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conclusions are derived from a small number of cases, we are cautious in making claims that our findingscan be generalized. The narratives that we provide and the conclusions that we draw from them may, however, spur further research on this interesting and important feature of security policy and international politics. Economic Engagement: Strategies and Expectations Scholars have usefully distinguished between two types of economic engagement: conditionalpolicies that require an explicit quid pro quoon the part of the target country and policies that are unconditional.1 Conditional policies,sometimes labeled linkage or economic ‘carrots’, are the inverse of economic sanctions. Instead of threatening a target country with economic loss(sanction) in the absence of policy change, conditional engagement policies promise increased economic benefits in return for desired policy change. Drezner (1999/2000) has proposed several plausible predictions regarding the employment of conditional [end page 524] strategies and the conditions of their success. He argues that the successful use of economic engagement is most likely between democracies (because democracies are better able to make credible commitments than non-democracies), within the context of international regimes (because regimes reduce the transactions costs of market exchange), and, among adversaries, only after coercive threats are first used. The success of a conditional engagement strategy should also be contingent on a state’s influence over domestic firms. If those firms find market-based transactions with the target state unappealing, a government pursuing a conditional strategy must convince them to deal with the target when desired change occurs. On the other hand, if domestic firms have strong economic incentives to conduct economic transactions with the target state, a successful conditional strategy must prevent them from pursuing their economic exchange in the absence of the desired change in a target state’s behavior. In this regard, democracies may have a harder time pursuing a conditional strategy: in a democratic setting, firms are likely to be openly critical of politicians who try to restrict their commercial
activities and will support candidates who do not place such demands on them. Our first hypothesis (H1), therefore, is that conditional engagement strategies will be less likely to succeed if the initiating state is a democracy, especially when underlying economic incentives to trade with or invest in the targetstate are strong.2 Unconditional engagement strategies are more passivethan conditional variants in that they do not include a specific quid pro quo. Rather, countries deploy economic links with an adversary in the hopes that economic interdependence itself will, over time, change the target’s foreign policy behavior and yield a reduced threat of military conflict. How increased economic integration at the bilateral level might produce an improved bilateral political environment is not obvious. While most