Serbia’s Delicate Dance with the EU and China

Serbia’s President Aleksandar Vučić has made many statements suggesting that joining the European Union is of “utmost significance” to his country. At the same time, though, he has amped up relations with China, an alliance that may stifle his EU ambitions. Why would Vučić squander Serbia’s opportunity to become an EU member state?  Why should it matter to the U.S. and the EU?

After many years of being anti-EU, Vučić seemingly turned a corner around 2008, when he broke away from the nationalist, anti-EU Serbian Radical Party (SRS) and co-founded the Serbian Progressive Party (SNS).

At the time, Serbians began to envision themselves inside the EU. SNS studied the data, incorporated pro-EU messaging into its political campaigns, and rapidly became popular. Overnight, Vučić opportunistically transformed his nationalist-Eurosceptic image into that of a Europhile.

Fast Forward to 2020

Vučić’s tune has been changing in recent years. On March 15 this year, for example, Serbia had only 27 confirmed cases of COVID-19 infections, yet Vučić declared a state of emergency. He accompanied what might otherwise seem like a prudent pre-emptive action with harsh words for the EU: “European solidarity does not exist,” he said, adding that Serbia’s only savior is China. This was arguably Vučić’s most explicit comparative expression favoring China over the EU.

Over the next few weeks, China provided medical supplies and equipment to Serbia, and in return, a pro-government media outlet plastered pro-China messages throughout Belgrade. A video of Vučić enthusiastically kissing the Chinese flag went viral.

More recently, in the context of the Belgrade-Pristina dialogue, Vučić stated:

You can talk to some people in Europe as much as you want, but believe it or not, they never really hear you. They have their agenda, and for them, an excellent Serbian president would be the one who will accept all their demands, pressures, and blackmails.

Clearly the president seems frustrated with the EU.

You Scratch My Back, I’ll Scratch Yours

During the 1990s, China built up a lot of political credit with Serbia. At the time, China abstained from many United Nations (U.N.) Security Council resolutions that were critical of Serbian atrocities in the region. In 1999, China also opposed the North Atlantic Treaty Organization’s Operation Allied Force against Serbian targets over Serbia’s attack on Kosovo. China even sustained three casualties when the alliance accidently bombed the Chinese Embassy in Belgrade. Serbia and China share a sense of victimhood from that incident. The site of the old Chinese Embassy is slated to become a new Chinese Cultural Center, which in addition to two Confucius Institutes in Serbia, will further expand China’s soft diplomacy and propaganda.

Moreover, unlike most EU member states, China has refused to recognize Kosovo’s sovereignty since it declared independence from Serbia in 2008, a crucial matter from Belgrade’s perspective.

In exchange, Serbia has also had China’s back. Belgrade supports the One China policy in relation to Taiwan; the vice president of Vučić’s party last December accused the United States of “pouring oil over fire” in reference to the Hong Kong Human Rights and Democracy Act; and in July 2020 it was the only European country that signed a joint statement to the U.N. Human Rights Council with countries like North Korea, Iran, and Zimbabwe in defense of China’s “genocide” against Uyghurs.

But in order for Serbia to join the EU, Belgrade has to align the country’s foreign policy with Brussels. Last year, Serbia only aligned itself with 57 percent of EU declarations, down from 99 percent harmonization in 2012. On issues related to the situations in Ukraine, Syria, Myanmar, Iran, Belarus, Hong Kong, Burundi, and Zimbabwe, Serbia’s positions are closer to Russia and China rather than the EU.

The EU vs. China

Vučić’s anti-EU, pro-China speech that he delivered in March at the start of the pandemic gave the impression that the Chinese partnership is more important than the EU.  The reality is that Serbia’s relationship with the EU has been, and continues to be, much more significant in dollar-for-dollar terms.

China is rapidly increasing Foreign Direct Investment (FDI) in Serbia – it has risen from €2.5 million in 2010 to €318 million in 2019. Nevertheless, the current amount dwarfs that of the EU’s FDI as a whole, which was €1.87 billion in 2019.  FDI from the Netherlands (€704,5 million), Russia (€658.7 million), Hungary (€463.9 million) and Switzerland (€378.7 million) also outweighed China’s contribution towards the Serbian economy.

Although it is hard to measure, Serbia also profits from a much greater investment climate due to its EU candidate status and because of the reforms it had to undertake as part of that journey.

Trade between Serbia and China has grown similarly rapidly.  It amounted to $1.18 billion in 2010 and stood at $2.837 billion by 2019.  The relationship is, however, severely tilted in favor of China: Serbia exported only $329.2 million to China while importing $2.5 billion from China, resulting in a huge trade deficit for Serbia.

