The Bargaining Paradox

The Bargaining Paradox: Transactional Diplomacy and the Erosion of Structural Bargaining Power

— The State That Wins Deals and Loses at Bargaining

This paper is the second installment of the research program that began with “The Collapse of Shared Context and the Explicit Society: The Theory of Context Externalization” (Paper 1). Where Paper 1 dealt with the storage location of information (transparency), this paper deals with the structure of time (repeated games).

Abstract

Core hypothesis. Transactional bargaining can increase the United States' short-term bargaining gains while at the same time eroding the structural sources of its long-term bargaining power. That is, short-term bargaining power ↑ ≠ long-term bargaining power ↑. The mechanism is the following chain: decline in alliance trust → decline in the voluntariness of cooperation → weakening of the alliance's force multiplier → the counterpart's construction of an alternative BATNA → decline in the United States' structural bargaining power. This paper names this the Bargaining Paradox — “A state may win more deals while becoming weaker at bargaining” — and proposes an analytical framework that separates deal-level outcomes from system-level bargaining capacity. The theoretical foundations are repeated-game theory (the shadow of the future), reputation capital, and credibility theory, and the diplomacy of the second Trump administration in 2025–2026 is taken as the test case, with four cases analyzed: NATO, the U.S.–ROK alliance, Europe and Ukraine, and China. This paper, however, is not an “anti-transactionalist brief.” Chapter 9 treats the contrary hypothesis (that transactionalism actually works) with due weight, and Chapter 10 formalizes, as discriminating variables, the conditions under which transactionalism strengthens a state's bargaining power and those under which it destroys it. All contemporaneous facts were checked and verified against publicly available original sources as of September 6, 2026 (Appendix).

Keywords: transactional diplomacy, bargaining power, repeated games, BATNA, alliances, force multiplier, reputation, shadow of the future, second Trump administration

Abstract (author's original English)

Core hypothesis. Transactional bargaining can increase a state's short-term bargaining gains while simultaneously eroding the structural sources of its long-term bargaining power. The mechanism runs: alliance trust ↓ → voluntary cooperation ↓ → the alliance's force multiplier ↓ → the opponent's alternative BATNA ↑ → structural bargaining power ↓. We call this the Bargaining Paradox: a state may win more deals while becoming weaker at bargaining. The paper separates deal-level outcomes from system-level bargaining capacity, grounds the argument in repeated-game theory (shadow of the future), reputation capital, and credibility theory, and tests it against four cases from the second Trump administration (2025–2026): NATO, the U.S.–ROK alliance, Europe/Ukraine, and China. This is not an anti-transactionalist brief: Chapter 9 states the strongest contrary case, and Chapter 10 formalizes the conditions under which transactionalism strengthens versus weakens national bargaining power. All contemporaneous facts verified against original sources as of September 6, 2026 (Appendix).

The standard question of negotiation theory is this: how much did you get in this negotiation?

This paper argues that the question is misplaced. Because there are two yardsticks for measuring a state's negotiation performance.

• Deal-level outcome: what was brought home from this negotiating table. Tariff rates, investment pledges, cost-sharing contributions, purchase contracts.

• System-level bargaining capacity: the power I hold in the next negotiation, the one after that, and negotiations that have not even begun. The trust of allies, the quality of the other side's alternatives, the weight of my promises.

[Derived] This paper's overall thesis: these two ledgers move independently, and the act of filling one can deplete the other. Transactionalism — a negotiating style that centers on immediate exchange and short-term gain and settles the relationship deal by deal — fills the deal-level ledger quickly, but the price leaks out of the system-level ledger. And between the two ledgers there is an accounting asymmetry: the gains from a deal are immediately visible and measurable, while the erosion of capacity is delayed and hard to measure. It is precisely this asymmetry that creates the incentive for political leaders to over-harvest structural bargaining power. It is the same structure as a company liquidating brand equity to meet quarterly earnings.

We put this proposition to the test of history. The United States of 2025–2026 is an almost ideal natural experiment for this hypothesis.

The methodological principles are the same as in Paper 1: (1) every key sentence is marked [Fact] or [Derived]; (2) citations are verified against original sources (Appendix); (3) falsification conditions are stated explicitly (Chapter 10).

