Two weeks after failing to win European Union candidate status due to a flare-up of violence in its former province Kosovo, which declared independence in 2008, Serbia is getting an energy boost. But it may prove too little to convince a discouraged nation to embrace Europe.
A $2.6 billion investment by Securum Equity Partners to build one of the world’s largest solar parks in Serbia and a soon-to-be-signed new long-term gas contract with Russia’s Gazprom OAO look set to revitalize Serbia’s economy.
The planned solar park places Serbia on Europe’s renewable energy map and paves the way for more such projects. The deal with Gazprom could help curb gas import costs by as much as 20% and may rein in inflation in Serbia, which came in at 8.1% in November, driven by high energy costs.
“The agreement itself is very important, and we see great positive impact on the economy, because such an agreement is not only about the gas price issue, but seems to be covering as well the construction of new gas plants and gas warehouses, which enhance the country’s competitiveness on the energy market,” says Liljana Grubic, head of research of Raiffeisenbank in Belgrade.
Good news also comes from Germany. While the German government was instrumental in blocking Serbia’s E.U. candidate status earlier this month, its business leaders are pushing for stronger economic ties between the two countries.
Michael Schmidt, head of the Delegation of the German Economy to Serbia, said this week that “the strong links of Serbia’s economy to the ones of EU member states, particularly Germany, will be a decisive factor for Serbia to continue following its EU pathway, regardless of the daily-political events.”
While the Kosovo issue is far from resolved, positive economic developments in the region may limit extremists’ ability to tap into a frustrated electorate by rousing nationalist feelings.
This is important for Serbia, which will elect a new parliament in May. Pro-European forces in Serbia fear that if the country fails to win EU candidate status by March, conservatives, who want Kosovo–or at least the country’s Serb-dominated North–back in Serbia’s fold, could prevail and jolt the region.
A stable economy, the hope for new jobs and a better life, however, could keep conservative powers at bay. But as Europe prepares for a second recession that will hit Serbia next year, politicians in Belgrade are distancing themselves from the EU.
Former president Vojislav Kostunica, who heads the Democratic Party, said this week Serbia should drop its EU bid and just seek economic ties with the bloc. Interior minister Ivica Dacic from the Socialist Party, frustrated over Serbia’s inability to get closer to the bloc which he believes will freeze new memberships after Croatia’s inclusion, called for “untying the Gordian Knot” regarding the EU and Kosovo, saying Serbia should pursue its own national interest.
Their stance could win votes and help them topple the pro-European government of Mr. Tadic, especially if the economic outlook remains week.
According to a recent poll by agency Faktor Plus around 40% of Serbs believe the country won’t get candidate status next year. The same poll also found that a majority prioritizes fixing the economy over joining the EU.
Source blogs.wsj.com
