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Home/News/Serbia woos Turkish investors during Erdogan visit

Serbia woos Turkish investors during Erdogan visit

Serbian President Aleksandar Vucic gave an extremely warm welcome to his Turkish counterpart Recep Tayyip Erdogan, who arrived in Belgrade for a two-day visit on October 10, as Serbia seeks to attract investors from the region’s largest economy.

Belgrade is keen to boost economic growth by attracting export-oriented FDI and has already had some success with persuading Turkish investors, especially in the textiles sector, to set up shop. With this year’s economic growth looking shaky — the International Monetary Fund has just lowered its 2017 outlook to 3% as drought hit the agriculture sector this summer — securing further investments to push up future growth has become even more critical.

In talks with Erdogan, Vucic promised the best investment conditions in the region for Turkish businesspeople. “Whoever offers you better conditions, come to us and we will improve our conditions and you will get 5% better conditions than anywhere else in neighbourhood, I personally guarantee you this,” Vucic said, underlining that Serbia wants to attract as many Turkish investors as possible.

At a joint press conference with Vucic, Erdogan said he would back Turkish investments in Serbia, and described the signing of 12 bilateral agreements during his visit as “a good foundation for future cooperation,” B92 reported.

“There is also room to boost the bilateral trade volume from the present $800mn a year to over $1bn by the end of the year,” Erdogan told a press conference with Vucic.

Several Turkish textile companies are already active in Serbia, among them Aster Textile, which opened a plant in Nis, southern Serbia, in late 2016. Aster followed the successful story of textiles producer Jeanci, which supplies high end global brands like Gucci, Prada and Dolce & Gabanna. Jeanci started its operations in Serbia five years ago in Leskovac, another southern Serbia town, with 50 workers and today it employs over 1,100 people in Leskovac and Krupanj.

Textiles is not the only sector where Belgrade is hoping for Turkish investment. Serbia organised a Serbian-Turkish agro-forum on August 22 to attract Turkish investments into the food industry.

Establishing production facilities in Serbia would help Turkey to place goods on the Russian market, as Serbia has signed a Free Trade Agreement with Russia that allows products that are over 51% made in Serbia to be exported to Russia duty free.

A very warm welcome

After welcoming Erdogan and his wife at Belgrade airport on the evening of October 9, Vucic and other officials have been trying to show warm hospitality and make Erdogan’s time in Serbia pleasant and unique. Vucic even told the Turkish president that nowhere in the world he “would find such hospitality and such a desire for cooperation” as in Serbia.

“I promise you that, and I am convinced that together we can provide a safe and secure and incomparably richer Balkans,” Vucic told the guests from Turkey.

Other Serbian officials exaggerated their efforts to get Erdogan’s sympathies. At the gala dinner on October 10, Deputy Prime Minister and Minister of Foreign Affairs Ivica Dacic serenaded Erdogan with a Turkish song. Dacic is known as a minister of foreign affairs who barely speaks English, but he likes to sing and often takes the microphone at informal events, usually to belt out popular local songs.

The efforts have already paid off to some extent, with the signing of a declaration to create a joint high council for cooperation, followed up by a raft of 11 cooperation agreements spanning numerous sectors of the economy and the cultural sphere.

According to the Serbian government’s statement, the two countries signed a revised free trade agreement, and agreements to cooperate in areas from energy, transport and education to forestry and water management.

Further deals were signed on the restoration of the hammam at Golubac Fortress, the Brace Krsmanovic Baths in Belgrade and the Bayrakli Mosque, also in the Serbian capital.

A bridge between Serbia and Turkey

From Belgrade, Erdogan is due to travel to Novi Pazar, the largest town in Serbia’s western Raska region, known as Sandzak by its large Muslim population as well as by Turkey. The Turkish president said he considered the region to be the bridge between Serbia and Turkey.

The population of Novi Pazar and nearby towns are euphoric about Erdogan’s visit. Novi Pazar has been decorated with Turkish flags and “Welcome to Novi Pazar” billboards.

Raska is a leading region when it comes to the brain-drain and youth unemployment. Among Serbia’s poorest regions, its economy receives frequent donations from Turkey and other Muslim countries, as well as direct payments to citizens mainly from relatives living in Turkey. There is an old saying that ‘there is no person in Novi Pazar who doesn’t have anyone in Turkey’.

The region is still an area of sporadic tensions based on nationalism, and Erdogan commented briefly on the situation.

“I will never stand with nationalism, especially not ethnic nationalism, and that is the message I will send to people,” Erdogan said, adding that there are “no problems” in Novi Pazar, B92 reported.

However, Erdogan’s visit hasn’t been well accepted by the entire population of Serbia. For pro-democracy citizens, Erdogan’s visit is a signal that autocracy is rising in Serbia — already a concern given the dominance of Vucic and his Serbian Progressive Party (SNS) over local politics and the weakness of the opposition.

Pro-western Serbs argue that the Serbian authorities should arrest any of Erdogan’s 50 bodyguards who are the subject of US arrest warrants to show that Belgrade respects international law. The US accused 12 of Erdogan’s bodyguards of attacking peaceful protesters during a visit to Washington in May.

Erdogan’s visit to Belgrade was also criticised by nationalists in Serbia as welcoming him means being nice to those who wanted to convert Christians to Muslims and killed millions during the Ottoman era. The main reason for the antagonism is Ankara’s support for Kosovo, which declared independence from Serbia in 2008 and is not recognised by Belgrade. During his visit to Pristina in 2013, Erdogan said: “do not forget, Kosovo is Turkey and Turkey is Kosovo”.

“This is not 1389, as some think — this is 2017,” Vucic said apparently referring to the Battle of Kosovo, a decisive battle lost by Serbia that paved the way for the region to be taken under Ottoman control until the late 19th century.