BALKAN BLOG: EU rejection creates space for Russian return to the Western Balkans

BALKAN BLOG: EU rejection creates space for Russian return to the Western Balkans
New friends in the East: Serbian Prime Minister Ana Brnabic with her Kyrgyz counterpart Mukhammedkalyi Abylgaziev, as she signs a free trade agreement with the Eurasian Economic Union.
By Clare Nuttall in Glasgow October 31, 2019

Serbia’s signing of its free trade agreement (FTA) with the Russia-led Eurasian Economic Union (EEU) and joint military drills with Russian forces followed swiftly after the EU dealt a setback not just to Albania and North Macedonia but all the countries of the Western Balkans that had been aspiring to join the union.

The timing was largely coincidence; Russian Prime Minister Dmitry Medvedev paid a visit to Belgrade on October 19 planned before EU leaders failed to agree at a summit on the preceding two days on setting a date for Albania and North Macedonia to start accession negotiations.

This was followed by the Slavic Shield 2019 drill on October 24 when Russia deployed its S-400 air defence system and Pantsir missile battery in military exercises outside its home country for the first time. (Serbia — which insists on maintaining its military neutrality — cooperates with both Russia and Nato.) Then there was the announcement that Serbian Prime Minister Ana Brnabic had finally signed a free trade agreement with the EEU on October 25, despite concerns raised by some EU member states. The EU has warned that Serbia must drop any free trade pacts it has with third countries when it joins the bloc.

Yet with the soonest possible date for EU accession, 2025, now looking increasingly ambitious, Belgrade has every incentive to take advantage of its ties to other world powers.

For his part, Putin been using the EEU to improve his ties to various countries. In addition to the free trade deal with Serbia, in the last month Russia has invited Uzbekistan and Iran to join the trade club. Both have agreed, but are likely to also sign free trade agreements with the EEU rather than become full members for the meantime.

However, without the membership of Ukraine, the EEU remains a largely political project dominated by Russia. As bne IntelliNews reported, Russia makes up 97% of all the trade volume in a free trade area that is supposed to mimic the European Union (EU).

New markets to the East

The FTA will replace Serbia’s current bilateral deals with Russia, Belarus and Kazakhstan and will add two more markets, Armenia and Kyrgyzstan. Serbia will be able to export more goods tax-free to the members of the EEU, while the quotas for limited goods are also increased.

Serbia's total trade with the five EEU member countries totalled $3.4bn last year, with about 90% of total trade being with Russia. While the EU remains a far more important trading partner for Serbia, Belgrade has been looking to sign the agreement for some time, as it provides large new markets for its products. It was already the first country outside the Commonwealth of Independent States (CIS) to enjoy a free trade agreement with Russia thanks to long standing good relations between Belgrade and Moscow.

For Serbia, the EEU deal isn’t perfect. It had been hoping to start exports of Fiat 500L cars manufactured at Kragujevac to the EEU, however, talks have lasted for years without any concrete results and the FTA specifically excludes cars. Still, the government statement stressed that it will open up the market of approximately 185mn people to the East.

Then there is the political point this allows Belgrade to make about its other options should the EU fail to progress its membership. In what could have been a veiled dig at the EU, Brnabic commented: “After a long period of isolation Serbia has been inactive for too long or has been waiting for others to open its doors. Today, we are committed to cooperation with anyone who can help the economy grow and citizens live better.” Whether this was a veiled criticism of the EU or not, the timing of the FTA inevitably fuelled speculation that the repeated delays in allowing the Western Balkans countries to progress towards EU accession is pushing the small, fragmented states of the region into the arms of Russia and rival international players.

"Blocking the accession talks … entails raising the question as to how the EU wants to influence neighbouring countries and encourage them to conduct reforms, if this does not offer the guarantee of enhancing integration,” commented Marta Szpala of the Warsaw-based Centre for Eastern Studies (OSW). “The lack of a positive decision will likely be used by such countries as Russia, China and Turkey, which have been making efforts to strengthen their position in the Balkans at the expense of the EU.”

The outcome of the EU summit was particularly worrying — not just for Albania and North Macedonia but for all countries in the region — because French President Emmanuel Macron appears to be keen to put further enlargement on hold altogether. This would affect the more advanced counties in the accession process (Serbia and Montenegro) as well as those that have yet to obtain candidate status (Bosnia & Herzegovina and Kosovo).

It has been said that Putin is all tactics and no strategy, but the vehicle of the EEU is starting to prove a useful foreign diplomacy tool to bring more countries into Russia’s sphere of influence and bind their economies to those of Eastern Europe a little more tightly while loosening their links with the EU. The Balkans has become the most recent theatre where this drama is playing out.

According to media reports, Macron has since launched informal diplomatic consultations to offer a special partnership with the Western Balkans, under which they would be offered financial assistance and other benefits in exchange for quietly dropping their quest for full membership. The idea was resoundingly rejected by the presidents of Albania and North Macedonia. “He [Macron] mentioned the word 'neighbour' in his last proposal for the Western Balkans, but we are not neighbour countries. We are in the process of becoming full EU members," said North Macedonia’s Stevo Pendarovski, as cited by Albanian Daily News.

One Russian official was quick to demonstrate that Moscow remains interested in the region with an invitation — serious or not — for the EU's rejects to join the EEU instead. “I am sure that the countries, which are candidates for EU membership and have recently been “put on ice” by Brussels, could find more understanding in the Eurasian Economic Union,” said Russia’s permanent representative to the EU, Vladimir Chizhov, on October 26, Balkan Insight reported.

Vucic’s balancing act

In Serbia, not only Russia but also China already has a visible presence through the numerous investment projects in the country (Serbia is the top destination for Chinese investment in the Western Balkans) and Chinese police joined their Serbian colleagues in September to help Belgrade deal with an influx of tourists.

Since Aleksandar Vucic came to power in Serbia, initially as prime minister and more recently as president, the country’s top priority has been EU accession, which ultimately offers a more appealing prospect than anything that Moscow can offer, not least because Serbia counts EU members Croatia, Hungary and Romania among its immediate neighbours, however much the far right opposition parties and even junior partners in the government may prefer to stress Serbia’s cultural ties to Russia. Russia has always been an important partner and as a sign of its place in Serbia’s foreign policy, Vucic himself has been taking Russian lessons and was guest of honour at Russia’s last May Day military parade. At the same time, Belgrade has played a careful balancing act of ensuring that it keeps Moscow on side with talk of the two countries’ longstanding brotherly relations and historic links.

As well as playing to the domestic audience, such ties also allow Belgrade to make a point about its other options and the threat of Russia re-extending its leverage in the Western Balkans.

“As long as Serbia lacks a solution to the Kosovo dispute that it can sell both to its international partners and to people at home, and as long as Serbia is denied a clear path to EU integration, it will continue to keep the Russia card up its sleeve,” wrote Vuk Vuksanovic in a comment for Carnegie.

The drills and Medvedev’s visit “speak to the fact that Belgrade is up to its old tricks of trying to play the Russia card for leverage with the West … Serbia will continue to use Russia and other non-Western powers as a way of hedging its bets and as compensation for being left out of the EU.” And this is particularly important for Serbia as it faces an obstacle on its EU accession path that fellow candidate countries Albania, Montenegro or North Macedonia do not have to contend with: namely the need to normalise its relations with Kosovo before it can enter the bloc.

Russia is arguably most important to Serbia as a staunch opponent of the international recognition of Kosovo’s independence; Moscow has helped keep Kosovo out of the UN and — allegedly — helped Serbia in its campaign to persuade states to “de-recognise” Kosovo. Moscow’s interest in the Serbia-Kosovo situation gives Serbia a powerful ally as it seeks a normalisation of relations — but not one that will wring too many concessions from Belgrade.

An opportunistic approach

The issue is handy for Russia too as it gives it a strong argument to defend its own tinkering with international borders in its immediate neighbourhood. As small economies that are not in Russia’s immediate neighbourhood, the Western Balkans countries are of less interest to Moscow than the likes of Georgia, Moldova or Ukraine. In the last few years erstwhile allies such as Montenegro have moved firmly into the western camp, and Moscow’s main footholds in the region are through its friendly relations with Serbia and the Bosnian Serb entity Republika Srpska.

These days, for the most part, Russia takes an opportunistic approach to the region, and studies have shown it is mainly active via the soft power it exercises — from backing opposition parties to media ownership — that allow it to make trouble for pro-western leaders but without any real expectation that countries in the region will fall back under Moscow’s sphere of influence. But if the prospect of EU membership that has been the driving force for reform and reorientation towards the west becomes no more than a mirage for the Western Balkans, as it has done for Turkey, there will be renewed scope for Russian influence. And in Turkey’s case it has done a complete about face from its EU aspirations to become an increasing important Russian ally in the east Mediterranean in the space of only two years.