Endogenous Sources of Compliance with Territorial Agreements

This paper develops a theory of compliance with international agreements, with a specific application to treaties about territory. Even though the signing of a treaty is (by assumption) an act of cheap talk, this decision can alter the incentives for subsequent compliance through the reactions of domestic or transnational actors. If these actors make decisions based on expectations of compliance, and if their welfare is valued by at least one of the parties to the agreement, the signing of an agreement can endogenously increase the costs or decrease the benefits of non-compliant behavior. The models developed here demonstrate how the signing of a border treaty can stimulate cross-border economic activities or the migration of co-ethnics living on the contested territory, both of which reduce the likelihood of reneging in response to future shocks to relative power. In both models, expectations of compliance driven by a selection mechanism become self-fulfilling by triggering actions that strengthen the constituency in favor of compliance or weaken the constituency in favor of non-compliance. The logic of the model is explored through a study of the Italy–Yugoslavia border after World War II.