A grateful Serbia offers its economy to Mother Russia


Belgrade : While Tomislav Nikolic, chief of the extremist, anti-Western Serbian Radical Party, has openly said he “wished” Serbia was a Russian province, the government of more moderate Prime Minister Vojislav Kostunica has relentlessly been promoting the rejuvenated link with Moscow.

Support TwoCircles

The pro-Russian euphoria among Belgrade politicians reflects Moscow’s hardline diplomatic position on the issue of Kosovo, with Russia so far blocking the independence drive of the largely ethnic Albanian breakaway province of Serbia.

Thanksgiving over Russia’s support has not been limited to diplomatic praise, but includes concrete concessions to Russians in the upcoming privatisation of major state-run enterprises, despite warnings that open favouritism towards Russian investors was painting a wrong picture of Serbia.

With repeated calls on Russian businessmen to invest in Serbia, the nationalist prime minister has indicated that East was preferred to West.

Just over the past month, Kostunica met Aeroflot chief executive Valeriy Okulov and Russian “aluminium king” Oleg Deripaska, who is interested in Serbia’s mining-smelting complex Bor.

According to reports, Aeroflot may acquire Serbia’s moribund carrier JAT for $400 million.

Media close to the government said Aeroflot was an “ideal partner” because it was willing to assume JAT’s $200-million debt and renew its ancient fleet without firing the sizeable workforce surplus.

Driving Aeroflot is its interest in accessing the Open Sky system through JAT when Serbia joins in 2008, local experts say. With the Serbian daughter company, Aeroflot will have opened a huge crack in the door to the international market.

Russian giant Lukoil emerged as the hot favourite in the privatisation of Serbia’s oil monopoly NIS, which is due to start with a sale of a minority stake in 2008.

Further, Moscow’s Sheremetyevo Airport has already signed a memorandum of understanding with its Belgrade Nikola Tesla counterpart to build a cargo terminal, though the international tender for the job has not even been opened yet.

Finally, Russian firms are due to build a huge underground natural gas reservoir in northeastern Serbia.

The euphoria continues despite the lesson – learned by the petrol retail chain Beopetrol – that Russian investment does not necessarily bring immediate prosperity.

Beopetrol’s shares have plunged to a third of their value since being taken over by Lukoil in 2003.

“The Russians have ruined Beopetrol,” screamed the Belgrade daily Press, stating that Lukoil has failed to meet investment pledges.