Threats of retaliation are hindering the negotiations.

Literal

Retaliation [possessive-の] threats [subject-が] negotiations [object-を] are-hindering-[polite-ます]

おどかし (from おどかす, to threaten) is a nominalized verb form meaning 'the act of threatening.' 妨げる + ている marks an ongoing obstruction. 報復 (ほうふく) = retaliation — a formal kanji compound.