18.09.2019 Author: Dmitry Bokarev

The EAEU Expands Westward


The Eurasian Economic Union (EAEU) was established at the beginning of 2015. The founding member states were Russia, Belarus, and Kazakhstan, joined by Armenia on January 2 and Kyrgyzstan in August 2015. The EAEU has not accepted any new countries as full member states since then, but the Union is open to the possibility of cooperating with countries all around the world, not just countries in Eurasia, and it has already significantly extended the reach of its economic partnerships further afield: in 2016, a free trade agreement (FTA) with Vietnam came into force, then a temporary FTA was signed with Iran IN 2018, as well as an Agreement on trade and economic cooperation with China and a Memorandum of Understanding with Cuba. Moldova was also granted the status of an EAEU observer state in 2018. The possibility of entering into various different agreements with Egypt, India, Mongolia, Thailand, Serbia and Singapore is being considered.

The EAEU is now only a few steps away from signing an FTA with Serbia in particular, a Balkan state in Southeastern Europe and official candidate for EU membership. This is interesting, because given the current global political landscape, Serbia’s interest in building closer relations with Russia has been a source of irritation for the EU leadership and Washington, and Western media outlets have speculated that an FTA with the EAEU could jeopardize Serbia’s chances of joining the EU. Nevertheless, Serbia continues to pursue closer relations with both the EAEU and Russia.

It is worth bearing in mind that Russia and Serbia have already signed a separate FTA. The two countries share a long history of friendly relations, a common Slavic and Orthodox culture and the proximity of similar political views. Russia and Serbia are also united by their cooperation on defense. Gas plays another significant role in relations between Russia and Serbia, which Russia has been selling to Serbia at a reduced price for many years. There are plans to have the “TurkStream” natural gas pipeline extended to Serbia via Bulgaria in the near future, which will run along the bottom of the Black Sea from Russia’s Krasnodar Region to Turkey. The gas pipeline will continue on past Serbia to Hungary. This will allow Serbia, which is already a major consumer of Russian gas, to become an important transit country, which will generate a considerable amount of revenue for the country.

The Serbs appreciate the Russian Federation’s position on Kosovo in particular. Russia does not recognize this self-declared state, which was separated from Serbia as a result of NATO military intervention. Serbia, in turn, does not support western anti-Russian sanctions.

In February 2018 during a meeting with Russian Foreign Minister Sergei Lavrov, Serbian President Aleksandar Vučić said that despite pressure from the EU leadership and Washington, Serbia will never join those imposing sanctions against Russia, because the two countries have never caused each other any harm.

Serbia has been expressing an interest in the EAEU for several years now. Signing an FTA with the Eurasian Economic Union would give Serbia the opportunity to trade with the five member states on preferential terms, which represent a total population of more than 186 million people. For Serbia, this is an opportunity to significantly increase trade, as well as to become more economically independent from the West. It should not be forgotten that Serbia receives EU financial support, and given that Serbia has refused to join the EU in imposing sanctions against Russia, the West may try to use this financial assistance as a bribe to put pressure on Serbia.

This scenario was foreshadowed in a report the European Parliament’s Committee on Foreign Affairs published in November 2018, in which the EU leadership insisted that “Serbia should align its foreign policy more with the EU’s, also on Russia” and reduce its “dependence” on Russian gas, reminding Serbia of the financial assistance it receives from the European Union. The document also expressed concern over Serbia’s military cooperation with Russia and Belarus.

However, Serbia is not going to just cut ties with Russia and stop buying Russian gas at a reduced price. The Serbs are also discouraged by the demands the EU is making for Serbia to recognize Kosovo’s independence. This means that pressure from the EU will only serve to push Serbia closer to Russia. Russia and its partners are more than capable of helping Serbia to strengthen its economy if the EU decides to deprive the country of its financial support.

Work on the FTA between Serbia and the EAEU gained momentum in January 2019, when Russian President Vladimir Putin paid an official visit to Serbia. The Russian President was given a stately welcome at the meeting: President Aleksandar Vučić was keen to show the Russian leader how significant his visit was for Serbia. The two leaders discussed Russian-Serbian relations and the situation in the Balkans. Vladimir Putin said you get the impression that the Serbs have been taken away and divided, “dragged into different state apartments.” The discussion also touched in the topic of gas. Vučić said that his country would like to receive natural gas at the best price, and this is what Russian gas has to offer.

Vladimir Putin went on to express his hope that an FTA agreement would be signed between Serbia and the Eurasian Economic Union before the end of 2019, and that this agreement would provide greater opportunities for trade between Serbia and the EAEC. The Russian President also mentioned that Russia intends to increase the annual gas supply to Serbia to 3.5 billion cubic meters by 2022, which is why work is being carried out to extend the Serbian gas network. Vladimir Putin believes that this will help strengthen Serbian energy security and energy security throughout the Balkans.

In February 2019, the Deputy Prime Minister of Serbia Rasim Ljajić met with the Russian Minister of Economic Development Maxim Oreshkin. During the meeting, Ljajić said that an FTA between Serbia and the Eurasian Economic Union should be signed as soon as possible.

Russian Prime Minister Dmitry Medvedev also called for a free trade agreement to be signed with Serbia at the earliest possible date when the Eurasian Intergovernmental Council met in Kyrgyzstan in early August 2019.

At the end of August 2019, Rasim Ljajić said that the FTA between Serbia and the Eurasian Economic Union would be signed in October 2019, when Ljajić is planning to make a trip to Moscow.

This statement has been met with deep concern in the West. In the United States, the press reported that Serbia’s decision to secure a free trade agreement with the EAEU may jeopardize the country’s hopes of joining the EU, and that if Serbia does want to pursue EU membership, it needs to agree these steps with EU leaders before going ahead with them.

The European Commission responded by publishing a statement which recalled that according to agreements that have already been made with Serbia, the country may enter into agreements with the EAEU prior to its accession to the European Union, but all of these agreements will then have to be terminated before joining the EU.

Nevertheless, Serbia is not going to just abandon the FTA with the EAEU, support sanctions against Russia, or upset relations with Russia in any other way. Given the severe deterioration of relations between Russia and the West, the fundamental disagreement between Serbia and the West over Kosovo, and the fact that Western countries are yet to come up with a viable alternative to Russian gas, Serbia’s decision to enter into an FTA with the EAEU could very well see Serbia rejecting EU membership in the future, in order to move in a different direction with Russia.

Dmitry Bokarev, political observer, exclusively for the online magazine “New Eastern Outlook.”

Please select digest to download: