BALKAN BLOG: Balance swings against Russian influence

BALKAN BLOG: Balance swings against Russian influence
Aleksandar Vucic's Serbia is the last country in the region to persevere its delicate balancing act between Russia and the West.
By Clare Nuttall in Bucharest April 27, 2016

When it became evident that his Serbian Progressive Party would be re-elected on April 24, one of the first things Aleksandar Vucic did was to affirm that Serbia would “continue on its European road”, adding immediately that Belgrade would also “maintain its traditional friendship” with Russia.

Of all the countries in the Balkans - a small and highly fragmented region sandwiched between Western Europe and the former Soviet Union - Serbia is the last to persevere its delicate balancing act between Russia and the West. All other countries in the region have made it clear, to greater or lesser degrees, that their priority is Euro-Atlantic integration, even if the goal of EU membership appears to be forever retreating into the distant future.

Even in Serbia, there have been subtle signs that the government is leaning westwards. Vucic has repeatedly said that EU membership - Belgrade hopes to join the bloc by 2020 - is the priority, as demonstrated by his government’s willingness to take unpalatable steps, including public enterprise reform and moves towards normalisation of relations with Kosovo.

At the same time, Vucic, President Tomislav Nikolic and other Serbian officials have continued to stress the “traditional ties” with Russia, and defied EU pressure by refusing to join sanctions against Russia over the Ukrainian conflict in 2014 - a step taken by several other ex-Yugoslavian states including former Moscow ally Montenegro.

The tipping point in Serbian-Russian relations, according to Dimitar Bechev, director of the European Policy Institute think tank in Sofia, came in December 2014, when Russian President Vladimir Putin decided to cancel the South Stream gas pipeline project that would have bypassed Ukraine to deliver Russian gas to Serbia and other Southeast and Central European countries.

“The Serbian government had invested a lot in South Stream, going full ahead with the project, unlike Bulgaria and Hungary which supported both South Stream and Nabucco (before it was cancelled),” Bechev tells bne IntelliNews.

Serbia had made numerous concessions to Russia in the energy sector, including the privatisation of state oil and gas company Naftna Industrija Srbije (NIS) to Gazprom in 2008. In return, Serbia was hoping for stable supply of gas and financial benefits from its position as a transit state and from lucrative construction contracts for local firms. While Bulgaria is also having trouble letting go of the South Stream plans, Serbia was arguably the worst hit by the decision to scrap the project.

“The reality check was when Putin pulled the plug in 2014,” says Bechev. “From then on Serbia did not move dramatically, but it tried to improve its relations with the US and Nato. Serbia is still sitting on the fence, trying to get the best deal with both sides, but it is now marginally closer to the West than to Russia.”

Without South Stream, Russia is much less important than the EU from an economic point of view. The latest foreign trade data from Serbia’s statistics office shows Russia is only Serbia’s fourth largest export market after Italy, Germany and Bosnia & Herzegovina. A deal to allow duty free exports of Serbian-made Fiat 500L cars to Russia, which could have given a significant boost to overall exports, has become bogged down in lengthy negotiations involving Russia’s fellow Eurasian Economic Union members.

Trading ties

It is a similar situation in other counties in the region, whose primary trading links are with each other and EU countries such as Italy, Germany, Hungary and Greece.

This has led some governments to jettison their relationships with Russia altogether. Romania, the only non-Slavic nation in the region, has fewer cultural ties to Russia than its neighbours. Bucharest and Moscow have long been locked into a struggle for influence in Moldova, and Romania has been happy to accept a beefed up Nato military presence in the Black Sea.

While Romania has allowed Lukoil to drill for oil in its sector of the sea and take over the Petrotel refinery in Ploiesti, officials from the Russian company are now on trial in Romania on tax evasion and money laundering charges. Kosovo too, is a firm member of the Western camp, a position reinforced by Russia’s continuing refusal to recognise its independence.

Elsewhere the situation is more ambiguous. Cultural, religious and linguistic ties are stressed, though this ignores the schism between the Soviet Union and Yugoslavia for much of the communist era. Communist Bulgaria had better relations with Moscow, but today debate over the country’s stance in relation to Russia is polarised. President Rosen Plevneliev is an outspoken critic of Russia, while Prime Minister Boyko Borissov takes a more pragmatic stance.