The standard definition of bargaining power begins with the other party's outside option. The better one's BATNA (Best Alternative to a Negotiated Agreement) — the fallback when negotiation breaks down — in the sense of Fisher and Ury (1981), the greater one's bargaining power.

[Derived] This paper's extension: a state's BATNA is not determined by national power alone. Alliances are a multiplier of BATNA. Bases, intelligence, joint deterrence, joint sanctions, joint standards — everything that allies provide voluntarily strengthens the United States' options away from the negotiating table. In the very words of Chatham House (May 12, 2026), America's alliances are a force multiplier providing “a strength that China has struggled to compete with.”

Structural bargaining power is therefore decomposed as follows.

• Structural bargaining power = own national power × alliance multiplier × weakness of the counterpart's BATNA

• While transactionalism raises deal-level gains, if two of these three multiplicative factors (the alliance multiplier and the counterpart's BATNA) are cut, the total falls.

• The key point: this erosion is invisible precisely because of the deals' success. The receipt for the victory covers the invoice for the depletion of assets.

First, the victories are recorded honestly. [Fact] The deal-level results of the Trump administration in 2025–2026 are real and substantial.

• NATO defense spending: at the Hague summit in June 2025, all 32 member states agreed to spend 5% of GDP by 2035 (3.5% core defense + 1.5% security-related). It is the most sweeping revision of alliance commitments since the end of the Cold War, and Trump's pressure was its direct driver (NATO; Intereconomics, 2025).

• Trade agreements: the Turnberry agreement of July 27, 2025 — the EU accepted a 15% reciprocal tariff and pledged large-scale purchases of and investment in U.S. energy and weapons (Negotiation and Conflict Management Research, 2025). In July 2025, South Korea pledged 350 billion dollars of investment in the United States in exchange for lowering its reciprocal tariff from 25% to 15%; Japan pledged 550 billion and Taiwan 250 billion (Money Today, February 23, 2026).

• The U.S.–China truce: a trade-agreement framework was reached in Kuala Lumpur on October 26, 2025, and the Trump–Xi meeting was held at Gimhae Air Base in Busan on October 30. The threat of 100% tariffs was withdrawn, China suspended its rare-earth export controls for one year until November 2026, and agreement was reached on agricultural purchases and cooperation on fentanyl precursors (China Briefing timeline; Yonhap News).

• The Ukraine minerals agreement: the agreement establishing the U.S.–Ukraine Reconstruction Investment Fund (UURIF) was signed on April 30, 2025 and entered into force on May 23. The United States secured access to revenue from Ukraine's critical minerals, oil, and gas (CSIS, May 1, 2025; American Journal of International Law, Shaffer).

• New structures: in December 2025, the semiconductor and AI supply-chain alliance Pax Silica (14 partners) was launched, along with FORGE, which guarantees price floors for critical minerals (co-chaired by Japan, 54 partners) (Chatham House, May 12, 2026).

[Derived] This list cannot be denied. The problem is that it is half of the ledger.

[Fact] In the same period, the other ledger recorded the following.

• Confusion over the NATO presence: in May 2026, the Trump administration announced a reduction of about 5,000 U.S. troops stationed in Europe, then reversed itself a few weeks later, saying it would “send an additional 5,000 to Poland.” Allied foreign ministers reacted publicly that they were “confused,” and even a U.S. Defense Department official said anonymously, “we don't know what this means either.” U.S. forces in Europe number about 80,000, and Congress has a provision restricting reductions below 76,000 without consultation with allies (AP, May 22, 2026).

• The Greenland threat: at the Ankara NATO summit on July 7, 2026, Trump said that if Denmark did not hand over Greenland, he “could withdraw all forces from Europe.” He linked an ally's territorial question to the alliance's troop presence (Stars and Stripes, July 7, 2026).

• Signals of institutional restructuring: on July 28, 2026, the U.S. Defense Department launched a review of its European presence. Under Secretary of Defense Colby said its purpose was to have “NATO move fast and irreversibly toward taking primary responsibility for Europe's conventional defense” (Euronews, July 28, 2026).

