The Unforeseen Consequences of Extended Deterrence: Moral Hazard in a Nuclear Client State

Abstract

Do “nuclear umbrellas” create a moral hazard that can increase the risk of war? In this article, we investigate whether situations of extended deterrence in which a nuclear patron makes a defensive commitment to a nonnuclear client state can inadvertently increase the likelihood that a client will initiate a crisis with another state. Using data on the crisis behavior of states from 1950 to 2000, we estimate the impact of a nuclear umbrella on various crisis outcomes, including the initiation and escalation of militarized conflict. Interestingly, we find no evidence that such commitments increase the risk of war or even two-sided violence at lower levels. However, consistent with both the moral hazard logic and bargaining theories of war, we show that this appears to be because potential target states offer increased policy concessions to client states to avoid costly fighting. Thus, the link between nuclear umbrellas and moral hazard appears to be real, but it is reflected in the division of benefits rather than a greater likelihood of war. The results have important policy implications as the US contemplates extending its nuclear umbrella.