Meanwhile, other countries that once sought Russian support and investment are now turning their backs on their former ally, most notably Montenegro, which took the decisive steps of applying for Nato membership and joining sanctions against Russia.

As Nato’s decision on whether to admit Montenegro approached in the second half of 2015, Prime Minister Milo Djukanovic and other officials repeatedly accused Moscow of funding the opposition Democratic Front, which at that time was staging regular protests that often resulted in clashes with police. They claimed Russia wanted to present an image of instability in Montenegro to deter Nato from issuing its invitation, though Russia’s foreign ministry ridiculed the claims.

In a recent interview with bne IntelliNews, Montenegro’s President Filip Vujanovic said that while Podgorica values its “close relations with Russia”, entry to the EU and Nato is in the country’s strategic interests.

Final bulwarks

From the Russian side, the small size of the Southeast European countries (with the exception of Romania) makes them marginal in terms of direct economic benefits. However, they remain important transit countries and countries such as Serbia and the Republika Srpska within Bosnia remain some of the final bulwarks of Russian influence within Europe as the EU spreads eastwards.

Russian soft power in the region has been relatively effective, given that in many countries, Russia is still viewed in a positive light by much of the population.

An April 14 report from Chatham House, Agents of the Russian World: Proxy Groups in the Contested Neighbourhood, looks at how Moscow has built a “network of advocates for the Russian World” spanning culture, language, history, religion and politics. While the primary focus has been on the former Soviet space, Russian so-called proxy groups “also operate in the Baltic states as well as in the wider Balkan region (especially in Serbia and Bulgaria)”, the report says.

The Russian media has also been making inroads, especially in Serbia and Montenegro, with the launch of the Serbian language Sputnik news portal in 2014. There were even rumours in the Serbian press in early 2016 that sanctions-hit Russian billionaire Konstantin Malofeev, a close ally of Putin, was planning to buy a Serbian broadcaster, though no deal has yet been announced.

Bechev points out that in the media “a modest investment gets you a long way” and that many of the messages disseminated by pro-Russian media such as Sputnik are “low hanging fruit because they are preaching to the converted”.

Russia has proved itself to be adept at exploiting conflicts in the region to maintain its leverage, and politically there are pockets within SEE that still rely on Russia on various issues. Serbia’s loyalty to Russia is to a large extent down to Russia’s consistent refusal to recognise Kosovan independence.

However, this could become less vital in the long-term, depending on the outcome of the normalisation process. While the process is very slow, there could conceivably be a time in the future when Russian support over Kosovo is no longer needed.

Serbia has already had to explain away some embarrassing bedfellows on the issue. Recently, Nikolic was forced to defend his decision to give a state decoration to his Sudanese counterpart Omar Hassan Ahmad Al-Bashir along with other African leaders who do not recognise Kosovo - a move that appalled many within Serbia as well as outside the country since Al-Bashir is wanted by the International Criminal Court for genocide in Darfur.

Russian links to far right parties in Serbia could also become problematic in future. The April 24 election saw a modest upturn in support for ultra-nationalist and anti-EU parties such as Vojislav Seselj’s Serbian Radical Party, which returned to the parliament.

“Russia wants to diminish support for European integration, and to discredit the concept of expansion and the values of those who participated in ending autocracy in the region,” Jelena Milic, director of the Center for Euro-Atlantic Studies (CEAS), a Belgrade based think-thank that aims to accelerate the process of EU integration, said in a recent interview with bne IntelliNews.

The mainly ethnic Serb Republika Srpka in Bosnia has also reached out to Moscow for funding and political support. “Since 2014, Russia has been strengthening its ties to the Republika Srpska,” writes Matthias Bieri, a researcher at the Center for Security Studies (CSS), in a recent report. He points out that in addition to Bosnia’s energy dependence on Russia, the cash-strapped Republika Srpska “of late enjoys perceptibly increased financial support from Russia in the form of loans and investment”.

As Russia’s presence within Bosnia grows, this “is also seen in the increasing challenge to Bosnia’s integration into Euro-Atlantic structures”. While Bosnia formally applied for EU membership in February, the Republika Srpska is likely to block any moves towards Nato membership. “Overall it can be assumed that Bosnia is seen by Russia as a place where it can trouble the EU with relatively little effort,” writes Bieri. This is a way of securing leverage for negotiations, with an instable Bosnia serving as a collateral.”