• Allies acting on their own: Europe and Canada accelerated the strengthening of their own defense capabilities in response to the uncertainty of Washington's security commitments, and von der Leyen and Rutte officially spoke of “a stronger Europe within a stronger NATO” — that is, a reduction of dependence on the United States (Euronews, July 28, 2026).

[Derived] Here is the first half of the mechanism chain. Alliance trust ↓ → the voluntariness of cooperation ↓. The value of an alliance lies not in the treaty text but in the voluntariness that moves before being asked. Base access, intelligence sharing, joint planning, riding along in a crisis — these cannot be bought with contracts, only with trust. The refusal of European allies to let U.S. forces use their bases in the Iran war (Secretary of State Rubio publicly said he was “very disappointed”) is the first large-scale case in which voluntariness actually failed to operate (France 24, May 22, 2026). The alliance's force multiplier is calculated not on paper but in exactly that moment.

[Derived] The real cost of transactionalism does not end with allies growing weaker. The counterpart grows stronger. Pressured allies look for alternatives, and those alternatives soon become the counterpart's bargaining chips.

[Fact] The record of 2026:

• Allies' independent approaches to China: in January 2026, President Lee Jae-myung declared a “full restoration of relations” with Beijing and signed agreements on the economy, trade, science and technology, and digital matters. Two weeks later, Canadian Prime Minister Carney announced a “strategic partnership” (3 billion Canadian dollars in exports) covering energy, agriculture, and Chinese electric vehicles. British Prime Minister Starmer's visit to China brought 2.2 billion pounds in export contracts and about 2.3 billion pounds in market access, and in February German Chancellor Merz agreed to strengthen a “comprehensive strategic partnership” through 17 bilateral cooperation agreements (Chatham House, May 12, 2026).

• China's accumulation of BATNA: between 2020 and 2026, China systematically built up a legal shield — supply-chain diversification, the institutionalization of export controls on rare earths and critical minerals (gallium and germanium in 2023, antimony and graphite in 2024, the rare-earth licensing regime in 2025), the Anti-Foreign Sanctions Law (2021), and the revision of the Foreign Trade Law (2026). The result: at the Beijing summit of May 14, 2026, China was no longer the side “managing concessions” but the side “meeting the other as an equal through its capacity to retaliate,” and Trump himself called the meeting the “G-2” — an expression that elevates China to parity with the United States, which American diplomacy had deliberately avoided (Legal Times, May 18, 2026).

• Exposure of American constraints: on February 20, 2026, the U.S. Supreme Court ruled the IEEPA-based reciprocal tariffs unlawful, and Trump responded with new global tariffs under Section 122 of the Trade Act, first 10% and then 15%. Chinese experts read this as “a weakening of Trump's bargaining power” (Yonhap News, February 22, 2026), and an “alliance paradox” arose in which allies that had already concluded deals (Korea, Japan, Taiwan) were left relatively worse off by the blanket tariff — a structure in which those who negotiated in good faith lose, while China, which had been at a stalemate, can end up with better terms (Money Today, February 23, 2026).

[Derived] The second half of the chain: alliance multiplier ↓ → counterpart's BATNA ↑ → structural bargaining power ↓. A sentence from Chatham House sums this up exactly: “America's allies... have begun to conclude that U.S. commitments may be a relic of the past, and that is leading them toward independent approaches to China — starting with commercial relations.”

[Fact/Derived] But the limits are recorded too. China's construction of alternative systems is not one-directional. De-dollarization “has hit a wall” — the infrastructure of yuan settlement, CIPS, and the digital yuan exists, but “it is resilience, not influence, and almost no actor voluntarily adopts Chinese financial instruments” (Foreign Policy, June 24, 2026). There is a ceiling on the quality of the counterpart's BATNA, and this is important evidence for the contrary hypothesis of Chapter 9.

[Fact/Derived] We lay the theoretical foundations.

• The shadow of the future: the folk theorem of repeated games — cooperation is sustained only when the shadow of the future, the discount factor δ, is sufficiently large (Axelrod, 1984). In a one-shot game, defection is the dominant strategy.