At the same time, Serbian exports to China pale in comparison with exports to the EU.  According to the EU delegation to Serbia, “The value of Serbian exports to the EU more than tripled from nearly €3.4 billion in 2009 to almost €11.3 billion in 2019.”

Moreover, statistics show the EU as a whole is by far the largest donor of aid to Serbia, even though public opinion polls show most Serbs think China is the biggest contributor (more on that below). According to the EU, it provided €1.539 billion in assistance to Serbia through the Instrument for Pre-Accession Assistance for the period 2014-2020. A new report by the Center for Strategic and International Studies in Washington reports that China is only the fifth-largest donor to Serbia and “has only delivered about 12 percent of its pledged aid to Serbia since 2009 (€6.6 million of €56 million).”

Between 2017 and 2019, Serbia received €5.5 billion in loans through China’s Belt and Road Initiative (BRI), more than any other state in the Western Balkans. Such borrowing creates a risk for Serbia that it will become ever-more vulnerable to China’s debt-trap diplomacy. Chinese loans are often opaque and come with conditions that are heavily skewed towards the creditor rather than the debtor’s interests. According to Richard Crawford from the London-based International Institute for Strategic Studies, “[since] 2010, Serbia has pursued at least 11 infrastructure projects for which it has pre-agreed financing with China and then awarded contracts to Chinese companies.” Such an approach also may contravene EU regulations on competition and transparency.    

Why the Flag Kissing?

Despite the benefits of economic relations with the EU, Serbia has the least pro-EU citizens in the Western Balkans and the most pro-Chinese citizens, not only in the region, but in Central and Eastern Europe. Vučić’s flag kissing and accompanying messaging thus reinforced the impression about China’s goodwill towards Serbia.

A survey conducted by the Institute for European Affairs during the week prior to Vučić’s anti-EU, pro-China speech in March, found that 4 out of 10 Serbians already had the impression that China was the largest foreign donor to Serbia, while only 17.6 percent thought it was the EU.

In another survey conducted by the Center for Insights in Survey Research conducted prior to Vučić’s March speech, Serbians were asked whether they would vote for or against joining the EU, and 50 percent of respondents said yes.  However, 39 percent and 46 percent of people ranked China as “highly favorable” and “somewhat favorable” respectively (85 percent in total), while only 20 percent (highly favorable) and 43 percent (somewhat favorable) held the same views of Germany, a key EU member state.

Vučić, therefore, may be slowly preparing the Serbian public to not necessarily oppose EU integration, but at least become indifferent to it. The more he strengthens the perception of China’s benefits to Serbia, the less likely it is that the public will demand EU membership.

So What? 

A popular Western assumption is that EU membership serves as the most important carrot to facilitate political and economic reforms in Serbia. While EU membership would be beneficial to Serbia as a whole, it may not serve the interests of Serbia’s ruling elites. Although Vučić publicly backs the idea of EU integration, his growing authoritarianism, corruption, and state capture threaten Serbia’s EU accession while at the same time making EU membership less desirable for him if his priority is to maintain those ways. China will not criticize him on any of those issues.  But, in order for Serbia to join the EU, it will have to implement a series of reforms related to democratization, rule of law, transparency, and market liberalization.

In essence, Vučić is developing what negotiation experts would refer to as a stronger “best alternative to a negotiated agreement” (BATNA).  He is creating the impression that there are many alternatives to the EU to grow Serbia’s economy.  To be clear, China is not Vučić’s only answer to EU membership. He is strengthening his BATNA by also pushing for integration of the Western Balkans and in the Russian-led Eurasian Economic Union, and by making highly visible (and sometime shady) bilateral deals with Russia and the United Arab Emirates.

Vučić’s antics will most vividly impact ordinary Serbians, both politically and economically. At the same time, for years the U.S. and the EU envisioned integration of Europe as a strategic goal most clearly expressed by the idea of Europe “whole and free.” Under current conditions, Serbia will not feature in that scheme, especially given EU divisions on policy matters related to the Balkans and enlargement, and in the absence of coordinated efforts between the U.S. and the EU on China and the Balkans.

IMAGE: Serbian President Aleksandar Vucic, left, shakes hands with Chinese President Xi Jinping, right, before the meeting at the Great Hall of People in Beijing, China on April 25, 2019. (Photo by Kenzaburo Fukuhara/Kyodo News – Pool/Getty Images)

 

About the Author(s)

Leon Hartwell

Non-Resident Transatlantic Leadership Fellow at the Center for European Policy Analysis (CEPA); former Policy Advisor and Officer at the Netherlands Embassies in Zimbabwe and South Africa. Follow him on Twitter (@LeonHartwell).

Stefan Vladisavljev

Program Coordinator at the Belgrade Fund for Political Excellence (BFPE) and part of the team behind the Belgrade Security Forum. Follow him on Twitter (@Vladisavljev_S).