BALKAN BLOG: Belgrade's tricky balancing act

By bne IntelliNews September 20, 2012

bne -

At the same time as an assortment of high-profile Serbian government officials were in Berlin trying to add to the already $1.2bn Serbia has received from Germany since 2000, the country's president was in Moscow cosying up to the country's favourite Slavic brothers, the Russians. In a financial fix, Serbia is clearly trying to pull off the difficult trick of playing the West off against Russia, though both Brussels and Moscow appear to be playing hardball with Belgrade at the moment.

From the Russian side, the confusion over whether it will help tide Serbia over for the year with a $1bn loan exemplifies this. Numerous officials on both sides have given conflicting statements; the latest from Serbian newspaper Politika is that sources have said that Russia will approve a $1bn loan to support Serbia's budget in a deal agreed at the September 11 meeting in Sochi between President Tomislav Nikolic and President Vladimir Putin. Instead of the previously agreed $800m that was supposed to be used for infrastructure projects, the paper says, the entire $1bn will be redirected into the state treasury. The first instalment of $300m will be approved this year and the second instalment of $700m will be approved next year.

Russia is also a crucial energy partner for Serbia. Gazprom Neft is majority owner of the former state oil and gas firm Naftna Industrija Srbije (Nis), and the Russian state-controlled gas giant has also agreed to run its planned South Stream gas pipeline through Serbia. Nikolic said construction would begin in early December on the Serb section of the pipeline, which will transport up to 63bn cubic metres of Russian gas a year under the Black Sea to Bulgaria and then on to Greece, Italy and Austria, and he has invited Putin to attend the launch. "The only thing I love more than Russia is Serbia," the Serbian president was quoted by broadcaster B92 as saying at the summit.

Still, South Stream highlights much that's wrong with the Serb-Russian relationship too. The Serbs, particularly the current nationalist lot in power at the moment, are happy to play up their close Slav-Orthodox ties, but constantly harbour doubts about Russian follow-through. "We want to have South Stream, but when will it really start? President Putin said South Steam would start 2009, but today it is 2012 and still we don't have a beginning," a clearly exasperated Minister of Energy Zorana Mihajlovic tells bne.

Likewise, the Serbs always welcome Russian support on the question of the legality of its erstwhile province Kosovo's unilateral declaration of independence, yet moan about Russia's recognition of the breakaway Georgian region of South Ossetia, which implies that Russian support is not based on a principle, rather it's a convenient way to needle the West.

Brussels, meanwhile, appears to be making a normalisation of relations with Kosovo a make-or-break issue for Serbia's EU accession hopes. On September 13, a bigwig of Germany's ruling party, the Christian Democratic Union (CDU), revealed a list of seven conditions that Serbia must meet in order for accession talks to begin, including several regarding Kosovo.

Serbian newspaper Vecernje novosti has reported official sources as saying the government might yet call a referendum if it's backed into a corner over Kosovo, asking the people to choose, essentially, between Kosovo or Europe.

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