The EU, the EEU, and the War in Ukraine: Political Risks and Management Options

Hannes Meissner / Johannes Leitner
The miscalculation by many in the West that Russia would not start a war for economic rationality
shows how dominant the neoliberal perspective that economic interests of countries and nonstate
actors dominate the international arena has become. For this reason, national security
interests and non-readiness for cooperation – as predicted by neorealism – have re-entered the
academic debate about international politics. One thing is clear, though. The new global constellation
will have far reaching consequences, not only for politicians, but also for enterprises.
Consequently, both policymakers and managers must adapt to new realities.
This chapter is dedicated to both the political risk constellation prior to February 24 th and to the
political risk constellation since the Russian attack on Ukraine. In the former regard, it presents
results from a field trip to Kiev in October 2021, dealing with the following questions: In what ways
are companies confronted with political risks related to competition and conflict in the course of
EU-EEU relations? How do they perceive the conflict in general? How do they manage the risks?
Additionally, the chapter 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 the EU and the EEU (prior to February 24 th ). In the latter regard, this chapter provides an
outlook on the new political risk constellation and risk management strategies under the current
conditions.
The following section (section two) introduces the concept of political risk. In this context, it
provides the analytical structure the empirical study (section four) draws on. Section three offers
insights into the methodology applied to the research project. The empirical study (section four)
provides answers to the questions introduced above. The field study to Kiev took place in October
2021, four months prior to the Russian attack. Section five takes a final look at the new political
risk constellation since February 24 th , focusing on war in Ukraine as well as Russia’s tightening
grip on post-Soviet countries.
2 The concept of Political Risk
The internationalisation of a company is usually associated with an increased risk. The risks
arise mainly from the fact that the company is entering a new market that may differ culturally,
socially, economically, legally, politically-institutionally as well as structurally – i.e., in the
constellation of the competition and local market preferences. Above all, the transformational
eco nomies in the post-Soviet region incur a heightened risk portfolio (Hoskisson et al 2000;
Meschi 2005; Alcantara/Mitsuhashi 2013). In addition to socio-economic and market risks,
there are also specific political risk factors that have a significant influence on international
business activities (Leitner/Meissner 2017). In this context, risk refers above all to the possible
negative consequences for the company’s business activity and profitability in the respective
foreign market due to unforeseen changes in the business environment (March/Shapira 1987;
Al Khattab et al. 2007). The business environment refers to all variables that define the framework
for entrepreneurial activity in a particular market, and includes both microeconomic and
8 Wirtschaft und Management · Band 33 · März 2023