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This chapter explores the link between economic instruments of statecraft and the broader foreign policy goals and strategies of states. Economic sanctions are used in conjunction with diplomatic and military measures in response to foreign policy problems and opportunities. However, they are not always effective. The chapter begins with a discussion of the instruments and objectives of economic statecraft, including trade restrictions, financial sanctions, investment restrictions, and monetary sanctions. It then explores the potential of economic incentives as a tool of statecraft and the question of whether economic interdependence leads to harmony, as liberals believe, or conflict among states, as realists predict. It shows that economic interdependence can either lead to peace or conflict depending on the future expectations of policy makers, the nature of the military balance, and the form that economic interdependence takes.

This chapter deals with two litmus tests for theories of European integration. The first part asks, how and to what extent various approaches can explain the contemporary crises of European integration. It thereby tackles the question of whether European integration theories might have biased EU scholars towards ignoring evidence for (dis-)integration. While being more optimistic about the state of the Union than many EU scholars are, the authors of this chapter argue for a more differentiated conceptualization of integration as a continuous variable that takes disintegration, rather than stagnation or no integration, as the opposite value of integration. The second part of the chapter examines to what extent European integration theories are able to shed light on experiences with regionalism across the globe. It argues that they do provide plausible accounts for the emergence of regionalism around the world. Comparing regions points to important scope conditions under which European integration theories operate. When it comes to outcomes, however, they need to be complemented by explanations emphasizing diffusion to clarify why and when states are more inclined to pool and delegate sovereignty in some regions than in others.