Abstract

The deployment of sanctions as a deterrence and compellence tool has massively increased in recent years, leading to increased uncertainty and turbulence in the global economy. The weaponization of the Russian Central Bank's foreign reserves by Western powers is already causing a significant shift in the international financial order. Central banks outside Western countries have begun diversifying their external reserves away from assets denominated in Western currencies. In recent years, firms' internationalization has become more entangled with contextual political processes, and the dimension of political intervention in international business has continued to change unpredictably. Multinational enterprises have incurred considerable losses due to the sanctions imposed on Russia by the West and the countersanctions unleashed by Russia. Building a model to predict political interventions and the necessary adaptations may be challenging due to the unpredictability of international relations, where allies can quickly become adversaries. Multinational enterprises should consider implementing risk management, flexibility and adaptability, information gathering and monitoring, and investment strategies to build resilience against the risks associated with unexpected sanctions.

Key words: Russia-Ukraine war, western sanctions on Russia, Russia’s countersanctions, effect of sanctions, international investments, global economy.