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Published: Wednesday July 30, 2014 MYT 6:15:02 PM
Updated: Wednesday July 30, 2014 MYT 6:16:09 PM

Czech government warns Russia sanctions may lead to new Iron Curtain

PRAGUE (Reuters) - A protracted trade war between the European Union and Russia would lead to a new "Iron Curtain", the Czech government said on Wednesday, but this week's new EU and U.S. sanctions would not have a major impact on the Czech economy.

The EU sanctions, which will be reviewed in three months, are part of the strongest international action yet over Russia's support for rebels in eastern Ukraine - support that Moscow denies it is giving.

The Czechs, who supported the action, have been against sweeping sanctions, worried about trade relations with Russia, still an important partner for many central European countries.

Czech exports to Russia last year totalled 116.2 billion crowns (£3.3 billion) - or 3.7 percent of the overall figure - with imports accounting for 5.5 percent of the country's total, but only a tiny fraction of the mutual trade involves military material.

"It is good (for the Czech Republic) that the sanctions do not have a blanket economic character and aim at a limited number of areas," Prime Minister Bohuslav Sobotka said in a statement, noting that he did not believe further sanctions would be necessary.

"Neither for the European Union, nor for Russia, is it favourable to get into a drawn-out trade war and that some new economic and political Iron Curtain appears on Ukraine's eastern border," the statement quoted him as saying.

(Reporting by Jason Hovet; Editing by Louise Ireland)

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