To what extent does growing trade lessen the probability of inter-state conflict? This paper addresses this question by using the curiously under-studied dyadic relationship between Greece and Turkey. Measuring trade and foreign direct investment (FDI) volumes as well as tourism flows and by use of elite interviews with key actors from both countries, we find that economic relations have become stronger and more diverse over time, non-state actors now featuring prominently in deepening interaction. Such developments, however, fail to translate into conflict resolution at the political level. To account for these findings, we use a New Liberal approach, arguing that this helps us explain both enhanced plurality in bilateral economic exchange and the incompatibility of the two countries' respective conceptions regarding legitimate national borders.
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