• [Derived] The game-theoretic definition of transactionalism: the act of chopping a repeated game into one-shot games, deal by deal. Or, equivalently — the act of repeatedly sending the signal that my δ is low. The other side comes to distrust the me of tomorrow, and chooses hedging over cooperation.

• Reputation is a stock: reputation is not a flow but a capital stock. Accumulation is slow and depreciation is fast. And in international politics, reputation transfers across relationships — Seoul observes the pressure applied in NATO, and Tokyo observes the settlement demanded of Seoul. Transactionalism in alliance A changes the equation of alliance B.

• The value of self-binding: Ikenberry (2001, After Victory) — postwar American dominance was accepted not only because of power, but because of institutional restraint: the United States bound itself through institutions and thereby removed the fear of domination. [Derived] Transactionalism is the release of this self-binding. The moment the bound hands are freed, the weak see not a protector but a robber.

• [Derived] The reversal of audience costs: in Paper 1 (Section 5.2), transparency was an asset that created the credibility of promises through domestic audience costs. But audience costs attach only to promises that are kept. The openness of a society that publicly reverses its promises is an amplifier not of credibility but of non-credibility. The same device operates with the opposite sign.

[Fact] Scholars are already characterizing and analyzing the style of the second Trump administration as “transactionalism.”

• Knowledge–International Journal (2025): analyzes the diplomacy of the second Trump administration as transactionalism characterized by “win-lose negotiations, short-term gains, skepticism toward multilateralism, and the disparagement of the value of historical alliances,” and concludes that “given that there is no guarantee that the United States will remain the undisputed hegemon in the near future, transactionalism is unlikely to bring about long-term benefits from the standpoint of U.S. national interest.”

• The expert-perspectives analysis in Negotiation and Conflict Management Research (September 2025): analyzes Trump's tariff negotiating tactics through the frame of “immediacy versus durability” — “partners hedge, retaliate, and seek alternatives. Trust erodes and the compliance tail of agreements shortens. This pattern is not unique to the Trump administration, but its intensity and publicity have made the trade-off unusually sharp.”

• Chatham House (May 12, 2026): “Trump's treatment of U.S. allies has weakened his negotiating position with Xi” — the alliances were a force multiplier “that China has struggled to compete with,” but “the floor has fallen out of the U.S. alliance structure.”

• Chatham House (May 11, 2026): “For Beijing, Trump is the gift that keeps on giving” — the assessment that by imposing tariffs on allies he pushed Vietnam and India toward Beijing, cast doubt on NATO, and tied up U.S. forces and attention in an Iran war that is hard to end.

[Derived] Note: these diagnoses are not the agitation of political opponents but structural analyses from a negotiation journal (NCMR) and a think tank (Chatham House). And what they point to in common is not the fault of any individual deal but the time structure of the style itself.

8.1 NATO

[Fact] Timeline of events: the Hague 5% agreement in June 2025 (short-term victory) → the reduction announcement and reversal in May 2026 (confusion) → the threat of full withdrawal linked to Greenland at Ankara on July 7, 2026 → the launch on July 28, 2026 of a review of an “irreversible” shift of primary responsibility to Europe → Europe's acceleration of its own defense (“a more European NATO”).

[Derived] Reading: at the deal level, an unprecedented victory — the largest defense-spending increase in history. At the system level, erosion of the multiplier — the alliance began to be redesigned from a protective shield centered on the United States into a system that works without the United States. The paradox: what the United States demanded (European self-reliance) is being realized in exactly the direction that eliminates the American multiplier. The problem is not the 5%, but that the 5% is headed not toward “a U.S.-led NATO” but toward “a Europe less dependent on the United States.”

8.2 South Korea

[Fact]

• The 12th Special Measures Agreement (SMA, 2026–2030) was concluded in October 2024 — an 8.3% increase in the 2026 contribution over the previous year, indexed to CPI thereafter. Yet even after its conclusion, Trump called Korea a “money machine” and said he would “make them pay 10 billion dollars a year” (Yonhap News, November 2024).

