Here is a rather underwhelming list of such purchases in recent times. West Germany buys three islands from the Netherlands in 1963? Pakistan buys Gwadar from Muscat and Oman in 1958. America buys the Danish West Indies in 1916. In 1947, though the Soviet Union bought part of Lapland in Finland to enable a hydroelectric plant.
We all know about the Louisiana Purchase. But that’s it since 1916!? Is Wikipedia failing us? I don’t think so.
Are there really no good Coasean trades between the two Irelands? Israel and the Palestinians? Armenia and Azerbaijan? How about Chile selling Bolivia a wee bit of coastline? I can think of a few reasons why territory purchases are these days so hard to pull off.
1. Incoming revenue is subject to a fiscal commons effect. Some crummy noble does not get to spend it on himself. And voters take government revenue for granted in most cases, and so do not perceive an increase in their expected retirement benefits from selling land to foreign powers.
2. In earlier times, a lot of land transactions were motivated by “they’re going to take it from us anyway, sooner or later.” Did Napoleon really think he could hold on to all that land? No. He wisely got out, though sadly subsequent French governments did not do “buy and hold.” Not to mention the Florida Purchase Treaty and Guadalupe Hidalgo. At least until lately, wars of conquest have been in decline and that has meant a corresponding decline in country-to-country land transactions as well.
3. First mass media and then social media have succeeded in making land boundaries more focal to the citizenry. Say Northern Ireland today wanted to sell a single acre to the Republic of Ireland. This would be seen as a precedent, rife with political implications, and it would be hard to evaluate the transaction on its own terms. Trying to sell a county would be all the more so. Just look at the map — should there really be so much of “Northern” Ireland to the south of ROI? Donegal, Derry, etc. — status quo bias, are we really at an optimum point right now?
4. Contested territories today often involve low levels of trust. Selling pieces of the Irelands back and forth is likely enforceable (but does ROI want any of it?), but an Israel-Palestine deal is not. Israel prefers to simply move the goalposts by increasing the settlements in the westward direction. What is really the gain from pressuring one of the Palestinian leaders to sign a piece of paper recognizing this? Most likely it would ensure his assassination and simply enflame tensions further. Both parties might prefer unilateral action over a deal.
5. Land in general is far less valuable than in earlier times. In theory, that could make it either easier or harder to sell land, but if some of the transactions costs (see above) are constant or rising in magnitude, that will make it harder. Let’s say Colombia raised the funds to buy back part of the Darien gap — whoop de doo! The country has plenty of empty land as it is. The whole notion of Lebensraum, and I don’t just mean in its evil Nazi form, has taken a beating since World War II.
6. Russia and China block some deals that might make sense, or maybe America blocks them too. Just run a Google search on “Arctic.” China is doing the investing, but we won’t let them own it. Russia doesn’t want America to own it. Everything thinks Canadian control or ownership doesn’t amount to much. Indigenous groups claim parts of it, but they cannot exercise effective control. And so the whole region and issue festers and stagnates.
7. Consider a deal that does make sense: the U.S. buying Greenland from the Greenlanders and also Denmark. Can we really in essence pay the 56,000 or so residents to give up their country and territory? I am no expert on the politics there, but I suspect they are unwilling to vote their pocketbook. (For one thing, I don’t see them posting a price on eBay or holding a garage sale.) How about skipping the vote and just offering them free condos in Miami? Let’s do it! Still, you can see the problem.
What else? And can you think of any current issues where a transactional approach might actually work?