Catherine will extend the borders of the Russian Empire southward and westward during her reign to absorb New Russia, Crimea, Northern Caucasus, Right-bank Ukraine, Belarus, Lithuania, and Courland at the expense, mainly, of two powers—the Ottoman Empire and the Polish–Lithuanian Commonwealth.

All told, she will add some two hundred thousand square miles (five hundred and twenty thousand square kilometers) to Russian territory.

Catherine's foreign minister, Nikita Panin (in office 1763–81), exercises considerable influence from the beginning of her reign.

A shrewd statesman, Panin dedicates much effort and millions of rubles to setting up a "Northern Accord" between Russia, Prussia, Poland, and Sweden, to counter the power of the Bourbon–Habsburg League.

When it becomes apparent that his plan cannot succeed, Panin will fall out of favor and Catherine will have him replaced with Ivan Osterman (in office 1781–97).

Catherine agrees to a commercial treaty with Great Britain in 1766, but stops short of a full military alliance.

Although she can see the benefits of Britain's friendship, she is wary of Britain's increased power following its victory in the Seven Years' War, which threatens the European balance of power.