The Structural Causes of Trusting Relationships: Why Rivals Do Not Overcome Suspicion Step by Step

If Israel and the Palestinians restarted their peace process, how would they overcome their suspicion of one another and form a trusting rela tionship? A prominent response is that actors develop trusting relationships gradually by probing each other's trustworthiness in a series of increasingly stringent tests. This paper challenges the efficacy of such incremental strate gies on the grounds that they force actors to expose themselves to exploitation before their counterparts demonstrate their trustworthiness, and offers an alternative approach that relies on the capacity of rules ("institutions") to limit opportunistic behavior. Trusting relationships emerge when suspicious parties limit the conse quences of exploitation. Governments will not transfer control over their in terests to others if doing so creates a significant risk of domination by former rivals or loss of political office to internal opponents. These dangers can be reduced by designing institutions that guarantee potential trustors the ability to influence collective choices ("effective voice") and that enable leaders to make decisions without undermining their standing among their supporters ("breathing space"). I examine the plausibility of this argument through a case study of gover nance in the European Community (EC) from the 1957 Treaty of Rome (TOR) to the signing of the Single European Act (SEA) in 1986. The EC (now Euro pean Union) is arguably the most important example of successful conflict resolution in the twentieth century, seen by policymakers as a model for resolv ing long-standing interstate conflicts.1 The European case was also a relatively easy one for trust-building strategies to succeed: U.S. troops on the Continent