The development of parliamentary constraints on the executive was critical in Western European political history. Previous scholarship identifies external wars as a key factor, but with varying effects. Sometimes, willing monarchs granted parliamentary rights in return for revenues to fight wars. Yet at other times, war threats empowered rulers over other elites or caused states to fragment. We analyze a formal model to understand how external wars can either stimulate or undermine prospects for a contractual relationship between a ruler and elite actors. We recover the standard intuition that war threats make the ruler more willing to grant parliamentary rights in return for revenue. Our key insight is that war threats also affect the bargaining position of elites. A previously unrecognized tension yields our new findings: stronger outsider threats increase pressure either on elites to fund the ruler or on the ruler to accept constraints—but not both simultaneously. Elites with immobile wealth depend on the ruler for security. War threats undercut their credibility to refuse funding for an unconstrained ruler. By contrast, war threats make elites with mobile wealth and a viable exit option unwilling to fund a hopeless war effort. Only under circumscribed conditions do war threats align three conditions needed for parliament to arise in equilibrium: ruler willingness, elite credibility, and elite willingness. We apply our theory to posit strategic foundations for waves and reversals of historical European parliaments.