• The trade agreement of July 2025: reciprocal tariff 25% → 15%, in exchange for a pledge of 350 billion dollars of investment in the United States. But after the Supreme Court ruling of February 2026 and the shift to a blanket 15% tariff, the difference disappeared between Korea, which had “bought” 15% through negotiation, and countries that “ended up at” 15% after pressure — the alliance paradox (Money Today, February 23, 2026).

• Korea's search for alternatives amid security uncertainty: the roadmap targeting 2030 for the transfer of wartime operational control (agreed in November 2025, second-stage assessment in 2026 — CRS, March 5, 2026). On July 27, 2026, retired Lieutenant General Chun In-bum's proposal for “dual-key nuclear sharing” reignited Korea's nuclear debate, and polls have shown support for nuclear armament as high as 80%. The policy elite prefers a “threshold” strategy of acquiring the capability while withholding the act (The Diplomat, August 19, 2026).

• In January 2026, President Lee Jae-myung's declaration of a “full restoration of relations” with China (Chatham House, May 12, 2026).

• A second-term outlook from a Korean government research institute (KCI-indexed, July 2026): continued demands for higher cost-sharing, the possibility of a medium- to long-term reduction of U.S. Forces Korea, and the possibility of reduced extended deterrence.

[Derived] Reading: Korea shows the textbook path of “trust decline → investment in an alternative BATNA.” The threshold nuclear-capability debate, the early transfer of wartime operational control, the restoration of relations with China — all three are insurance not against the dissolution of the alliance but against the scenario in which the alliance becomes meaningless. The very fact that premiums have begun to be paid is a market signal that the probability of the insured event has risen.

8.3 Europe / Ukraine

[Fact] UURIF was signed on April 30, 2025. The United States shifted to a “transactional” model that receives access to mineral and energy revenue instead of providing aid (AJIL, Shaffer — “quid pro quos in place of generosity”), and the core limited-partnership (LP) agreement is undisclosed. A similar model is being extended to the Democratic Republic of the Congo (minerals in exchange for security assistance) (CSIS, May 2025).

[Fact/Derived] But this deal is a double-edged sword — it is the core evidence for Chapter 9. IISS (May 8, 2025) reads it as “a triumph for Ukrainian diplomacy”: Ukraine won terms far fairer than the initial American demands (50:50 decision-making, all revenue of the first ten years reinvested in Ukraine), and above all produced a lock-in effect binding Trump to Ukraine's future. Trump subsequently resumed arms sales.

[Derived] Lesson: transactionalism can be turned around and used by the counterpart as a means of binding me through interests. The deal gave the United States resources, and gave Ukraine the United States. Which is more valuable, time will tell.

8.4 China

[Fact] Timeline of events: mutual retaliatory tariffs in April 2025 → the Kuala Lumpur framework of October 26 → the Busan meeting of October 30 (one-year truce, rare-earth suspension until November 2026, cooperation on agriculture and fentanyl) → the Supreme Court's IEEPA ruling in February 2026 (weakening of the American card) → the state visit to Beijing on May 14, 2026 (originally scheduled for late March to early April, postponed because of the Iran war) — no joint statement, Trump's “G-2” remark, China's framing of “constructive strategic stability” (Legal Times, May 18, 2026).

[Derived] Reading: on a seven-year time axis, the structure is being reversed. The structure of the first Trump term (2017–2020) was “American demands — Chinese management of concessions.” The structure of 2026 is “exchange of equivalents,” and China has institutionalized its retaliatory cards (rare earths, legal shields, market diversification). And while the United States pressured its allies, China filled the vacancies left by those allies through commercial diplomacy (the Korean, Canadian, British, and German cases noted in Chapter 8). What transactionalism subtracted from the alliance ledger was added to the counterpart's ledger.

[Derived] If this paper stopped here, it would become a piece of propaganda. We state the contrary hypothesis in its strongest form.

• The free-riding correction argument: an ally's “voluntariness” is often a euphemism for free riding. The 5% agreement achieved in one year through pressure what decades of persuasion had failed to achieve. European self-reliance was not a loss for the United States but its original goal, and even if it heads toward “a Europe without America,” a stronger European defense is in itself a cost saving for the United States. As Caverley & Kapstein (2025) point out, the United States still depends on its European allies despite stronger demands for burden-sharing — dependence is mutual.

