defense spending. SIPRI keeps good data on defense expenditures around the world[1], and the Wiki gives a nice comparative visualization. Last year, the world’s militaries consumed about $1.7 trillion.

The U.S.’s share? $711 billion.

That’s approximately 41% of the entire world’s spending.

It’s more than Chinese (8.2%), Russian (4.1%), British (3.6), and French (3.6%) spending…combined.

It’s more than every non-permanent member of the United Nations Security Council…combined.

So, the U.S. isn’t exactly at a crossroads when it comes to military spending.

Moreover, $500 billion over the course of ten years comes out to $50 billion a year. That would still give the United States $661 billion in defense spending, still 39% of the new world’s spending and more than 4.5 times as large as China’s receipts. Thus, even if you think of China as having a second-rate military, ours would still be substantially better.

I understand that $50 billion will result in meaningful cuts to our military. But the United States needs to reduce spending somehow. Among all the alternatives, this one seems relatively painless.

[1] SIPRI has to estimate expenditures from a lot of countries, notably China and Russia. While their figures may be underestimates, SIPRI would have to have made massive mistakes for the effects to be relevant to the argument.

Does the Vice President’s Vote Matter?

Growing up, I remember my parents telling me about the vice president’s role in the Senate. As president of the Senate, the VP only casts a vote in the event of a 50-50 tie among the senators. Thus, the VP rarely ever casts a vote.

But, as my parents explained, the VP’s vote only matters if there is a tie. If the Senate’s vote was 51-49, or 63-37, or 100-0, the VP’s vote will not change the outcome. So, functionally speaking, the VP has full voting power in the Senate.

Fast forward about fifteen years. Presh Talwalkar had a post on Mind Your Decisions this evening on the very same point. After reading the entry, it hit me there is a major caveat: the filibuster.

For quick review, the Senate only votes on a bill if 60 senators vote to close debate. (If not, someone can “filibuster,” or aimlessly continue creating fake debate, to prevent an actual binding vote.) Thus, despite only needing 51 votes to pass a bill, you really need the tacit approval of 60 senators.

And there’s the rub. The VP does not vote on ending debate. Thus, he is powerless to stop the filibuster. In turn, for the VP’s tie-breaking authority to matter, it must be the case that at least 60 senators tacitly approve of a bill but exactly 50 of them are actually willing to sign off on it.

That’s a big caveat. Essentially, the filibuster nerfs the VP’s voting power.

Butter for Bombs SPSA Presentation

On Thursday, I will be presenting at the 2013 Southern Political Science Association Conference. My paper is entitled “The Invisible Fist: How Potential Power Coerces Concessions.” You can download a copy here. In it, I show that traditional explanations for nuclear proliferation are insufficient, as they do not appreciate bargaining’s role in incentivizing states to not join the nuclear club.

For my presentation, click here.

Fun with Institutions: Airport Subsidy Edition

Going back to Olympic badminton, Olympic swimming, and college football, recall the following:

Law: People will strategize according to the institutional features put in front of them.

Here’s the beautiful Lebanon Municipal Airport in New Hampshire:

Lebanon Municipal Airport is one of those tiny airports that services a sparsely populated area. The federal government subsidies these airports so they stay afloat…but only if they have enough customers. In fact, it needs to have 10,000 passengers to qualify for a $1 million grant. Administrators want that grant but are about a thousand short for the year.

Their solution? Sell flights for $12 until they hit the threshold.

Whoever set up the grant system surely did not intend for this to happen. A customer should only count as a customer if he is willing to pay for the good at a price that the business can sustain. But the 10,000 passenger threshold was some arbitrary break point that “separates” worthless airports from airports worth subsidizing. This system is obviously prone to abuse. Credit the Lebanon Municipal Airport administrators for figuring it out.

How do you fix the system? Simple: create a formula to determine the maximum federal grant money as a function of number of passengers per year. An airport that flies 10,000 per year should not be worth $1,000,000 more than an airport that flies 9,999 per year. Offering $100 in subsidies per passenger, for example, would eliminate Lebanon Municipal Airport’s perverse incentives.

