Russian-Serbian relations, energy as a tool for blackmail

Independent researchers in Serbia conducted a studious analysis of the impact of Russian Gazprom on the energy situation in Serbia, as well as how Serbia's energy status overlaps with the political one.

Russian gas pipelines

At the beginning, it was pointed out that the analysis of events, official documents and media sources and other collected materials was performed, the political and economic moves of the ruling elites were analyzed, which show certain irregularities in decision-making to the detriment of Serbian citizens, and to achieve strategic geopolitical goals by Gazprom and the Russian Federation. Based on all that, it can be stated with certainty that certain political blocs in Serbia were guided by other interests in relations with "Gazprom", and not the interests of citizens, and that no one was ever held accountable for the huge number of indications for abuses.

That Serbian-Russian relations have long been perceived emotionally can be shown by the fact that Serbia pays the highest price of gas to Gazprom than any other country in the region. The entire history of Serbia-Gazprom relations can be divided into several periods that can be viewed through the same issue - the existence of an intermediary company for the import of Russian gas. In the first years of establishing cooperation during which the principles of energy dependence were set, from 1992 to 2000, the import of Russian gas went through the intermediary "Progresgas Trading", a mixed company "Progres" and "Gazprom". That period could be pictorially marked by the period Marjanović-Černomirdin, when gas was procured for a commission of about 1 percent. From 2000 until 2004, NIS directly imported gas from "Gazprom Export" in Russia and citizens did not pay any commission in the price of gas. That period was marked by the policy of Prime Minister Zoran Djindjic, who viewed the gas business quite pragmatically. The third period, which has lasted since 2004, although the intermediary was reintroduced only at the end of 2006, this time was the mixed Russian-Serbian company "Jugorosgas", primarily established for the construction of the gas pipeline, which started charging a commission of about 4%. During that period, "Gazprom" completely formalized Serbia's energy dependence and took over the gas and oil infrastructure in Serbia. That period is marked by Putin and Kostunica. Currently, Gazprom manages energy processes in Serbia through Srbijagas and its director Dusan Bajatovic, although Minister Zorana Mihajlovic tried to remove him from the position of director of Srbijagas in her intentions, but she has not yet succeeded because the powerful Russian lobby is behind him.

According to the Agency for the Prevention of Corruption, Bajatović, as the general director of the public company Srbijagas Novi Sad, receives monthly (about 1,480 euros), as a member of the National Assembly of Serbia (243 euros), a member of the Supervisory Board of the joint Russian-Serbian joint stock company Jugorosgaz (12,480 euros). as the President of the Supervisory Board of the joint venture Underground Gas Storage Banatski Dvor (5,000 euros), from March 2020 as the director of the Serbian-Russian Gastrans doo Novi Sad (EUR 14,470), and in mid-2019, as a member of the Supervisory Board of Jugorosgaz, according to the Agency's report, he received an annual award in the amount of (EUR 12,490).

JP Srbijagas is 100% owned by the state. The company Gastrans, whose activity is pipeline transport, was founded after the suspension of the project and the company of the same name, South Stream Serbia, and Srbijagas has a 49 percent share in it, and Gazprom 51 percent. Jugorosgas a. D. Belgrade is also a company with a mixed ownership structure whose activity is the construction of gas pipeline systems, transport and trade of natural gas. Under the Serbian-Russian agreement from 2009, the underground gas storage Banatski Dvor is a joint venture in which Gazprom has a 51 percent share, and Srbijagas 49. Russian Gazprom (Gazprom), one of the largest oil and gas companies in the world, owns the Oil Industry Serbia (NIS) with 56.15% of the share capital.

The impossibility of Minister Mihajlović to remove Bajatović should not be a surprise, many things in Russian-Serbian energy relations are still inaccessible to the public. It is impossible to get precise information from state bodies and public companies on the financial aspects of doing business with the Russian side. "Gazprom's" policy in almost all countries importing Russian gas was based on the principles of concluding "secret" interstate agreements, which define cooperation for at least a quarter of a century, so this non-transparency should not surprise anyone. Agreements had to be "aminated" by political subjects, respecting many other aspects of relations, so it is logical that they often took on the character of political rather than economic decisions.

This secret nature of cooperation has always cast doubt on the fact that Russian-Serbian representatives often spoke a universal language, the language of corruption. However, no evidence has ever been presented for these allegations, nor has anyone been formally charged, although investigations have been conducted.

The best, so far, legal analysis of the arrangement between Serbia and Russia in the field of oil and gas economy was made by the legal team of the "Isac Fonda" project in December 2009, analyzing all available public documents. The comprehensiveness of that arrangement and the far-reaching political, economic, social, cultural, and even legal consequences it will have for energy in Serbia is unprecedented, as is the degree of privileges and the degree of deviation from the application of Serbian regulations. The legal team disputes the documents from several angles, first of all the incompatibility with the Constitution in terms of the prohibition of discrimination, because Russian and Serbian contractors were given a more favorable position in relation to other companies.

Furthermore, the arrangement violated other already concluded international agreements, such as agreements on encouragement and mutual protection of investments with Spain, the Netherlands, Germany, Hungary and Switzerland, by which Serbia undertook to provide investors from those countries with the same treatment as domestic ones, and is in conflict with certain provisions of the Law on Public Procurement and the Law on Privatization. Also, with the arrangement, Serbia violated the obligations undertaken with the establishment of the Energy Community, because it undertook to establish an integrated market for natural gas and electricity and to introduce appropriate EU regulations into its legislation. Also, it is unclear to the legal team why the joint venture will be established in Switzerland, considering that the subject of the company's business will be the implementation of the project on the territory of Serbia. The great powers of "Gazprom" in the management of NIS are also disputable, because the founding act of NIS envisages the right of veto

of Serbia on certain issues, but it also gives quite broad powers to the Management Board of NIS, in which the majority of NIS members are.

However, the energy agreement with Russia passed without any problems in the parliament, because it was verified with 214 votes in its favor. At the same time, only 140 out of 250 MPs voted in favor of ratifying the SAA with the EU. The Serbian-Russian agreement differs from all agreements signed by the Russians with other countries in that the Russian state company "Gazprom" in Serbia gained majority control over the complete gas and oil market, so the complete care of the energy future was entrusted to "Gazprom". In addition to NIS refineries, warehouses and about 450 gas stations, Russia's Gazpromneft also received a monopoly of oil derivatives and gas on the Serbian market, the right to exploit for oil and gas fields in Vojvodina, and the Naftagas concession in Angola, which valid until 2025, from where Serbia receives 80,000 tons of oil a year.

Gas is becoming a fuel both politically and economically in the 21st century. Serbia has diversified its routes, and that is an important and good step, but it has not diversified its suppliers. The demands that will be placed before Serbia, and they concern energy norms on its negotiating path towards the EU, will in many ways call into question the current Russian energy monopoly in Serbia, and it will also be a kind of test of their relations.