Agreements wherein parties pledge various forms of military cooperation are common in the international system and are often prominent in conflict settings. In 1949, for example, the United States, Canada, and numerous Western European states formed the North Atlantic Treaty Organization (NATO) to counter the threat of attack by the Soviet Union. In turn, the Soviet Union and various Central and Eastern European nations formed the Warsaw Pact in 1955 to counter threats from NATO. Since the end of the Cold War, the Warsaw Pact has dissolved while NATO has remained in force and expanded its membership. Article 5 of the NATO Charter specifies that an attack against any member state will be considered an attack against all member states. Following al Qaeda's attack against the United States on September 11, 2001, Article 5 was invoked for the first time. The United States and its NATO allies then cooperated in an invasion of Afghanistan to overthrow the Taliban, who had supported al Qaeda. US-led forces also cooperated militarily with the “Northern Alliance,” an intrastate coalition of Afghan groups fighting against the Taliban. Meanwhile, various transnational terrorist groups and criminal syndicates have been reported to cooperate with al Qaeda in ways that appear to constitute non-state alliance behavior.

The scholarly literature on alliances is vast, encompassing both theoretical and empirical research, with extensive coverage of political and economic determinants and effects. In this chapter we focus primarily on economic aspects of military alliances.