Serbia and Bulgaria have long been the main focus of Russia's strategy in the Balkans because of their geographic location, relationship with the European Union and historic ties to Russia. Over the past few years, Moscow has used loans, strategic acquisitions, proposed energy projects, trade and other investments to deepen its relationship with Bulgaria and Serbia. However, Russia's negative growth in 2015 and a weakened currency will inhibit its ability to compete with the European Union for influence in the two countries.
Though Bulgaria is a member of the European Union and Serbia is pursuing integration with the bloc, Russia has significant economic ties with the two countries. According to the Bulgarian National Bank, net inflow of foreign investment in Bulgaria between January and October 2014 was around 805 million euros ($974 million). Of that, some 177 million euros, or about 22 percent, came from Russia. The major Russian firms with assets in Bulgaria are LUKoil, Gazprom and Promet Steel. LUKoil's operations, including its oil refinery in Burgas, have reportedly contributed about 25 percent of Bulgaria's tax revenues. Export volumes, however, are modest, and only about 2.6 percent of Bulgarian exports in 2013 went to Russia. Nevertheless, more than 18 percent of Bulgaria's imports came from Russia that year.
Similarly, Russian businesses contribute a substantial portion of investment in Serbia. In 2013, according to the National Bank of Serbia, net foreign direct investment in Serbia totaled around 769 million euros. Of that, 45 million euros came from Russia, or around 5.8 percent. Since 2009, Russian energy giant Gazprom has been the majority shareholder in Petroleum Industry Serbia, an oil and natural gas company better known as NIS, with assets reportedly totaling over $3 billion. Moreover, since mid-2013, Russia has pledged over $1.3 billion in loans to Serbia to finance its budget deficit and to modernize infrastructure. Unlike Bulgaria, Serbia has a free trade agreement with Russia, with about 7 percent of its exports going to Russia in 2013. Around 9 percent of its imports came from Russia that same year. Furthermore, Russian bank Sberbank operates a subsidiary in Serbia with assets worth 839 million euros.
However, Russia's economic troubles will limit its ability to rival the European Union for influence in the Balkans. Russia will retain some influence in the Balkans through its investments in Serbia and Bulgaria and because of the region's dependence on Russian natural gas imports, but overall Russia's economic troubles are a setback in its competition with the European Union, at least temporarily.
