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Sanctions and Countersanctions: The Czech Business Perspective

13/04/2021

Due to the political crisis between the Russian Federation and countries condemning the annexation of Crimea, a mixture of economic, financial and diplomatic sanctions were imposed on the Russian Federation. In March 2014, the western world implemented approximately 20 different sanctioning measures, including travel bans, asset freezing and bans on trade of certain goods. The Russian Federation reacted to these measures by imposing countersanctions. As a result, the business environment for trading with the Russian Federation worsened, although the political and economic relationships between the Russian Federation and the rest of the world remained relatively unchanged. The effectiveness of these sanctions is far from clear especially because there is no agreement within EU about their usefulness.

The goal of the paper titled “Sanctions and Countersanctions Concerning the Russian Federation: The Czech Business Perspective” authored by Vít Hinčica, Hana Řezanková & Grace Worcester is to investigate the impact of the sanctions and counter sanctions on the Czech companies trading with the Russian Federation. The data for the empirical analysis was collected through a questionnaire, which was then analyzed by using multivariate statistical methods. The overall impression about the sanctions and counter sanctions is negative—the surveyed Czech firms believe lifting them would be beneficial to them.

The results of the study showed that over half of the Czech companies strongly believe that sanctions imposed on Russia have a negative impact on their profits while two thirds agreed that countersanctions resulted in a negative effect on profits. In addition, over 80% of the companies pointed that both sanctions and counter sanctions reduced customer volume. Nearly every company participating in the survey agreed that after the imposition of sanctions, trading with the Russian Federation became more difficult.  A total of 85% of the surveyed companies stated they would like to see the sanctions abolished. The results indicate that Czech businesses trading with the Russian Federation seem to be harmed more by the sanctions than by the countersanctions.

The full article can be accessed at:  https://www.tandfonline.com/doi/full/10.1080/10669868.2020.1755407

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