Bloomberg: Friendship between Serbia and Russia “increasingly awkward”

AFP/ Andrej Isakovic

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. In its latest analysis Bloomberg said that 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 symbol of resistance and a protest as Putin escalates his military campaign in Ukraine.

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, reads the analysis.

It adds that Serbian President Aleksandar Vucic has resisted joining the sanctions against Russia, yet Serbia’s economy depends on the European Union (EU) 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 October 10 to meet Vucic on his way to talks with Putin in St. Petersburg,” reported Bloomberg.

Putin the most favored world leader for Serbs

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.

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 an interview on October 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.

Friendship between Russia and Serbia

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.

Russia sells Serbia natural gas at below the market rate under an extension to an existing contract. But the country accounts for just 6 percent 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. Serbia’s top three exporters are Chinese-owned metals mining companies and a steel producer, the Finance Ministry said.

Relations with Russia are being hollowed out

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, reads the analysis.

“Relations with Russia are being hollowed out. 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,” said Maksim Samorukov, an analyst for the region at Carnegie Endowment who left Moscow in February.

Indeed, as the conflict cleaves the world between east and west again, Belgrade is playing a familiar role. Under communist leader Josip “Tito” Broz 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 percent this year. Inflation will remain above 11 percent 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 October 11. It cited the gas contract with Russia versus the longer term aspiration of EU membership.

China is key

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.

Milivojevic, who did stints in Brussels and Paris and was Serbia’s ambassador to the Council of Europe, said that China is key because Serbia’s relations with the country have no political strings attached.

UAE leader’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. It’s symbolic, something very important politically for us.”

Challenge for Vucic

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 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 and package it as sanctions against Russia to put him on the same side as the EU, said Bloomberg in an analysis carried by Financial Post.