Between Competition and Conflict, Convergence and Cooperation: EU-EEU Relations as Risks and Chances for Multinational Enterprises

Political risk encompasses political events and processes that can negatively affect a company’s operations and profitability. A common example of political risk relates to a country that unexpectedly raises corporate taxes for a specific industry or increasing contestation in International Relations, including its perception by business actors. A more extreme example is an act of war or military coup that cuts companies off from global revenue sources. There are examples of political risk occurring in emerging and frontier markets. However, political risk is not only an emerging and frontier markets phenomenon. Two extreme examples of political risk – Brexit and the 2016 US presidential election – shed light on the need for political risk management also in developed markets. Given this background, political risk research gains increasing attention both in Political Science and in International Business Studies. External contestation between powers at the international level as well as internal contestation over the course of foreign policy regularly pose major risks to multinational enterprises. In regards to EU-Russia business relations, sanctions and countersanctions, which resulted from the Ukraine crisis are an example of this. The sanctions have repeatedly been invigorated by the US and the European Union (EU) also because of Russia’s alleged interference in Western elections or the Skripal case. Decreasing contestation is, vice versa, associated with chances for businesses, since cooperation might lead to bi- and multilateral trade agreements, the dismantling of customs duties and a positive climate for investments. However, the factor that positive expectations must not necessarily become true is again a sort of political risk. This paper researches the perception of political risks deriving from external contestation in the relations between the EU and the Eurasian Economic Union (EEU). It thereby contributes to understanding of the perception of the EU in societies of the EEU member states. It presents first results from (field) research on the EEU country Belarus, drawing on qualitative interviews with managers of multinational enterprises of varying sizes, and industries (such as transport, chemistry, construction, technology, infrastructure, telecommunication, finance and banking), as well as of academics, journalists and civil society activists. The leading questions are: In what ways are companies confronted with political risks related to contestation in the course of EU-EEU relations? How do they perceive the conflict in general? How do they manage these risks? How do they evaluate the potential for cooperation? Additionally, the paper sheds light on the managers’ perceptions of the root causes of the conflict between Russia and the EU as well as their ideas on future cooperation and convergence between EU and the EEU.