On April 3, Serbian Minister of Natural Resources, Mining and Spatial Planning Milan Bacevic announced that a deal on a $500 million Russian state loan to Serbia will be signed during Serbian Prime Minister Ivica Dacic's visit to Moscow on April 10-11. During that visit, officials will also discuss adding cars, sugar, tobacco and cheese to the list of duty-free exports from Serbia to Russia.
Bacevic's statement came one day after EU foreign policy chief Catherine Ashton announced that Serbia and Kosovo failed to reach an agreement after an extensive round of negotiations. These discussions are sponsored by the European Union, which both Pristina and Belgrade aspire to join. Serbia received its candidate status in early 2012, but Belgrade's EU accession depends upon the normalization of relations with Kosovo.
Serbia and Kosovo have undertaken intense negotiations this year aimed at reconciling their positions regarding Kosovar independence in general and Serbs living in northern Kosovo in particular. Belgrade has made numerous overtures to Pristina in recent months. Dacic and his Kosovar counterpart, Hashim Thaci, agreed to discuss the creation of an Association of Serbian Municipalities, which would provide some autonomy to Serbs in northern Kosovo. While Belgrade opposes Kosovar independence, Serbia has sought a rapprochement with Kosovo whenever Belgrade has seen a potential benefit, such as that of maintaining the European Union's interest.
Like most countries in the Western Balkans, Serbia believes EU accession would facilitate increases in foreign investment, trade and funding — the European Union provides financial assistance to candidate countries as well as to its poorer member states. But Kosovo's status is a highly sensitive issue in Serbia, one that allows Serbian politicians to raise the banner of nationalism in times of economic crisis.
In recent weeks, Serbia has used its relationships with Europe and Russia to target an additional goal: that of becoming a transit country for EU members doing business with Russia. For example, Belgrade wants Russia to lift trade barriers on cars made in Serbia. This will directly benefit Italy's Fiat, which is the largest carmaker and a key industrial employer in Serbia. An agreement between Belgrade and Moscow would allow Italy — which doesn't have a free trade agreement with Russia — to increase its car sales in the growing Russian market.
Serbia's Place in the European Borderlands
Because of its location in the European borderlands, Serbia has traditionally been under the influence of external powers, including Europe, Russia and Turkey. Serbia fell under Ottoman control in the late 14th century for five centuries, but persistent revolts by the Serbs prevented the complete Ottoman domination of Serbia. Belgrade's relationships with Western Europe and Moscow are also complex. As a Christian and Western nation, Serbia feels it belongs in Europe. This identification with the West was partly a reaction to Ottoman rule, since Serbia traditionally saw Habsburg Austria as a counterweight to the Turks. But as a Slav and Orthodox country, Serbia also has a strong cultural bond with Russia.
With the collapse of the Ottoman empire in the early 20th century, Turkish influence in Serbia declined. But Serbia remained divided between its interests in the West and the influence from the East. Even during the Cold War, Socialist Federal Republic of Yugoslavia President Josip Broz Tito refused to align with the Soviet Union — yet he never fully broke with Moscow. At the same time, Tito was smart enough to maintain cordial relations with the United States and Western Europe. His strategy was to play Moscow and the United States against each other in an effort to extract concessions from both.
Just as the Ottomans collapsed in the early 20th century, the Soviet Union collapsed by the end of the century. In the first decade after the end of the Cold War, Serbia and the other members of the former Yugoslavia had to deal with violent conflicts that resulted from the country's breakup.
Serbia managed to escape its international isolation in the early 2000s, after the fall of Slobodan Milosevic and the appointment of Boris Tadic as president between 2004 and 2012. During these years, Serbia improved its relations with NATO and applied for EU membership, but Belgrade also kept a close economic and political relationship with Russia. Belgrade and Moscow signed a free trade agreement in 2000. In 2006, Gazprom and Serbian state-owned natural gas company Srbijagas began the first negotiations for the construction of South Stream. The final investment decision for the Serbian section of the pipeline was signed six years later, in October 2012. More important, Moscow supported Serbia after Kosovo's unilateral declaration of independence in 2008.
But Serbia's strategy has limitations. As the European crisis deepens, the European Union is losing interest in integrating new members. In addition, European countries are wary of institutional corruption and the presence of organized crime in Serbia, meaning that Kosovo is not the only obstacle to Serbia's accession to the European Union. At the same time, Serbia is surrounded by NATO members and is located far from Russia's borders, so influence over Belgrade is desirable but does not represent a vital strategic goal for Russia. As a result, Serbia's main foreign policy challenge is to remain attractive for both powers so it can continue to benefit from both relationships.