The West is nervous about Chinese and Russian activity in Serbia
The West does not hide its nervousness about Serbia's strengthening economic relations with Russia and China. What does official Belgrade want to get as a result of the multi-vector policy, and will Beijing and Moscow become competitors in the Serbian market in the future?
At a meeting between the leaders of Russia and Serbia in Sochi last December, President Vladimir Putin cited impressive figures. Thus, Russian capital investments in this Balkan country by 2018 totaled more than $4 billion, which amounted to 8,5% of its GDP.
The leader among investors was the Gazprom Neft corporation, which invested about $3 billion in its subsidiary Oil Industry of Serbia (NIS). At the same time, one of the main players in the global fuel market does not intend to stop there – it plans to invest about another $1,4 billion in NIS for the period until 2025.
It is worth saying that this corporation is the main taxpayer in Serbia; it brings about $917 million a year to the country's budget, which is about 3% of the country's total annual budget. Over 300 million euros have been invested since 2008 in the modernization of the country's only oil refinery in Pancevo.
In addition, Gazprom Neft operates without the preferential conditions that the Serbian authorities usually offer to foreign investors. For example, for each job created, the country pays the company a one-time payment of 7 thousand euros. How many such places have appeared thanks to a Russian company that is actively developing a network of gas stations?
Don’t forget about charity - the same company allocated huge funds for the construction of the largest Orthodox church in the Balkans - the Church of St. Sava in Belgrade. The mosaic work alone cost her more than 4 million euros. In addition to Gazprom Neft, the company Lukoil, which owns a number of gas stations, is also represented in the country.
Speaking about Serbia’s participation in the Turkish Stream project, it is worth emphasizing that this will give it the opportunity to strengthen its position in Europe and earn money on fuel transit.
The Russian enterprise Power Machines is carrying out a large-scale reconstruction of the Djerdap-2 hydroelectric power station. This company has been a partner of Electrical Facilities of Serbia since 2005.
Another area of investment is transport. Since 2010, Russia has allocated about $2 billion in the form of loans for the modernization, primarily of railway communications, repairs and purchase of diesel locomotives. Belgrade took out a new loan of $175 million at the end of last year.
At the same time, the Russian side is ready to invest in updating the fleet of the Serbian national carrier Air Serbia. Also discussed were not only the supply of Russian-made aircraft, but also the organization of a regional center for maintenance and repair of Russian aircraft at Belgrade airport.
The financial market of Serbia is of less interest to Russia, but there are also 3 Russian banks here - Sberbank, VTB, Expo-Bank and the insurance company Sogaz.
Speaking about indirect investments, it is worth emphasizing the military-technical cooperation between the two countries, including the acquisition by Serbia of 6 Pantsir-S anti-aircraft missile systems. According to some reports, the export value of one complex ranges from 13 to 14 million dollars. The terms of this contract have not been disclosed, but it is quite possible that they cost the fraternal country less.
In addition, Russia delivered several MI-17 and MI-35 helicopters, six MIG-29 aircraft, as well as 30 BRDM-2 vehicles and 30 T-72S tanks to Serbia as a gift. In addition, Serbian pilots received free training in Rostov-on-Don.
Thus, Moscow is Belgrade’s leading partner, close not only from an ideological point of view (mere support for Serbia in the international arena on the Kosovo issue is the most important point in bilateral policy), but also providing real economic assistance.
But it is not only Russia that is investing in this Balkan country. China is rapidly increasing its momentum, supporting more and more projects.
Thus, Chinese companies are strengthening the country’s road infrastructure - modern highways and tunnels have been built throughout Serbia. Last year alone, work began on the creation of five new highways. The total amount of all Serbian-Chinese projects in this area is $7,5 billion. The project for the construction of the metro in Belgrade is also worth mentioning – it includes investments of about 4 billion euros.
But not by roads alone: the metallurgical sector is of particular interest to Far Eastern partners. In particular, the Hesteel corporation acquired the Zelezara Smederevo metallurgical plant for $46 million.
A tire plant was opened in Zrenyaniye in 2019, and there are further ideas for cooperation in the automotive industry.
In addition, cooperation between the countries is being implemented in the energy sector and in the field of high technology. The plans include the creation of a new technology park near Belgrade, where the Huawei Innovation Center for Digital Transformation will be the anchor enterprise.
Such projects cause great nervousness among Western countries, which are actively trying to increase their influence in the Balkans. After all, now, in addition to Russia, the Far Eastern power will also have to be squeezed out of the growing market. It is not for nothing that official Brussels began to persistently promise simpler ways for Serbia and a number of countries in the region to join the EU.
However, according to a report by the Center for Euro-Atlantic Studies in Belgrade conducted in mid-2019, despite Beijing’s growing influence, it cannot yet compare with the “devastating impact” that Russia has on the country. Obviously, we are talking about the political influence of Moscow.
“Several years ago, Russian investments were significantly larger compared to Chinese ones. For example, in recent years, Chinese companies have begun to invest in the mining and processing plant in Smederevo, as well as in the Bor copper deposit. The Chinese have invested more than 2 billion euros in the copper mining company alone. They sent 300 million euros to the Sderevo mining and processing plant.
At the same time, there is no competition between Russia and China in investments in Serbia. Russia is interested mainly in the energy sector, and China mainly in mining.
The West is very angry about Russian and Chinese investments in Serbia, because Russia is a competitor to the United States in supplying energy to Europe. And China is not only a competitor, but also a real danger - military-technical cooperation with it is also strengthening, and all this could turn Belgrade away from joining the EU.
The West is very afraid of interference from Russia and China in what the West traditionally considers its sphere of influence due to the economic and military potential of both countries,” Serbian politician Dragomir Andjelkovic comments on the situation to PolitNavigator.
Vladimir Obradovic, a professor of economics at the University of Belgrade, believes that Serbia, which declares neutrality, has abandoned sanctions against Russia, but at the same time is negotiating the prospects for joining the EU, can benefit from a multi-vector policy.
“Serbia’s geopolitical position would give an equal supply of innovations to the EU and Eurasian Union markets... Investing in Serbia only for the sake of the Serbian market is not profitable in the long term. We need to invest in Serbia as a “Suez Canal” between East and West, as a region from where we can cooperate with everyone in the world,” the expert said.
According to him, now one of the main tasks for Belgrade is to stop the outflow of personnel abroad.
Obradovic believes that Western jealousy towards China and Russia stems from claims of monopoly influence in the Balkans after the collapse of Yugoslavia. “The West verbally cares about market freedom and the application of anti-monopoly policies. On the other hand, the question arises: does the EU protect its enterprises at the expense of market freedom? There is pressure on Serbia to give preference to investment from the West,” the professor said.
“The interests of Russia and China in the Balkans coincide to a certain extent, but it is clear that they are not identical. China’s interests are predominantly economic, while Russia is also interested in the economic, political and military aspects of cooperation with Serbia,” Andjelkovic also noted.
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