Serbia won’t abandon Russia as West mulls ever-tighter sanctions

Serbia won’t abandon Russia as West mulls ever-tighter sanctions
Russia's presence in Belgrade is clear.
By Clare Nuttall in Belgrade April 15, 2022

Russian can be widely heard these days on the streets of Belgrade, the capital of one of the only countries in Europe to have defied western pressure to join international sanction over the invasion of Ukraine. The Serbian authorities’ insistence on maintaining neutrality after Russia’s invasion have turned the country into a route for Russian citizens still seeking to travel to Europe and a haven for Russian businesses, but this risks permanently damaging Serbia’s relations with the West and EU accession prospects. 

Signalling no change in Serbia’s foreign policy as he claimed victory in the April 3 presidential and general elections hours after polls closed, President Aleksandar Vucic made it clear that he will continue with the increasingly difficult job of balancing relations between Russia and the West. Just three days after the elections at a time when most European governments are searching for ways to end their dependence on Russian gas Vucic held a telephone conversation with his Russian counterpart Vladimir Putin in which they discussed the imminent start of talks on a new long-term gas supply contract. 

Vucic’s multi-vector foreign policy, under which Serbia seeks good relations with the EU, the US, Russia and China has served it well until now, allowing it to pursue the goal of EU accession while at the same time benefitting from Chinese infrastructure and industry investment, as well as from Russian political support in keeping Kosovo out of the UN and other international organisations. However, as Russia continues its unprovoked assault on Ukraine and news of atrocities surface, this position is becoming increasingly unacceptable, not only in the eyes of Ukrainian politicians but also among many in the EU, which Serbia seeks to join. On the day that Serbians went to vote in their general, presidential and several local elections, the news broke of the massacre in the Kyiv suburb of Bucha by retreating Russian troops. 

A difficult decision 

Russia invaded Ukraine in the early hours of February 24, around six weeks before Serbia’s elections. As he sought re-election to the presidency and another term in office for his Serbian Progressive Party (SNS) the question of whether to join sanctions was clearly a difficult one for Vucic; while western governments announced sanctions earlier in the week when Russia recognised the independence of two separatist entities in eastern Ukraine, he delayed making an announcement until February 25, when he set out the case for Serbia not to join sanctions in an address to the nation. 

The statement issued by the presidency on the evening of February 25 said Serbia respects Ukraine’s territorial integrity, but Vucic recalled Serbia’s own experience of western sanctions during the wars of the 1990s and pointed to Russia’s support for Serbia at that time as well as Moscow’s support on the issue of Kosovo, which unilaterally declared independence from Serbia in 2008. “[Russia was] the only country that did not impose sanctions against us in the 1990s … They also supported our territorial integrity in the United Nations. We must not forget that,” the Serbian president said.

Despite not joining the sanctions, Serbia has backed key UN resolutions against Russia. At the emergency session of the UN on March 2, Serbia voted in favour of the resolution condemning the Russian aggression against Ukraine. On April 7, Serbia was among the countries that voted at the UN General Assembly to suspend Russia from the UN Human Rights Council for “gross and systematic violations and abuses of human rights" in Ukraine. 

This is not enough for EU officials, who have repeatedly stressed that as a candidate country Serbia needs to align its foreign policy with that of the bloc. Fellow candidates from the region Albania, Montenegro and North Macedonia have all announced sanctions on Russia.

“Alignment with the EU decisions in foreign and security policy is one of the requirements in the accession process. In March, the European Council in its conclusions also called on ‘all countries to align with those sanctions’ and stressed that ‘any attempts to circumvent sanctions or to aid Russia by other means must be stopped’,” said Peter Stano, the European Commission’s lead spokesperson for foreign affairs and security policy, in response to a question from bne IntelliNews

“Alignment with EU Foreign Policy is regularly monitored and taken into account in the regular review of the progress achieved in the accession process by Serbia,” Stano added. 

The message was reinforced by German Foreign Minister Annalena Baerbock on April 12. “If you want to become a member of the EU, which Serbia does want, then it is central that at such moments you join EU foreign policy, and sanctions that go along with it,” Baerbock said as reported by Reuters.

In March, nine MEPs from the Renew Europe group sent a letter to European Commission President Ursula von der Leyen and High Representative Josep Borrell calling for accession negotiations with Serbia to be temporarily frozen and for a suspension of EU financial assistance until Belgrade aligns with Brussels on sanctions. Vucic, then in pre-election campaign mode, responded that “haters” were behind the letter, which was aimed at "stopping Serbia from advancing in any way”. 

Not abandoning old friends 

Russia’s links to Serbia are clearly visible in the Serbian capital, where landmark buildings include the Hotel Moskva built on the site of a historic inn with investments from Tsarist Russia, and the Balkans’ largest Orthodox church, the Temple of Saint Sava, partly financed by Russia with Putin’s personal endorsement. Less visible is the soft power Russia wields in Serbia, on top of the traditional historic and cultural links as fellow Orthodox Slavic nations. Russia supported Serbia during the Nato bombardment of 1999, and has continued to back Serbia by refusing to recognise Kosovo’s independence, thereby keeping it out of the UN and other international organisations.