War Exhaustion and the Stability of Arms Treaties

(Paper here.)

Earlier this month, I wrote about Iranian nuclear intransigence. In this post, I want to generalize the argument: war exhaustion sabotages long-term arms treaties.

This is part of my dissertation plan, so some background is in order. My main theoretical chapter shows that if declining states can’t threaten preventive war to stop rising states from proliferating, they can buy them off instead. The idea is that weapons are costly to develop. Rising states don’t have any reason to proliferate if they are already receiving most of the concessions they wish to obtain. Meanwhile, the declining state is happy to offer those concessions to deter the rising state from proliferating.

Let’s boil it down to the simplest version of the game possible. The United States has two options: bribe or not bribe. Iran sees the US’s move and decides whether to build a nuclear bomb. American preferences (from top to bottom) are as follows: not bribe/not build, bribe/not build, not bribe/build, bribe/build. Iranian preferences are as follows: bribe/not build, bribe/build, not bribe/build, not bribe/not build.

(I derive these utilities from a more general bargaining setup, so I suggest you look at the paper if you think these seem a little off. I personally wouldn’t blame you, since it seems strange that Iran prefers accepting bribes to taking bribes and proliferating anyway.)

Given that, we have the following game:

By backward induction, Iran builds if the US does not bribe but does not build if the US bribes. In turn, the US bribes to avoid having Iran build.

Great! Iran should not proliferate. But…yeah…that’s not happening at the moment. Why?

One problem is the reason why Iran prefers not building if the United States is bribing. The idea here is that bribes are permanent. By continuing to receive these bribes for the rest of time, Iran sees no need to proliferate since it is already raking in the concessions and nuclear weapons will only waste money.

But what if the United States had the power to renege on the concessions? In the future, the US will no longer be suffering from war exhaustion from Afghanistan and Iraq and will force Iran not to proliferate by threat of preventive war. At that point, the US can renege on the bribe without any sort of repercussions.

Again, boiling the argument down to the simplest game possible, we have this:

Backward induction gives us that the US will renege (why give when you don’t have to?). So Iran builds regardless of whether the US offers a bribe (it’s a ruse!). Proliferation results today because the United States can treat Iran as essentially nuclear incapable in the future. Iran has a window of opportunity and must take it while it can.

This is neat because a commitment problem sabotages negotiations. Recovering from war exhaustion makes the United States stronger in the sense that it will be more willing to fight as time progresses. Yet, this additional strength causes bargaining to fail, since Iran fears that the United States will cut off concessions at some point down the line. More power isn’t always better.

In addition to discussing Iran, the chapter also talks about the Soviet nuclear program circa 1948, which is fascinating. We often take Moscow’s decision to proliferate as a given. Of course the Soviet Union wanted nuclear weapons–there was a cold war going on! But this doesn’t explain why the United States didn’t just buy off the Soviet Union and avoid the mess of the Cold War. Certainly both sides would have been better off without the nuclear arms race.

Again, war exhaustion sabotaged the bargaining process. The United States was not about to invade Russia immediately after World War II ended. Thus, the Soviets had a window of opportunity to proliferate unimpeded and chose to jump through that window. The U.S. was helpless to stop the Soviet Union–we had zero (ZERO!) spies on the ground at the end of WWII and thus had no clue where to begin even if we wanted to prevent. The same causal mechanism led to intransigence in two cases separated by about 60 years.

If this argument sounds interesting to you, I suggest reading my chapter on it. (Apologies that some of the internal links will fail, since the attachment contains only one chapter of a larger project.) I give a much richer version of the model that removes the hokeyness. Feel free to let me know what you think.

Explaining Iranian Nuclear Intransigence

Iran is almost certainly trying to build a nuclear bomb right now. For the past four years, President Obama has been trying to get Iran to back down with a combination of rewards for nonproliferation and sanctions in the meantime. Why has Iran ignored us thus far?

