bne -

Russian President Vladimir Putin on Tuesday, September 11 will meet in Sochi with Serbian President Tomislav Nikolic, during which "special attention will be paid to the issues of trade and economic cooperation" and "promising new projects that are being worked out in the energy, transport, infrastructure, credit and finance spheres," the Kremlin press service was reported as saying by Itar-Tass.

The Kremlim says the two sides have developed the closest cooperation in the energy sector where the key role is played by Russia's Gazprom Neft, which holds a 51% stake in Petroleum Industry of Serbia - NIS (Naftna Industrija Srbije). Serbia also participates in the South Stream gas pipeline project in which the agreements on the preparation for the construction of the Serbian section are being fulfilled on schedule.

However, also on the agenda will no doubt be a loan of up to $1bn from Russia to help Serbia's struggling economy. Assertions and denials from officials over the past few weeks have left people scratching their heads as to whether this will happen.

Serbian Natural Resources and Mining Minister Milan Bacevic told Tanjug on September 4, following a meeting in Moscow with Russian Energy Minister Alexander Novak, that Belgrade is close to securing the funding. The Serb official also claimed that Belgrade also hopes to see that loan quickly followed by another to support the 2013 budget. However, a representative of the Russian Finance Ministry contradicted Bacevic, insisting Russia has not held talks on such a loan with the Serbian government, reports Prime.

Russia signed an agreement on a $1bn loan in several tranches to Serbia in April 2010, reports Voice of Russia. The first instalment of $200m was also allocated that same year to cover the Serbian budget deficit, while Russia said it plans to channel the remaining $800m to infrastructural projects. Alexander Konuzin, Russia's mercurial ambassador to Belgrade, said on August 22 that the remainder could be released, depending on "Serbia's needs," according to Bloomberg. But both he and Serb Infrastructure Minister Milutin Mrkonjic insisted that the funds would not be used to prop up the budget, but would go towards the country's railways.

The Kremlin also noted that "Russian businesses are actively involved in the development of Serbian non-ferrous metallurgy, engineering, tourism, banking enterprises, and promising new projects in the energy, transport, infrastructure, credit and finance spheres are being worked out."

According to the Russian side, the bilateral trade volume last year increased by 42%, compared with 2010 and amounted to more than $2bn.

In the international arena, Russia and Serbia have similar or identical positions on most key issues. "One of the priority issues of the joint work is European security with an emphasis on the Balkan region," the Kremlin noted. "In particular, the sides develop constructive cooperation on the Kosovo issue."