• The no-alternative argument (TINA): de-dollarization has hit a wall (Foreign Policy, June 2026), European strategic autonomy is a task of decades, and Korea's threshold nuclear strategy remains at the “threshold” as long as the alliance is alive (The Diplomat, August 2026). Allies have no option of equal rank to replace the United States. Toward a counterpart with no alternative, transactionalism is not a cost but simply an exercise of power.

• The lock-in effect: as the Ukraine minerals agreement shows, transactional deals bind the counterpart through interests. A counterpart with a flow of benefits attached finds it hard to leave. Pax Silica and FORGE are new collective structures created for transactional motives (supply chains) — even Chatham House evaluated the two as “encouraging data that the administration is slowly realizing that there are cases where American unilateralism erodes power.”

• The size of the realized short-term gains: Turnberry (15% plus purchase pledges), the Korean, Japanese, and Taiwanese investment pledges (totaling more than one trillion dollars), the U.S.–China truce and rare-earth suspension, the extension of the model to the Congo. These are not hypothetical but realized flows.

• The strategic restraint argument: the line of Posen (Restraint, 2014) and Walt–Mearsheimer (2016) argues that American commitments were overextended in the first place. From this perspective, transactionalism is not a waste of bargaining power but the normalization of unsustainable promises. What is shrinking may be not structural bargaining power but structural over-commitment.

[Derived] Conclusion: the contrary hypothesis is not a fiction. In particular, 2 (TINA) and 5 (restraint) are serious interpretations competing with this paper's hypothesis over the same data. So the question is not “is transactionalism right?” — it becomes the question of the next chapter.

[Derived] The discriminating variables that decide between the two interpretations. The net effect of transactionalism is a function of the following conditions.

• Whether the counterpart has alternative options: if the counterpart has no alternative of equal rank, transactionalism strengthens (9-2); if it does, transactionalism destroys (Chapter 5). Measurement: the quality of the counterpart's BATNA — the existence and maturity of alternative markets, alternative security providers, and alternative financial channels.

• The frequency of repetition and the shadow of the future: in one-off, terminal transactions (resource purchases and the like), the cost of transactionalism is small. In infinitely repeated relationships (alliances, nuclear deterrence, currency), the cost is large.

• The asset specificity of the relationship: the greater the dedicated assets invested in a specific relationship (joint operational plans, intelligence fusion, interoperability), the more destructive settlement-style renegotiation becomes.

• The publicity of issue linkage: covert pressure limits the transfer of observation, but public pressure (Truth Social posts, summit remarks) changes the equations of third-party allies as well. The distinguishing feature of 2025–2026 is the extreme publicity of the pressure.

• The counterpart's capacity to co-opt pressured allies: China's commercial diplomacy satisfied this condition (Chapter 5). If the counterpart lacks the capacity to co-opt, the pressure is simply absorbed.

• The thickness of the institutional stock: treaties, laws, and congressional provisions (for example, the 76,000 floor for the European presence) are friction that limits the speed at which transactionalism can be executed. The thicker the stock, the slower the erosion.

• The accounting asymmetry of time horizons: deal gains become visible within the term of office, while the erosion of capacity is billed to the next administration. Without domestic institutions that correct this asymmetry (Congress reclaiming tariff authority, stricter treaty-ratification requirements — the direction Ikenberry argued for in a 2026 interview), over-harvesting is the equilibrium.

[Derived] Falsification conditions. This paper's hypothesis is discarded upon the following observations.

• Indicators of alliance cohesion (joint planning, the level of intelligence sharing, base access, voluntary participation in crises) recover and hold even after transactional pressure, and deal gains accumulate → the paradox is refuted.

• Allies' alternative investments (European self-reliance, Korea's threshold nuclear capability, commercial restoration with China) are reversed by a single American reassurance → the erosion is not structural but at the level of cheap talk.

• China's alternative channels (the yuan, CIPS, commercial co-optation) fail to attract voluntary adoption within five years → the “counterpart BATNA ↑” link is overestimated.

• Conversely, if between 2026 and 2031 allies' bilateral agreements with China expand, the setting of joint red lines toward China fails (exactly what Chatham House recommended), and the United States accepts worse terms than before in its next major negotiation → the paradox is supported.

