Russia offers Serbia €1bn loan in attempt to extend Moscow's influence

RUSSIAN PRESIDENT Dmitry Medvedev offered a €1 billion loan to cash-strapped Serbia yesterday, as he sought to strengthen Kremlin influence in a country striving to balance relations between Moscow and the West.

Russian businessmen accompanying Mr Medvedev signed deals with Serb counterparts to set up companies to run the Serbian section of Russia’s South Stream gas pipeline and a huge underground gas storage facility which could make Serbia a regional energy hub.

Kremlin-controlled energy giant Gazprom will hold a majority stake in the new companies, strengthening the grip that Russia established on Serbia’s energy sector when Gazprom bought state oil monopoly Nis for a knockdown price last year.

Critics of the deal saw it as an obvious “thank you” to Moscow for its opposition to Kosovo’s independence, a position that Mr Medvedev reaffirmed in talks with Serb president Boris Tadic.

“Having in mind our centuries-old relations, now we are developing very important economic ties,” said Mr Tadic, adding that he was “grateful” for Mr Medvedev’s approval of Belgrade’s loan request.

Mr Medvedev said the South Stream pipeline and the gas storage complex would “spur our economic co-operation even more. Our goal is to make Serbia a big energy player which will distribute Russian gas . We are seeking to turn the co-operation between our two states into a strategic partnership.”

Mr Tadic also expressed thanks for Russia’s support over Kosovo, which has now been recognised as an independent state by more than 60 countries. Belgrade is counting on Moscow’s backing at a hearing on the issue at the International Court of Justice in December.

“Russia will always offer support to Serbia on this issue and insist on respecting its sovereignty and territorial integrity,” Mr Medvedev said.

While vehemently criticising US and EU backing for a sovereign Kosovo, Serbia is determined to improve political and economic links with the West, and Mr Tadic and his allies have pledged to lead their country towards EU accession.

Brussels insists that this will only be possible once war crimes suspect Ratko Mladic has been captured, while the EU is wary of the influence that Russia is accumulating in Serbia. For its part, Moscow is sanguine about Belgrade’s EU ambitions, but does not want it to join Nato.

Mr Tadic insisted that Serbia does not want to choose between Russia and the West.

“I do not see any danger related to our intentions to join the EU,” he said. “In the European Union we will be Russia’s best friend. That will help in all aspects of relations between the two countries.”

Mr Medvedev landed in Serbia just hours before US vice-president Joe Biden flew to Poland to start a central European tour. Analysts say the White House wants to reassure the region that it will not suffer as a result of a US bid to improve relations with the Kremlin.

Meanwhile, top European and US officials met Bosnian leaders to try and push through reforms that would allow the ethnically divided country to revive its flagging bid to join the EU and Nato.

The men who run Bosnia’s two constituent parts are diametrically opposed on how to move forward. However, leaders of the Muslim-Croat Federation advocate more powers for the central authorities in Sarajevo, while the Bosnian Serb region is determined to maintain as much autonomy as possible and resist western-backed efforts to overhaul a constitution that was drawn up at the end of Bosnia’s 1992-5 war.

All sides acknowledged that little progress was made yesterday, and talks will resume today.