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This chapter reviews the literature on neoclassical realism, and explains its evolution as well as its strengths and weaknesses. Neoclassical realists agree with other realists that power is the chief determinant of foreign policy. Yet a reliance solely on structural factors – a state’s position in the international distribution of power – cannot account for underwhelming performances, structure explains the context in which a state operates but says little about the content of foreign policy. Neoclassical realists thus posit that domestic factors act as intervening variables or ‘transmission belts’ converting systemic pressures into choices. In addition, neoclassical realism is a theory of mistakes differentiating ideal or optimal foreign policy (responding solely to structural pressures) from actual, sub-optimal choices, which arise as a result of the filtering effect of domestic pathologies.

This chapter proposes modifications to neoclassical realism, labeling the result the strategic analysis variant. It is possible to view this variant in terms of its position on a continuum built around a tenet of realism, that capabilities shape intentions. At one end, structural realism predicts that states faced with a power vacuum seek to expand their interests abroad. At the other end, the strategic analysis variant increases accuracy while remaining within the confines of realism: it fragments power to understand how shifts in its components affect foreign policy, it increases the number and specificity of intervening variables to reflect their filtering role, it conceptualizes foreign policy more precisely by separating it into four components (power/security/influence-maximization, national interests, strategies, and consequences), and it systematizes the concepts of actual and ideal foreign policy and clarifies how states suffer consequences as a result of gaps between ideal and actual versions.

Chapter 3 details and delimits the range of unit-level intervening variables employed by neoclassical realists. In particular, it identifies four broad classes of intervening variables, which include: (1) leader images, (2) strategic culture, (3) domestic institutions, and (4) state-society relations. Within the variables are models, such as psychological and bureaucratic/organizational, which reflect other approaches to foreign policy analysis. All of which lead to policy response and international outcomes. It then explains how each of these intervening variable clusters affects the three intervening-level processes, which were identified in Chapter 1, (1) perception of the international system, (2) decision-making, and (3) resource mobilization and policy implementation.

Systemic pressures are filtered through domestic processes, explaining the conversion from possible – the range of feasible outcomes shaped by power – to actual choices. Three intervening variables matter: status, identity and factional politics. There is a discrepancy, first, between Iran’s aspiration to regional power status and its perception that the status ascribed to it is unbecoming of what it believes is its rightful place in the regional order, it suffers from a status discrepancy. This is a source of revisionism, but remains indeterminate. To achieve greater specificity, the second variable consists of the Iranian regime’s rejectionist identity, which specifies Iran’s interests by ranking alternatives and shaping decisions. The balance of power among regime factions – the third intervening variable – constantly evolves but remains within the parameters of the Islamic Republic’s identity. That is, power, aspirations and identity shape an increasingly precise set of options, bargaining among factions subsequently determines which are selected.

Chapter 7 focuses on the negative externalities of increased transactions on people who do not interact across borders themselves. Multilevel analyses show that in highly transnationalized countries, individual transnationalism has a greater impact on EU support than in less transnationalized countries. In other words, higher degrees of macro-level transnationalization exacerbate the relationship between individual transnationalism and EU support. In highly transnationalized countries, people who rarely interact across borders are even more likely to be eurosceptical than in less transnationalized countries. This finding suggests that in highly globalized societies, the integration–demarcation divide found by Kriesi and colleagues (2008) is even more pronounced, as people who rarely interact across borders might feel overwhelmed and marginalized by the transnationalization of their environment.