Economic Ties Between Moscow and Prague Under Mutual Sanctions

The article is devoted to the analysis of the transformation of the Russian-Czech economic relations under the new economic and political conditions, emerged due to the Ukraine crisis. While in the 1990s Russian-Czech economic relations were affected by divergent political aspirations, since Prague’s accession to the EU, it has devoted itself to the development of trade and bilateral investment with Russian counterparts. However, since the global financial crisis of 2008 the parties have been facing difficulties in the deepening of their cooperation. The sanctions introduced by the EU in 2014 and the responsive measures that Moscow has undertaken, as well as other related factors (such as a weakening of the Russian currency and economy in general) have contributed to the slowing down of trade and investment partnerships. The article pays special attention to the mutual trade between the Czech Republic and the Russian Federation. The author selects the key changes in the structure and volume of mutual trade between two countries and notes the main reasons for the existing situation. The article addresses the current situation with mutual foreign direct investments in the Czech Republic and the Russian Federation during imposed sanctions. Key investment projects of 2014 are described in the article as well as the main strategies of investment behavior of Russian and Czech companies in corresponding markets. The author demonstrates that while some players attempted to use the situation to increase their share on the market, others contracted their operations. The unfavorable economic environment affected primarily nonindustrial sectors.

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