[Derived] Paper 1 (“The Externalization of Context”) and this paper (Paper 2) are two axes of a single research program.

• Paper 1 = the axis of information: bargaining power is a function of where information is stored (transparency). Transparency lowers transaction costs (internal games), but forces the surrender of information rent in negotiation (external bargaining-type games) and creates credibility (external commitment-type games) — the sign splits by game type.

• Paper 2 = the axis of time: bargaining power is a function of the length of the shadow of the future (δ) and the stock of reputation. Transactionalism chops a repeated game into one-shot games to harvest short-term gains, but that signal cools the counterpart's cooperation and induces investment in alternatives.

• Combination: the credibility channel of Paper 1 (audience costs, two-level games) was an asset only for a society that keeps its promises. Paper 2 shows that this asset, as a stock variable, is consumable. When a transparent society repeatedly reverses its promises, transparency flips sign from an amplifier of credibility to an amplifier of non-credibility (Section 6-5). The axis of information and the axis of time are multiplied — if either axis is zero, the total is zero.

• The overall diagram of the research program: (storage location of information) × (time horizon) × (game type: commitment/bargaining) × (quality of the counterpart's BATNA) — the overall thesis of this program is that these four variables determine the bargaining power of states and organizations.

The Bargaining Paradox is not a story about morality. It is a story about accounting.

The United States really did win many deals in 2025–2026. The 5%, the 15%, the 350 billion dollars, the minerals, the truce. That is the left side of the ledger.

On the right side of the ledger there is a different record. Foreign ministers who said they were “confused,” a Seoul that has begun buying insurance, allies that declared a “restoration of relations” with Beijing, and a counterpart that spent seven years institutionalizing its retaliatory cards.

Which ledger is larger — the books have not yet been closed. What this paper can say with confidence is that the two ledgers move separately, that the receipt for the deal covers the invoice for the capacity, and that without an institutional correction device built in to address this asymmetry, over-harvesting is the equilibrium.

A state may win more deals while becoming weaker at bargaining.

One question remains. Who, when, and by which indicators, will close these books? That is what the next installment of this research program must measure.

Theoretical literature (classics)

• Axelrod, R. (1984). The Evolution of Cooperation. New York: Basic Books.

• Fearon, J. D. (1994). Domestic political audiences and the escalation of international disputes. American Political Science Review, 88(3), 577–592.

• Fisher, R., & Ury, W. (1981). Getting to Yes. Boston: Houghton Mifflin.

• Ikenberry, G. J. (2001). After Victory: Institutions, Strategic Restraint, and the Rebuilding of Order after Major Wars. Princeton: Princeton University Press.

• Mearsheimer, J. J., & Walt, S. M. (2016). The case for offshore balancing. Foreign Affairs, 95(4).

• Mercer, J. (1996). Reputation and International Politics. Ithaca: Cornell University Press.

• Posen, B. R. (2014). Restraint: A New Foundation for U.S. Grand Strategy. Ithaca: Cornell University Press.

• Press, D. G. (2005). Calculating Credibility. Ithaca: Cornell University Press.

• Putnam, R. D. (1988). Diplomacy and domestic politics: The logic of two-level games. International Organization, 42(3), 427–460.

• Schelling, T. C. (1960). The Strategy of Conflict. Cambridge, MA: Harvard University Press.

• Snyder, G. H. (1984). The security dilemma in alliance politics. World Politics, 36(4), 461–495.

Contemporary analyses and sources (all verified against originals as of 2026-09-06)

• Chatham House (May 12, 2026). Trump's treatment of US allies has weakened his negotiating position with Xi.

• Chatham House (May 11, 2026). The Trump–Xi summit: can progress be made on Iran?

• Chatham House (May 13, 2026). Trump–Xi summit will be about managing US–China rivalry, not resolving it.

• CSIS (May 1, 2025). What to Know About the Signed U.S.-Ukraine Minerals Deal.

• IISS (May 8, 2025). The US–Ukraine minerals deal: a triumph for Ukrainian diplomacy.

