The last stage of the Anglo-German naval arms race before the First World War provides a valuable case study for the evaluation of current theories about the development of cooperation between intensely competitive states. After 1912 the naval competition between Britain and Germany resembled a game of prisoners' dilemma, as decision makers in both countries concluded that they benefitted from reciprocal restraint in battleship-building programs. Another striking feature of the naval rivalry in this period is that a modified version of a tit-for-tat strategy, devised by none other than Winston Churchill, who then served as first lord of Britain's Admiralty, played a critical role in controlling the competition. This essay analyzes the domestic political, diplomatic, and strategic factors that promoted mutual restraint in the battleship-building programs of Britain and Germany. Another purpose of this essay is to explore the limits of cooperation and to examine why this informal understanding on naval armaments did not lead to a significant improvement in Anglo-German relations.
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