Eurasia Press & News
At the beginning of February in Belgrade, representatives of the Directorate for the Prevention of Money Laundering of the Republic of Serbia and representatives of the Financial Intelligence Service of the United Arab Emirates signed an agreement on the prevention of money laundering.
The signing ceremony was also attended by the UAE Ambassador to Serbia, Mubarak Saeed Burshaid Al Dhaheri. The Deputy Prime Minister of Serbia and Minister of Finance Siniša Mali emphasized that the agreement will enable the institutions of both countries not only to cooperate better, but also to strengthen their already strong economic relations: “Relations between Serbia and the United Arab Emirates have never been better, and there is room for further development. further”, said Mali.
It is a reminder that in recent years the diplomatic, economic and military relations of the Republic of Serbia and the UAE have risen to very high levels, so the Serbs themselves state that they now perceive the UAE as “Serbia’s best friend in the Arab world”. More precisely, relations between Belgrade and Abu Dhabi are so branched and layered that they have reached the level of strategic partnership. Along with France, Italy, Russia, China and Azerbaijan, the UAE has become part of the “elite circle” of countries with which Serbia has strategic partnership agreements. However, it was not always like that, pricisely relations were often very bad and on the verge of diplomatic war.
The gradual development of the relations
Serbian-Emirati ties are several decades old. Relations between the UAE and the Socialist Federal Republic of Yugoslavia were established in 1971. Even then, as one of the republics of Yugoslavia, Serbia began to slowly but surely develop its relations with the Gulf monarchy. Relations were often bad because of Belgrade’s relations with Bosnia and Herzegovina and Kosovo. During the war in BIH, Abu Dhabi financially supported the Bosniaks in the war against the rebel Bosnian Serbs who were supported by neighboring Serbia. Emirati leaders generously aided the military forces of Bosnian Muslims. UAE President Sheikh Zayed bin Sultan al-Nahjan donated more than $10 million, and Defense Minister Sheikh Mohammed bin Rashid al-Maktoum invested nearly $15 million. At the same time, we should not forget that in addition to financial injections, the Emirati authorities played a role in equipping and sending foreign radical Islamic fundamentalists to Bosnia and Herzegovina who fought as Mujahideen in the war. In addition to military action, foreign volunteers committed numerous crimes and misdeeds against Serbian and Croatian soldiers and civilians.
When open war broke out in Kosovo between Serbian security forces and the Kosovo Liberation Army in 1998, Abu Dhabi backed the Albanian independence movement, which again angered the Serbian government. The authorities of the Emirates wholeheartedly helped the Kosovars, and the basic motivation, apart from the Kosovars’ affiliation to Islam, was driven by the inhuman actions of the Serbian Army, that is, the massacres of the Kosovar Albanians. The Emirates strongly supported the NATO bombing of Serbia. Moreover, as part of the KFOR peacekeeping mission, the Emiratis deployed around 1,500 soldiers to the breakaway southern Serbian province. When Kosovo declared independence in 2008, the UAE became the first Arab country to recognize the self-proclaimed republic. Such a procedure enraged Serbia and led to the severance of the newly created diplomatic ties between Belgrade and Abu Dhabi. More precisely, official diplomatic relations between the independent Republic of Serbia and the UAE were established in 2007.
The appearance of Vučić and a dramatic turn in relations
The fundamental driving force behind the development of good relations between Serbia and the UAE, which will acquire a strategic character, is the current Serbian president, Aleksandar Vučić. It was Vučić’s political prudence and pragmatism that led to a 180-degree turn in the previously bad relations. At the same time, one should not lose sight of the motivation of the Gulf Kingdom, which was also interested in thawing ties with Belgrade. Relations took a dramatic turn in 2012 after the coming to power of the Serbian Progressive Party and the visit of the Crown Prince of Abu Dhabi, Muhammad Bin Zayed, to Belgrade the following year. What exactly was it about?
At the time, Serbia was struggling with major economic difficulties characterized by high public debt and a high unemployment rate, while the Serbian factory industry lagged behind European competition. Serbia desperately needed foreign direct investment that could give a positive, healthy boost to its failing economy, which was still recovering from international sanctions in the 1990s, but also from privatization looting by tycoons. Vučić desperately needed foreign investors to revive factories, crafts and agricultural activities in order to employ the Serbian masses and preserve social peace. Social peace was a prerequisite for the enthronement of Vučić and his authoritarian regime.