• Shaffer, G. (2025/2026). The U.S.-Ukraine Strategic Minerals Partnership in the Wake of Russia's War of Aggression. American Journal of International Law (Cambridge Core).

• Negotiation and Conflict Management Research (September 2025). Expert Perspectives on Trump's Tariff Negotiations (Falcão, Chao, Kesting, Druckman et al.).

• (Knowledge–International Journal) (June 2025). Analysis of transactionalism in the diplomacy of the second Trump administration and a study of its long-term risks.

• AP/Courthouse News (May 22, 2026); France 24 (May 22, 2026). Coverage of the NATO foreign ministers' meeting and the troop-presence reversal.

• Stars and Stripes (July 7, 2026). The Ankara NATO summit and the Greenland-linked withdrawal threat.

• Euronews (July 28, 2026). Launch of the review of U.S. forces in Europe (Colby, Hegseth).

• NATO. Defence investment and NATO's 5% commitment (the 2025 Hague agreement); Intereconomics (2025). Can Europe Deliver NATO's Five Percent?

• Yonhap News (November 6, 2024). Conclusion of the 12th SMA and Trump's “money machine” remark. / Yonhap News (February 22, 2026). The Supreme Court's IEEPA ruling and Chinese expert analysis (citing SCMP).

• Money Today (February 23, 2026). The blanket 15% tariff and the “alliance paradox” (Korea 350 billion, Japan 550 billion, Taiwan 250 billion dollars).

• Legal Times (May 18, 2026). Analysis of the 2026 U.S.–China summit — a fundamental change in the structure of bargaining power, the “G-2” remark, China's institutionalization of retaliatory cards.

• CRS (March 5, 2026). U.S.-South Korea Alliance: Background and Issues for Congress (R48877) — the wartime operational control roadmap, extended deterrence.

• The Diplomat (August 19, 2026). South Korea's Nuclear Dilemma — Chun In-bum's dual-key proposal, public support as high as 80%.

• Paper from a Korean government research institute (KCI, July 2026). A study of the ROK–U.S. alliance's response strategy after the U.S. presidential election.

• Foreign Policy (June 24, 2026). China's De-Dollarization Drive Has Hit a Wall.

• Asia Experts Forum (April 13, 2026). Interview with John Ikenberry — the liberal international order and Trump 2.0.

• China Briefing (updated August 26, 2026). US-China Relations in the Trump 2.0 Era: A Timeline — the Kuala Lumpur framework, the rare-earth suspension.

• Chatham House May 2026 analysis: the original text was confirmed to match the draft's citation exactly — “Trump's treatment of US allies has weakened his negotiating position with Xi,” dated May 12, 2026. The “alliances = force multiplier” phrasing, the cases of Korea, Canada, the UK, and Germany approaching China independently, and the information on Pax Silica (December 2025, 14 partners) and FORGE (54 partners) were all confirmed in the original.

• The study analyzing Trump-style transactionalism: the literature corresponding to the draft's “2026 study” was identified as the Knowledge–International Journal paper (published June 2025) — “win-lose negotiations, short-term gains, skeptical attitude towards multilateralism... transactionalism is unlikely to bring about long-term benefits.” The year has been corrected to 2025.

• Cross-verification completed: the Hague 5% agreement (NATO official + Intereconomics), UURIF (fourfold: CSIS, CFR, IISS, AJIL), the SMA (Yonhap), the Supreme Court's IEEPA ruling (twofold: Yonhap and investment media), the Beijing meeting and the “G-2” remark (Legal Times), the troop-presence confusion (twofold: AP and France 24), Korea's nuclear debate (twofold: The Diplomat and CRS).

• Date consistency: Trump's visit to China was originally announced for March 31 to April 2, 2026 (Yonhap, February 2026), postponed because of the Iran war (Chatham House, May 11, 2026), and took place on May 14 (Legal Times, May 18, 2026). This sequence is reflected in the text.

• Withheld from use: for the NCMR expert perspectives (September 2025), the individual essay authors and titles are described only to the extent confirmed on the journal page. Money Today's investment-pledge figures (Korea 350 billion, Japan 550 billion, Taiwan 250 billion dollars) are noted as coming from a single news source.