Strategic Serbian deals balance relations with EU and Russia

SERBIA:COURTED BY both Russia and the West, Serbia's parliament yesterday ratified a pact putting it on the road to eventual EU membership and another handing control of the country's oil and gas industry to the Kremlin.

The two deals highlighted the deep divisions in Serb society, with nationalists opposing co-operation with the EU until it stopped supporting Kosovo's independence, and liberals askance at the allegedly knockdown price paid for the NIS state oil firm, in what they saw as a "thank you" for Moscow's diplomatic support over Kosovo.

In the end, the 250-seat parliament voted 140 to 28 for the Stabilisation and Association Agreement (SAA) with the EU, and 214 to 22 for the energy deal with Russia's state-controlled energy giant, Gazprom.

"Serbia has made a huge step today towards European integration and a better life," said prime minister Mirko Cvetkovic.

"We have also adopted the agreement with Russia, as we wanted to demonstrate we can co-operate at the same time with the East and the West.

"We would like Serbia to be a driving engine in the region and offer some kind of a bridge between the East and the West."

Serbia's last government collapsed due to disagreements over the SAA, but the subsequent election eventually produced a new coalition led by the pro-western liberal party of President Boris Tadic, a strong advocate of EU membership.

"Serbia must not be an enemy to Russia. Serbia as a member of the EU must be a friend of Moscow," Mr Tadic said.

Some of his allies, notably deputy prime minister Mladjan Dinkic, had fiercely criticised an energy deal with Russia that was championed by the nationalist former premier Vojislav Kostunica. Mr Dinkic said NIS was being sold for a fraction of its true value.

Under the agreement, Gazprom will pay €400 million for 51 per cent of NIS and invest €500 million in the company.

It also promised to ensure passage via Serbia of the planned 900km South Stream pipeline taking Russian gas to southern Europe - in competition with the EU's similar planned Nabucco project.

"The enhanced co-operation between Serbia and Russia will improve the security of natural gas supply to Europe and increase the flexibility of export routes," said Gazprom deputy chairman Alexander Medvedev, adding that South Stream would make Serbia "a major European energy hub and benefit the Serbian economy as a whole".