On the other hand, one should not be naive and think that Emirati sheikhs helped Serbia because of philanthropy. They helped the Serbs out of self-interest in order to help themselves. At that time, the UAE government was looking for ways to diversify its energy-dependent economy, and Serbia offered an opportunity for just that. More precisely, in Serbia the Emiratis saw an opportunity to build a strong foothold on the European market and gain access to the once strong military industry that was internationally respected during Yugoslavia. The military industry of Serbia needed investments in order to modernize its capacities, and this was not a problem for the sheikhs. The two countries quickly recognized the tangible benefits of close bilateral relations. In a relatively short period of time, the growing partnership between Belgrade and Abu Dhabi has expanded to air transport, (urban) construction, agriculture, military industry and tourism. UAE foreign direct investment in Serbia increased from EUR 300,000 in 2010 to EUR 180 million in 2018.
A profitable strategic partnership
In 2013, agreements were signed between the governments of Serbia and the UAE on cooperation in the field of defense, mutual encouragement and protection of investments, and avoidance of double taxation of income tax. The following year, an agreement was signed on the abolition of visas for holders of diplomatic and official passports, as well as an agreement on air traffic. On August 1, 2013, Serbian Jat Airways and Emirati Etihad Airways entered into a strategic partnership to create a new Serbian national airline called Air Serbia. According to that contract, Etihad acquired a 49% stake and management rights for a period of five years, while the Serbian government retained the remaining 51% of shares and five out of nine seats in the company’s supervisory board. Jat Airways was reorganized and formally renamed Air Serbia in October 2013, and on October 26, 2013, the first flight under the new name was organized from Belgrade to Abu Dhabi. Although the share of Etihad Airways in Air Serbia fell from 49 to 18% during the pandemic, the Emirati company still has an important influence in the Serbian airline.
In the same year 2013, the Emirates approved a loan of 400 million dollars to Serbia, which had difficulties in granting European loans due to its unenviable financial situation. In March 2014, Serbian Finance Minister Lazar Krstić announced that the state investment fund of the Emirates, Abu Dhabi Investment Authority, had signed an agreement with the Serbian government on a low-interest loan worth one billion dollars. The same agreement on a billion-dollar loan was signed two years later. With food security a strong driver of Emirati investment, Abu Dhabi-based Al-Dahra has invested $400 million in many failed socialist-era farms across Serbia that produce wheat, hay and fodder. This is the largest investment in Serbian agriculture in the last few decades.
Significant investments in the military industry followed. The Emirati Advanced Research and Technology Holding (EARTH) has signed a $267 million contract with the largest Serbian military company Yugoimport SDPR to develop an anti-armor multipurpose long-range missile system (ALAS). It is the most sophisticated weapon ever made in Serbia. The sheikhs also invested in the metal processing industry in Serbia, which further confirmed the large-scale cooperation between the two countries. The UAE buys large quantities of Serbian weapons, and some of those weapons produced in Serbia ended up in the wars in Syria and Yemen. Serbia profits handsomely by selling its weapons to the Middle Eastern market, while the Emirates acquires a legal channel for acquiring weapons and the ability to distribute those weapons to its allies in various regional conflicts. In 2020, Serbs exported weapons worth 61.5 million dollars to the Emirates.
Belgrade on the water
In 2014, the Serbian government and partners from the Emirates secretly began developing the “Belgrade on the Water” project, which aims to revitalize and reconstruct the part of the Serbian capital known as the Sava Amphitheater. The project includes the construction of luxury buildings and apartments, Belgrade Park, Sava Promenade, five-star hotels, a 168 m high skyscraper (“Kula Beograd”) and a large shopping center Galerija Belgrade (300 thousand square meters), which opened in October 2020 on the right the bank of the Sava river.
The value of the Belgrade on the Water project is about 3.5 billion euros, which the government of Serbia and their partners from the Emirates need to invest. The joint venture agreement was signed in April 2015 and announced in September of the same year. The Government of Serbia has a share of 32% of the shares in the company Belgrade on water, and the remaining part is owned by Arab investors.
Frequent visits by political leaders
The mutual visits of the leaders of Serbia and the UAE to the two capitals are frequent, which is one indicator that the two countries are nurturing special relations. In his role as Prime Minister, Vučić visited the UAE in October 2015 and November 2016. Then he met with the Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces, Sheikh Muhammad bin Zayed Al-Nahjan. In his role as President of the Republic, Vučić visited Abu Dhabi in December 2018, March and September 2021. Deputy Prime Minister and Minister of Foreign Affairs of Serbia Ivica Dačić participated in the Sir Bani Jasi Forum in Abu Dhabi in 2017, 2018 and 2019. Crown Prince Zayed Al-Nahyan attended the presidential inauguration of Vučić in June 2017. UAE Deputy Prime Minister Sheikh Hamdan bin Zayed Al Nahyan visited Serbia in August 2018. In January 2020, the Prime Minister of Serbia, Ana Brnabić, in the role of special envoy of the President of Serbia, participated at the opening ceremony of “Abu Dhabi Sustainability Week” and at the “Zayed Sustainability Award” ceremony.
