Will Cutting Russia’s Gas of Serbia Lead to a Regional Disaster?

Serbia is awaiting the final decision of the European Union on sanctions on the transport of Russian oil through the Trans Adriatic Pipeline (TAP).

Croatia had earlier demanded that Western Balkan countries not be exempt from the latest sanctions package.

The eighth package of EU sanctions against Russia has strained relations between Serbia and Croatia. Tensions between the two countries were heightened at a summit meeting of the European Political Community in Prague, the Czech capital.

Croatia has once again announced that it will stop the delivery of Russian oil via the Adriatic pipeline to Serbia, but the final decision was postponed until December 1.

With this step, Serbia is in an unenviable position. It will have to look for another alternative.

 

Serbian Response

Serbia considered the Croatian move to be an outright hostile act towards it, and this was confirmed by Serbian Prime Minister Ana Brnabic in a statement in which she said that "sanctions against Russia have turned into sanctions against Serbia."

"This is an act of open hostility towards Serbia. We cannot find cheaper oil than this, and obviously contracts do not have to be respected either," she said.

Serbian President Aleksandar Vucic warned of a "desire to harm Serbia," while Croatian Prime Minister Andrej Plenkovic responded by saying Serbia "cannot sit in two chairs."

"Serbia will have cheap Russian oil that will come to Croatian ports and reach them via the Adriatic pipeline," Plenkovic said, adding: "They will have cheaper oil thanks to their deal with Putin. And what will we be here? A kind of useful fool?"

Serbia has contracts with the Adriatic Oil Pipeline (JANAF) to transport large quantities of oil. The contract provides for the transport of 2.7 million tons of oil in 2021 and the transfer of 3.2 million tons in 2022.

The controlling owner of the contract is the Russian company Gazprom, and this is among the main reasons for the sanctions.

The latest data available from competent institutions indicate that Serbia produces less than a third of the required amount of oil, i.e., 26.10%. Most of the rest are imported from Iraq, followed by Russia (33%) and Kazakhstan (5-10%).

Due to the fact that the contract is owned by Gazprom, the Serbian authorities have long been considering the option of buying ownership from the Russian company during the sanctions in force and then returning it to its ownership.

 

Excluded and Neglected

What increased Serbia's discontent is that Hungary and Bulgaria have been excluded from the EU's latest raft of sanctions against Russia.

The exemption applies to the carriage of oil by sea and in case of urgent need, meaning that the higher price of oil agreed upon by the European Union does not apply to such transport.

Thus, Bulgaria will not face restrictions regarding the operation of the Lukoil refinery, where the main refinery is located.

In the first six months of 2022, the Adriatic Oil Pipeline achieved a total profit of €25.3 million and a net profit of €20.7 million. This represents an increase of 15.7% compared to the same period last year.

The main activity of the pipeline is the transportation and storage of oil and its derivatives. The roots of the company JANAF go back to 1974 in the period of the former Yugoslavia.

Croatia, Bosnia and Herzegovina, and Serbia participated in the construction of the oil pipeline at that time

All of them pledged to invest hundreds of millions at the time, but that was enough for just 10 percent of the pipeline.

 

Heated Region

The Serbian discontent comes at a time of severe tension between Serbia and Bosnia and Herzegovina. The renewed tension between Serbia and Kosovo at the end of July has re-drawn attention to the region once again.

As part of reciprocity, the Kosovo Government has requested that Serb citizens entering the country's borders carry a temporary document issued by its authorities during their stay, as well as replace their license plates with temporary ones from Kosovo. Tensions between the parties arose after Serbs residing in the country objected to this decision.

Serbia does not recognize the State of Kosovo, which unilaterally declared its independence in 2008.

Since Kosovo is not a member of the United Nations, some EU member states do not recognize Kosovo because of the status of minorities in their countries.

According to the Kosovo Government, Serbia is operating under the direction of Russia in the Balkans.

Kosovo officials argue that Serbia has ambitions over Bosnia and Herzegovina and Kosovo, as do Russia's historic claims about Ukraine and Moldova.

Serbian President Vucic stated in a recent statement that "Kosovo Serbs will not tolerate any further persecution, that they will seek peace without surrendering, that they will not succumb to Kosovo's 'discrimination' against them, and that Serbia will win."

Bosnia and Herzegovina is another Balkan country threatened with conflict at any time, with officials in the Republika Srpska claiming that the current system is a problem and that Serbs are also discriminated against.

Serbian leader Milorad Dodik has previously announced that they will withdraw from the country's top military, judicial and tax administration in October 2021, describing Bosnia and Herzegovina as a "failed state."

 

Turkish Diplomacy

Turkiye's diplomacy has played an important role in easing the tensions in the region, while most EU countries did not have the capability to do so.

Last month, Turkish President Recep Tayyip Erdogan ended a tour of the Balkans that included Bosnia and Herzegovina, Serbia, and Croatia, amid tensions in the south-eastern European region, as Turkiye tries to maintain the peace that barely arose after bloody conflicts that are still remembered in recent history.

The visit was characterized by a commercial nature because of the cooperation agreements it witnessed in this framework, along with the high-level delegation accompanying President Erdogan of Turkish businessmen and investors.

However, the tour in this important region carries a message about the importance of the Turkish role as a mediator to establish peace and security between the ethnicities that control the fate of the Balkans after yesterday's rivalry.

While Turkiye, at the general international level, stresses the need to achieve security and peace in areas of tension and conflict, it attaches greater importance to the sensitive Balkan region, given the ties of history, blood, and religion on the one hand, and the fact that the Balkans are an important transit gate from Anatolia to Europe on the other.

However, it is noticeable that Turkiye deals with the countries of this region on certain considerations common and open to all, as its relations with Serbia, for example, are strong and very good in a "striking" way, according to the Turkish researcher and security expert Abdullah Agar, who pointed out in press statements that Erdogan's thesis on the Balkan countries is based on the need to solve controversial problems internally, and not to allow anyone to exploit these differences.

Turkiye does not want the contagion of the war in Ukraine to spread to the Balkans, as there are certainly beneficiaries of these conflicts, and therefore they will not allow the war to end quickly, especially in light of its diversity and racial and ethnic overlap.

According to Agar, Turkiye is almost alone in this position open to all the countries of the Balkan region and plays the role of mediator at a time when Ankara enjoys good relations with all parties, stressing that it "has played its required role in calming the situation in light of the polarization and hostility that resulted from previous conflicts."