Serbian President Aleksandar Vucic skillfully navigates geopolitical tensions, balancing relationships with the West, Russia, and China amid the Ukraine conflict. While Serbia refrains from sanctioning Russia, American restrictions on Gazprom-affiliated NIS complicate energy security. Vucic faces public discontent and potential disruptions, prompting discussions on divesting Russian ownership. Despite pressures from both the Kremlin and the West, Vucic seeks to maintain influence and stability within Serbia’s energy sector while avoiding asset seizures.
Vucic’s Balancing Act in Serbian Politics
Serbian President Aleksandar Vucic has emerged as a savvy player in the world of geopolitics, expertly navigating the complex dynamics among major powers vying for influence in the Balkans. Even in the wake of Russia’s invasion of Ukraine, Vucic has managed to maintain a delicate balance, cooperating with the West, Russia, and China while avoiding significant backlash from any party.
Belgrade has refrained from joining sanctions against Moscow and has preserved flight connections to Russia. Simultaneously, the Serbian arms industry has supplied weapons to Ukraine through indirect channels, allowing Vucic to garner Western support amid ongoing tensions with Kosovo.
Challenges Arising from American Sanctions
However, this balancing act has become increasingly challenging. Recent American sanctions targeting the Russian energy sector now directly impact Serbia. The Naftna Industrija Srbija (NIS), a key player in Serbia’s energy landscape, is predominantly owned by Gazprom Neft. These sanctions prohibit transactions with the Russian state company and its subsidiaries, affecting both trade and financial services linked to NIS.
NIS is vital for Serbia’s energy supply, involved in domestic gas and oil extraction, as well as the import and processing of energy resources. With a refinery in Pancevo and numerous gas stations across Serbia and neighboring nations, NIS generated $3.3 billion in revenue last year, constituting 4.5% of the nation’s economic output.
Amid rising public discontent following a tragic infrastructure collapse in November, Vucic is determined to prevent any disruptions in energy supply, particularly during the winter months.
In a concerning turn of events, just one day after the announcement of American sanctions, a technical failure temporarily halted gas supplies from Azerbaijan. Reports of a purported Ukrainian attack on the TurkStream pipeline added to the anxiety, despite the lack of credible evidence linking these incidents to the sanctions.
As Serbia relies on gas from Azerbaijan via the Trans-Anatolian Pipeline and imports from Russia through TurkStream, the recent occurrences have underscored the nation’s vulnerability. Consequently, Vucic has indicated that a change of ownership regarding NIS is imperative for its continued operations, suggesting that Gazprom must divest its stake.
The timeline for a regular sale is exceedingly tight, with ownership transition required by February 25. Given the constraints, a state takeover of the Russian share seems more plausible, and even a forced nationalization is legally feasible. However, Vucic has publicly stated his intention to avoid seizing assets unfairly, emphasizing that the state has the means to negotiate a fair acquisition price.
Energy expert Miodrag Kapor highlights that the stakes go beyond mere finances; Gazprom’s majority ownership of NIS is also politically motivated. NIS, along with its affiliated entities, plays a crucial role in sustaining Russian influence in Serbia, a legacy from when Serbia was economically vulnerable during the Yugoslav wars.
The sale of NIS to Gazprom in 2008 lacked transparency, with no public tender and an undervalued price of $400 million. This deal secured Moscow’s support against international recognition of Kosovo, solidifying NIS’s protected status. Inspections are rare, and few are willing to confront the Russian-controlled entity.
Given these complexities, the Kremlin is likely to resist losing its foothold in Serbia. Russian Foreign Minister Sergei Lavrov has asserted that NIS must not be nationalized under any circumstances, while Western nations pressure Serbia to move away from Russian influence.
Despite the challenges, there remain avenues for Moscow to retain some degree of influence. Kapor anticipates that the Kremlin will advocate for a management team at NIS that aligns with Russian interests. This influence is already visible in the state gas company Srbijagas, where General Director Dusan Bajatovic champions strong ties with Russia. Consequently, while Vucic’s political maneuvering is under pressure, there remains potential for him to continue his intricate balancing act.