A lot of people believe that you simply cannot appease rising states in this manner–they need weapons to secure concessions, so bargaining is fruitless. A few years ago, I was one such person. But in my effort to verify what I thought, I discovered I was wrong, and turned my results into an interesting paper. Settlements almost always leave both sides better off, even if the rising state can freely take the concessions and proliferate anyway.

So, again, why is Iran trying to proliferate?

I have a working paper that I think provides a reasonable explanation. (It is still preliminary, so I am not posting it here. Please email me and I will gladly send you a copy, though.) Conventional wisdom portrays Iran as the villain and us as the good guys. But if you think about the situation from their perspective, Iran’s motivation will be obvious.

The United States has always had a bad relationship with Iran since the revolution. There was a glimmer of hope on September 11, 2001 when Iran (quietly) assisted us with the invasion of Afghanistan. But that cooperation tanked when Bush declared Iran part of the “axis of evil” a few months later. This infuriated Iran, and things went cold for a couple of years.

Nevertheless, Iran again extended an olive branch in May 2003 in a remarkable effort that has amazingly escaped our collective memory. Iran put everything on the table–full diplomatic relations, dropping the nuclear program, recognition of Israel, ending support of Hezbollah, help with al-Qaeda–and asked for shockingly little in return. It is the type of deal we would jump at today, so much so that it is difficult to believe it was within our grasp just nine years ago.

How did Bush respond? He didn’t.

Yes, you read that correctly. The Bush administration completely ignored the offer.

So consider how Iran views Obama’s overtures. Iran knows the United States is weak right now–yet another war in the region would be difficult at the moment. So Iran has two choices. Option one is to proliferate now while it is still an option and force the United States to play ball in the future. Option 2 is accept Obama’s concessions now and hope the United States will continue them into the future without the threat of nukes in the background. Given the experience from 2003, which would you choose?

The unfortunate part is how inefficient the result is. Both sides would be better off if the United States could credibly commit to continued concessions into the future. But because the U.S. cannot, we are stuck with Iran attempting to go nuclear.

Of course, this does not mean proliferation will certainly be the ultimate outcome. Trade sanctions could lead to some domestic shock which changes Iranian priorities entirely. The proliferation process itself is uncertain as well; it is possible that Iran will find that proliferation will take too long and ultimately give up. But until we reach that point, don’t expect U.S.-Iranian relations to suddenly thaw.

The “You Are Imperfect Ergo You Are Worthless” Fallacy

Here is a generic criticism that has been, is, and will be levied at forecasting models like Fivethirtyeight and Votamatic:

The forecasting models fail to account for x, y, and z. But x, y, and z are fundamentally important! Therefore, we should not use the forecasting models.

Fallacious! I think we can all agree that, for various reasons, being able to predict the outcome of elections is important. We cannot just stop forecasting tomorrow. Given that, the question is a matter of what methodology we use to predict outcomes.

In that light, the above criticism fails to highlight the real question. Rather than asking “are forecasting models perfect?” we should be asking “are forecasting models better than the alternative?” In other words, we should treat what we currently have (talking heads on Fox News, CNN, and MSNBC) as the null hypothesis and the forecasting models as the alternative hypothesis. And that being the case, the forecasting models beat the hell out of political punditry.

Yet, the full criticism we often hear is this:

The forecasting models fail to account for x, y, and z. But x, y, and z are fundamentally important! Therefore, we should not use the forecasting models and instead keep pretending my inane rants actually have meaning.

Of course, the political pundit’s inane rants have absolutely no meaning. The pundit is quick to criticize what he does not like but then gives himself a free pass. However, not only does his punditry fail to account for x, y, and z, it is also completely made up horse manure, often fabricated for the sake of ratings. (Or page views…coughunskewedpollscough…)

Now, we should not take forecasting models completely off the hook. They have problems, and their creators are the first to admit that. But, as with anything else in life, we need to ask ourselves whether this devil is better than the other devil. And personally, I’d rather have Nate Silver’s pitchfork pointed at me than Joe Scarborough’s.