Splitting Serbia

UPDATE: The anti-Gazprom Serbian politician, Mladjan Dinkic, has apparently been forced to resign today.

tadicmiller121108.jpgWe’ve seen Moscow apply the Rumsfeldian divide-and-conquer disaggregation technique to split Europe from the United States on NATO and missiles, split East and West Europe on energy, and now, split the individual polity of Serbia over the Gazprom takeover of the state energy monopoly NIS. 

Today the Associated Press is running a report on a split that has opened in the Serbian government over the energy deal, with Deputy Prime Minister Ivica Dacic pushing the Kremlin line to sell NIS without any guarantees on what they would get in return – the main argument being that they can ill-afford to risk angering their most important “strategic ally.”  Dacic is opposed by the Minister of Economy Mladjan Dinkic, who represents the pro-Western party, arguing that it would be extremely unwise for Serbia to hand over control of its energy sector (and the accompanying political influence which would come with it), if Gazprom is unable to guarantee that South Stream will indeed be build, and that Serbia would be given a role as a regional distribution hub.

We’ve been following Russia’s strategy in the Balkans for quite some time now, and if we recall the recent (and disproportionate) ruckus raised in Spain over Lukoil and Repsol,the debate over the Russian takeoever is likely to heat up.  There area number of extenuating factors which are being projected onto the NIStransaction, not least the YugoRosGas scandal (similar in some ways to the Ukraine scandal over RosUkrEnergo), anger over the recognitionof Georgia’s breakaway territories, and the increasingly publicpolitical disagreements over whether Serbia’s future lies in closerrelations with the EU or with Russia.  There have even been some whospeculated that Russia was angling to benefitfrom the Kosovar independence and instability in the region, and manySerbian politicians are aware that Gazprom has extended a number of impossible promises with regard to the South Stream pipeline – offering various governmentsin South Eastern Europe the opportunity to be the gas supply hub inexchange for concessions and blockages of alternative projects.

The debate over Serbia’s future couldn’t come at a more difficult time, as the government pushes to solve an crippling exchange rate problem, which at once could be solved quickly by adopting the euro, but few believe the country is sufficiently integrated with Europe to accomplish this – which in our opinion plays very well to Gazprom.

Photo:  Serbia‘s President Boris Tadic (L)shakes hands with Russian gas giant Gazprom’s Chief Executive AlekseiMiller during their meeting in Belgrade December 5, 2008. Serbia and Russian gas giant Gazprom will finalise details for the long-planned sale of Serbia‘s oil monopoly NIS by the end of the year, Miller said on Friday. (Reuters Pictures)