People I spoke to in Belgrade said seeing the devastation caused by Russian attacks in Ukraine brought back painful memories of the Nato bombings but this has not by and large prompted Serbs to turn against Russia or to demand their government take action to support Ukraine. Russian officials have repeatedly played on this in official statements by recalling the Nato bombardment, and, as explored by bne IntelliNews, many Serbian media outlets have reflected these messages back to a receptive audience. The high level of support for Russia was also revealed by a thousands-strong pro-Russian march in the Serbian capital on March 4, while a smaller march on the same weekend called for an end to Russian aggression in Ukraine. The Russian House cultural centre in Belgrade has held a series of events in support of Russia (not attended by bne IntelliNews), including one on April 11 titled “One soul in two bodies”. At an earlier event on April 4, Serbian and Russian participants talked of the “strength of sympathy for Russia in the country” and the "importance of expanding the presence of Russian media in [Serbia]”. 

Polls of the Serbian population show that in general people support the policy of neutrality, while an overwhelming 95% of respondents to an ECFR survey said they see Russia as either an ally or a necessary partner. A separate poll by consumer data company Valicon showed most Serbians blame Nato or the US for the war in Ukraine, rather than Russia. 

Gas talks coming up 

When announcing his decision on sanctions back in February, Vucic said decisions on restrictive measures or sanctions will “be guided solely by the protection of [Serbian] citizens' vital economic and political interests”. Accordingly, Serbia is preparing for talks on the price at which it will import Russian gas after a pre-war agreement struck in November under which it is continuing to buy Russian gas at a price of $270 per 1,000 cubic metres for six months. The price is around a third to a quarter of that paid by other customers in the region, allowing Vucic to boast at the time of having secured an “incredible” gas price from Gazprom that would allow Serbs to spend Christmas “in their T-shirts”. 

That six-month period took Vucic and his ruling Serbian Progressive Party (SNS) safely past the April 3 elections before the price rises under the next long-term contract expected to be agreed by mid-May. Srbijagas director Dusan Bajatovic announced in late March that under the new contract Russia will deliver 3bn cubic metres of gas per year at a price of $600 to $850 per thousand cubic metres, with the exact price still to be agreed. 

Meanwhile, EU governments are debating whether they can afford to end Russian gas imports altogether to avoid funding the war in Ukraine through payments for the gas they import from Russia. Following the atrocities in Bucha and elsewhere there have been widespread calls for Europe where the EU recently announced a fifth sanction package to cut off imports of Russian gas, but many countries, led by Germany, have shied away from the idea, afraid of the negative economic impact. Some countries have gone further than others; in the Baltic states, home to some of Ukraine’s staunchest allies, Lithuania became the first EU country to announce an end to imports of Russian gas, and Latvia and Estonia say they will follow suit.

But the economic links go beyond hydrocarbons. After reciprocal bans on airspace between Russia and most European countries, meaning no airlines can operate on routes from EU countries to Russia, Serbian flag carrier Air Serbia continues to fly to and from Russia. This makes it possible for Russians to fly into the Serbian capital then transit to other European countries, a process that has become known as the ‘Serbian backdoor’. Shortly after the war began, Air Serbia doubled its direct flights between Belgrade and Moscow to 15 a week though in a sign of the unhappiness about this route, there have been bomb threats on some recent flights between Serbia and Russia. 

In the retail sector, Torgservis Group, which operates stores under the Mere and Svetofor brands, launched in Serbia in late 2020 with its first Mere store, followed by the opening of Svetofor in 2021. Nova Ekonomija business portal reported in March, quoting a company representative, that the war has not affected its expansion plans and it plans to open 22 new stores over the next two years. This is in contrast to the closure of Mere stores in other countries following the invasion, including in the UK where it had been dubbed the 'Russian Lidl' because of its extremely low prices after it opened its debut store in Preston in summer 2021.

I heard in Belgrade of businesses from Russia renting office space as they relocate to Serbia. Data from the Business Registers Agency (APR) quoted by N1 on April 5 showed that 288 Russian-owned companies have been registered in Serbia since the start of the war, many of them in the IT and consulting sectors. 

Just six Ukrainian companies opened during the same period, and three Ukrainian companies closed. Intellias, one of Ukraine’s largest IT companies, announced in March it was closing its development centre and office in Serbia and relocating to Croatia because of the two countries’ very different positions on the war in Ukraine. Explaining the move, Intellias wrote on its Facebook page of the “pro-Russian position of the Serbian government” and said that government responses to the events in Ukraine are “extremely important to us”. 

Change of policy ahead? 

Given that its refusal to join sanctions on Russia runs directly counter to its goal of joining the EU, there has been speculation that Serbia might change direction after the elections are out of the way and Vucic and the SNS safely ensconced for another term. 

Vucic appeared to dash such expectations when he commented in his victory speech after polls closed that the most important thing for Serbia is to have good relations in the region and to continue its European path, but not to ruin good relations with traditional friends.

Still, analysts are divided over whether Belgrade may decide eventually to join the sanctions. Igor Novakovic, director of research at the International and Security Affairs Center, told a webinar organised by Euractiv Bulgaria on April 11 that he expected Serbia to gradually join the sanctions. “Serbia will increasingly align with restrictive measures, but at a slow pace, attempting at the same time to assure Russia that it is not completely against it,” Novakovic forecast. 

Meanwhile, Teneo analysts expect Serbia will seek to maintain its neutrality as long as possible. “Despite the mounting pressure from the EU and the US to align with Western sanctions on Russia, Belgrade is unlikely to shift its position and will seek to maintain a neutral position for as long as possible. To this end, Vucic might use the protracted government formation process as means to postpone any decision on the sanctions front,” said a note from Teneo after the elections. 

Commenting on the consequences of this, Teneo’s note added: “The reluctance to align its foreign policy with Brussels – along with slow reform progress – further limits the country’s prospects of joining the EU for the foreseeable future.”