Serbia’s pro-Moscow stance looks increasingly hollow as the country juggles its economic interests and courts Chinese and Arab money.
Author of the article:
Rodney Jefferson and Misha Savic
(Bloomberg) — The face of Vladimir Putin daubed onto a building on the corner of a street in Belgrade has the eyes and mouth covered in red paint, perhaps a surprising sight in a country that’s pro-Moscow. But the friendship between Serbia and Russia is an increasingly awkward one.
The slogan “Brat” — or “Brother” — has been altered to “Rat” — Serbian for “War.” What started as a mural expressing support for the Russian president now looks like a protest as he escalates his military campaign in Ukraine.
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Serbia has been adept at balancing its geopolitical and economic interests between east and west, but the war has exposed the paradoxes of that juggling act and raised questions in Belgrade over where the country’s interests actually lie in the new world order.
President Aleksandar Vucic has resisted joining the European Union’s sanctions effort against Russia, yet Serbia’s economy depends on the bloc for 60% of its trade and the government’s stated goal — however remote at the moment — is to join the EU eventually.
Serbia, meanwhile, has been courting China, Saudi Arabia and the United Arab Emirates, whose president stopped in Belgrade on Oct. 10 to meet Vucic on his way to talks with Putin in St. Petersburg.
A poll taken a couple of months after Vucic was re-elected in a landslide in April showed Putin was the most favored world leader for Serbs, even after China’s Xi Jinping got a boost for providing Covid-19 vaccines. Serbia has since become a haven for thousands more Russians fleeing the regime. Its national airline has maintained connections to Russia, flying 14 times a week to four destinations.
The country’s stance, though, has become uncomfortable for some in the president’s close circle. Zorana Mihajlovic, Serbia’s deputy prime minister, blamed Putin for putting the world “on the brink of tragedy.”
“The world is changing, the geopolitical situation is different and we have to look to the future to find our place,” Mihajlovic, a prominent voice in Vucic’s party, said in a television interview on Oct. 12 after Russia renewed its bombardment of Ukrainian cities. In short, she said, it’s time Serbia picked a side to “define our position.”
While Serbia joined the condemnation of Putin’s invasion in votes at the United Nations, the optics, for now, are that the country is still in Russia’s orbit.
The friendship between the two Eastern Orthodox nations goes back centuries before cooling during Soviet times. It was revived during the breakup of Yugoslavia and then turbocharged by NATO’s 1999 intervention that ended the war in Kosovo. Serbia counts on Moscow’s support for its refusal to recognize Kosovo’s statehood. Putin uses Kosovo as evidence of what he calls western duplicity over his war in Ukraine.
Read More: War Hangover in Divided Kosovo Is a Warning for Europe
In Belgrade, the headquarters of national broadcaster RTS — just along from the small Russian church that sits in the shadow of St. Mark’s Cathedral — remain partly demolished by a NATO bomb that killed 16 people. A sign says it’s being turned into a memorial.
Elsewhere, Serbia’s red, blue and white colors are painted along a wall on one side of the Brankov Bridge spanning the Sava River with a symbol made up of the EU flag and NATO emblem. A line is crossed through it.
Economically, the sands shifted long ago. Russia sells Serbia natural gas at below the market rate under an extension to an existing contract. But the country accounts for just 6% of Serbia’s foreign trade. The EU is by far the biggest partner, with $30 billion of trade.
Then there’s investment from China and the UAE. Since 2010, Chinese money has reached about $3.2 billion, in addition to the $8 billion in infrastructure loans and projects. Serbia’s top three exporters are Chinese-owned metals mining companies and a steel producer, the Finance Ministry said.
One of the most eye-catching projects in Belgrade is backed by the UAE: The Waterfront, Vucic’s flagship development of luxury apartments on the Sava. The UAE and Serbia also signed a “strategic alliance” in September, covering everything from an extradition agreement to a pact with the Abu Dhabi Fund for Development. The Emiratis also agreed to lend Serbia $1 billion to help with debt servicing and energy investments.
“Relations with Russia are being hollowed out,” said Maksim Samorukov, an analyst for the region at Carnegie Endowment who left Moscow on Feb. 27, three days after the war started. “It will remain amicable, but any issues of substance will disappear. Politically, socially, the friendship is still there, but the war has precipitated the rupture economically.”
Indeed, as the conflict cleaves the world between east and west again, Belgrade is playing a familiar role. Under communist leader Josip Broz Tito, whose mausoleum sits in a park in the city, Yugoslavia famously broke with the Soviets and forged ties among other non-aligned countries.
There are signs it’s working. The International Monetary Fund, with which the government in Belgrade is pursuing a standby agreement, projects Serbia’s economy will grow 3.5% this year. Inflation will remain above 11% for 2022, though below the European average.
“Some aspects of Serbian geopolitics are capable of bringing notable benefits,” Bank of America said in a report published on Oct. 11. It cited the gas contract with Russia versus the longer term aspiration of EU membership.
For retired Serbian diplomat Zoran Milivojevic, the only thing that’s off the table in terms of what Serbia will consider if it’s in its interests is the recognition of Kosovo, which declared independence in 2008. Everything else is open to discussion, including sanctions, he said.
China is key because Serbia’s relations with the country have no political strings attached, said Milivojevic, who did stints in Brussels and Paris and was Serbia’s ambassador to the Council of Europe.
UAE leader Sheikh Mohammed bin Zayed’s visit, meanwhile, was an endorsement of Serbia’s geopolitical balancing act, he said. “For us, that’s special support, indirect support for our positions,” he said over coffee in Belgrade. “It’s symbolic, something very important politically for us.”
Yet Serbia has little political leverage with the West, said Carnegie’s Samorukov, and its ties with countries like China and the UAE are purely based on financial interests. The challenge for Vucic, who served as information minister under former strongman Slobodan Milosevic, is how long he can resist pressure from Europe to take a firmer stance on Russia, he said.
A compromise could come in the form of agreeing to some sanctions or reviewing its 30-day visa-free open-door policy to Russians, though that would be unpopular with the electorate.
Conversations with Russians in Belgrade suggest the latest arrivals are more anti-Putin. That makes the defacing of the mural of the Russian president perhaps unsurprising, according to Piotr Nikitin, a lawyer and activist based in Belgrade who helped start a group of Russians, Belarusians and Ukrainians against the war.
His concern is that Vucic might eventually opt to tighten Serbia’s visa regime. “He can package it as sanctions against Russia,” Nikitin said as he sipped tea at the Hotel Moskva, an art nouveau icon in central Belgrade that enshrined Serbia’s turn toward Russia at the beginning of the 20th century. “To put him on the same side as the EU.”
—With assistance from Sylvia Westall.