The Political Economy of European Foreign Policy Instruments
Member states of the European Union (EU) have both common and conflicting foreign policy interests. For example, they have shared concerns in the realms of security, the promotion of democracy, rule of law, and human rights. Cooperation through the EU can help to divide costs and enhance credibility. On the other hand, EU countries are competitors in economic foreign policy matters and want to maintain some room to manoeuvre. As the EU is both a custom, economic and monetary union, member states cannot use monetary politics, employ different external tariffs against third countries, or sign trade agreements. However, national governments have discretion to use bilateral investment treaties, loans and aid both unilaterally and multilaterally. The project aims at studying the strategic choice of EU member states both in terms of economic foreign policy instruments and channels to pursue their foreign policy goals. Based on theoretical models of international cooperation we will formally model EU country’s strategic foreign policy choices. We then test our predictions empirically using dyadic time-series-cross-section data for all EU member states over twenty years.