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Serbia and Russian sanctions: Short-term profits, long-term risk

Food on a shelf in a Belgrade supermarket.

Food on a shelf in a Belgrade supermarket.

Ljudmila Cvetkovic

Short-term profits, long-term risk – that is the consensus of those talking to RFE about whether Serbia might profit from Russian sanctions against the EU and the US on the import of a large number of agricultural products.

Russian sanctions against the EU and the US are seen in certain economic circles as a chance for a boost in the domestic economy. According to those in such circles, Serbia might achieve profits by increasing fruit and vegetables export to Russia, as well as dairy and meat products. But there is a risk in this approach.

“We can try to use the situation in which two sides are arguing, but later, it will reflect very negatively if we play against the EU, as we are aspiring to become its member. It is necessary to consider advantages and negative sides of such decision, not in the next six months, but the next ten years,” warns Aleksandar Stevanovic, Chairman of the Serbian Association of Small and Medium-Sized Businesses.

As soon as Russia introduced an embargo on import of fruit, vegetables, meat, fish, milk and dairy products from the US, the EU, Australia, Canada and Norway as a counter-measure to the West’s sanctions against Russia because of Ukrainian crisis, some economic experts pointed out that the market for export of agricultural products from Serbia to Russian market has increased and Serbia should capitalize on the opportunity.

Chairman of the Chamber of Commerce of Serbia Zeljko Sertic appealed to the Serbian economic sector to organize its potentials, and told Serbia’s domestic media that the Chamber of Commerce sent a request to all municipalities asking them to identify companies that can export their products to the Russian market.

“Our potential in that sector are great. We have, for example, unlimited need for dry plums, but the problem is that we do not have enough plums for our homemade schnapps, let alone something else. When it comes to the export of meat and meat products, we have not fulfilled our current quotas for Russia or the EU. Aside from that, there are all dairy products, cheese of plant origin and confectionery,” said Sertic.

Direct EU measures?

Serbia has had a specific agreement with Russia and a possibility to export a majority of its products to a single Russian market without having to pay customs and additional taxes, but those in the know say that some of those products have been unable to compete on the market. Also, as the Chairman of the Chamber of Commerce said, it is questionable how much Serbia now has available for export.

Economist Stevanovic also points that out:

“We had a big problem and we were unable to meet those requests we received. The only profit we can achieve is the profit that will come from re-export, since I know how our people think. You cannot have ten times more good-quality apples than you had before. I know how that is going to be implemented in practice, if it happens at all. I am not certain we should undermine the foreign policy of our country because of short-term profits.”

Still, some experts believe that Serbia might increase its export to Russia. According to the information of the Chamber of Commerce of Serbia, in 2013, the Russian Federation imported USD 42 million worth of foodstuffs from Serbia, while Serbia’s total exported goods were worth USD 185 million, and Russia’s expanded need is seen as a potential for Serbia.

But, even with economic gain, what would that mean for Serbia, a country that started accession negotiations with the EU? The country has declined to align its policy with the Western sanctions against Russia because of the Ukrainian crisis. It has managed to walk a fine line between Russia and the West, supporting the territorial integrity of Ukraine, including Crimea, but declining to support sanctions against Russia.

Bojan Al Pinto Brkic, representative of the Forum for International Relations of the European Movement in Serbia, says that the EU and the US might take direct measures against Belgrade if Serbia profits from the Russian sanctions against the West. He says:

“And they (measures) can be direct in the sense of suspension of certain parts of the agreements on agricultural products that are in force – by holding up certain arrangements we are negotiating, or have already signed and about to implement. We must be very careful there. Of course, the risk is even bigger in a political sense, because Serbia is getting warnings not to follow the joint foreign policy of the EU, and that is very dangerous at this time when Serbia is hoping to open talks [with the UN] announced for this fall.”