Research on the ''contact'' hypothesis supports the conclusion that a necessary (if not sufficient) condition for reduction of intergroup conflict and prejudice is some form of cooperative interdependence in pursuit of common, superordinate goals. The apparent instability of cooperative arrangements among ethnic groups in the international arena challenges current social psychological theor ies of intergroup relations. Brewer's (1991) [Personality and Social Psychology Bulletin, 17, 475-482] theory of ''optimal distinctiveness'' provides an explanation for this instability of superordinate groups in terms of competing needs for inclusion and differentiation. Recent experimental research on cross-cutting social group identities and social roles suggests one model in which groups can maintain distinctiveness and mutual cooperation in the long run. Copyright (C) 1996 Elsevier Science Ltd.