The Government of the Emirates was one of the first to help Serbia in the fight against the coronavirus pandemic by sending a plane with 10 tons of much-needed medical equipment to Serbia on March 29, 2020. On December 25, 2020, Vučić personally welcomed the plane with medical equipment worth several million euros sent to Serbia by the Emirates at the Batajnica military airport. In December 2021, a postage stamp was issued in honor of 50 years of friendship between the two nations. Serbia has its embassy in Abu Dhabi and the Emirates in Belgrade. In 2020, trade between the two countries amounted to about 120 million dollars. Exports from Serbia amounted to 93.7 million USD, and imports from the Emirates amounted to 26.1 million USD. In pre-crisis 2019, the volume of trade was USD 163 million. Between 2010 and 2019, the UAE was the fourth largest foreign direct investor in Serbia, with a share of 3.1%, behind the European Union, Russia and China. In the fall of 2021, Vučić stated that around a thousand companies from the Emirates are operating in Serbia.
(Geo)political motives of partnership
The excellent relations between Serbia and the Emirates lead to the question, what is the background of these relations, if the obvious economic profitability is excluded? The main motive that drives the foreign policy of Vučić’s Serbia and thus the attitude towards the UAE is the policy of non-alignment and the double policy of maneuvering between the West and the East. For Serbia, partnerships with, generally speaking, non-Western or Eastern powers such as China, Russia, India, Turkey and the United Arab Emirates are an integral part of foreign policy, a part that is very necessary in order to create a sustainable balanced foreign policy, but also the internal political and economic stability of the country.
On the one hand, by partnering with Abu Dhabi, Ankara, Manama and other powers of the Middle East, Serbia attracts foreign investors and creates new jobs. With this goal in December 2020, Vučić traveled to visit Bahrain, where he expressed his desire for stronger political and trade ties with that Gulf monarchy. On the other hand, Serbia ceases to be dependent on the European Union and the USA in the event that the West cuts off investment channels or perhaps imposes sanctions on Serbia due to its relations with its neighbors. If that were to happen, Serbia has insurance that it will not experience the gloomy 1990s again.
When observing Vučić’s motives from the aspect of geopolitics, the balanced foreign policy of good relations with numerous countries in Asia, Africa and America shows that Serbia wants to be an important geopolitical factor. Serbia can neither be a great nor a medium power, but it can be a small (regional) power with great influence. Apart from, of course, economic benefits, this influence can help Serbia to establish itself more strongly in the territories of the former Yugoslavia and Belgrade can become the “center of the region”, as Vučić and his colleagues pompously say. In other words, although it can’t become economic powerhouse, Serbia wants and can become politically and diplomatically the most powerful country of the ex-Yugoslavia, which can develop its capacities but also implement the hegemonic foreign policy of the “Serbian world”.
A respected and powerful Serbia in the international community would certainly have a better chance of attracting the Republika Srpska, Montenegro, northern Kosovo and other Serbs in the areas of the former Yugoslavia under its influence. Currently, the strengthening of special relations with those political entities that Vučić considers to be “Serbian countries” is in force, and in the future it may be time to redraw the borders. It is quite clear that through their extensive diplomatic network, Serbian diplomats lobby not only against the recognition of Kosovo, but also direct their efforts against Bosnia and Herzegovina and Montenegro: they want to convince foreigners that these countries cannot survive in this form in the long term.
The Emiratis also benefit geopolitically from the strategic partnership with Belgrade. The aim of the Emirati policymakers is to push Turkey’s influence out of Serbia and the Western Balkan region. The UAE seeks to use its close ties and strategic investments in Serbia to prevent its rival from establishing a foothold to expand its economic and geopolitical influence in the region. Political, economic and security issues are intertwined between the regions of the Western Balkans and the Middle East. In fact, rivalries from one region spill over into another. The Emirates believe that they can be dominant in the Western Balkans and in their desire to suppress other competitors, they create strong bilateral relations such as the relationship with Serbia. This results in the creation of new geopolitical realities. These realities further complicate the already complicated relations in the region.
