international analysis and commentary

The Balkan chessboard: Russia’s ruble diplomacy and EU interests

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In 1998, Zbigniew Brzezinski argued that “a power that dominates Eurasia would control two of the world’s three most advanced and economically productive regions. A mere glance at the map also suggests that control over Eurasia would entail Africa’s subordination, rendering the Western Hemisphere and Oceania geopolitically peripheral to the world’s central continent”. His book The Grand Chessboard was indeed a major contribution to geopolitical studies. Depicting the new challenges for US foreign policy in a multipolar world, Brzezinski identifies the geopolitical Achilles’ heel of the 21st century in the area he designated as the Global Balkans, i.e. “the swathe of Eurasia between Europe and the Far East.”

An arena of historical disputes among the United States, Russia and Europe, and a source of regional instability, the Balkans are undergoing an uncertain transition towards a new security architecture; new forces are playing an increasingly crucial role and old actors are losing their geopolitical influence over the region. The gradual decline of US leadership coincides with the eurozone recession: the EU is perceived as unable to provide the Balkans with a new pathway towards a form of pan-European integration and incentives for major structural and economic reforms. This political vacuum is exposing the area to the influence of other active powers, such as Turkey and even Israel, but above all Russia.

Vladimir Putin’s renewed Eurasianism validates this assumption. Alexander Dugin, a Russian politologist close to the Kremlin and the military entourage, acknowledges that Russia’s ultimate geo-strategic goal is to re-frame a continental block against the Atlantic powers, by making use of the vast strategic and demographic potential of the Eurasian continent. Following this approach, Russia should adopt a multi-dimensional foreign policy waiving close relations with the EU, China and the regional powers, such as Iran and Turkey.

The Post-Soviet Space (Bližee Sarubeže or Near Abroad in Russian’s political rhetoric) stresses the historical and cultural affinities with the Slavic communities and represents a pivotal area for Moscow’s external projection. Energy links are the key tools of political leverage for Russia’s power projection towards this Near Abroad

The “South Stream” project represents the cornerstone of this trend: the pipeline, once completed, will pump Russian gas under the Black Sea to Bulgaria, branching off in two directions, north to Austria and south to Italy. Considering that Europe’s demand for gas imports is projected to grow significantly in the next few years (reaching 80 billion cubic meters by 2020 and surpassing 140 billion cubic meters by 2030) the South Stream project will be crucial for the European energy supply.

With the intent of securing political commitment to the South Stream Project, Russia has signed inter-governmental agreements with several Balkan states, such as Croatia, Slovenia, Serbia and Bulgaria. Moscow is aiming at promoting deeper economic integration in the Balkans, possibly persuading the countries of the region to join the Customs Union between Russia, Belarus and Kazakhstan.

The Near Abroad is not just seen as an area of natural expansion of Russian interests, but also a factor in Moscow’s increasing competition with China – – now an active competitor in the Balkans. The uncertainty over the future of the eurozone was inevitably exported to the EU periphery with a GDP contraction of 5.2% in 2009 in Balkan countries. Moscow is making its influence felt as a reliable counterpart for the Balkan countries. The unresolved Kosovo question and the relative (or at least temporary) weakening of the EU’s and NATO’s direct role in the region are viewed by Moscow as an opportunity.

Encouraging Russian companies to invest in the region and raising the flag of cultural affinity, Russia eyes the Balkans as an economic hub to ensure better access to European markets. In Serbia, the election of the Russian-leaning President Tomislav Nikolić is accelerating projects for the enhancement of hydro-electric stations, the advancement of the railway tracks and the rearming of the Serbian military. As a complement to those projects, Belgrade is also expected to receive Russian credits to the tune of $800 million.

In 2011, Russia promoted large investments in the real estate sector in Montenegro as well as in the oil and gas sector in Macedonia. In turn, more than 200 Slovenian companies are operating in almost 50 Russian regions. To put this into context, EU FDIs have steeply declined in the last few years. 

Meanwhile, lack of funds and of a reliable supply of natural gas are the main reasons for the stalemate of the EU’s flagship project of the Southern Gas Corridor – The Nabucco pipeline, the gas bridge from Asia to Europe that was designed essentially to by-pass Russia and link the Turkish-Bulgarian border to Baumgarten in Austria via Bulgaria, Romania and Hungary. Once completed the 1,300km pipeline’s annual capacity will be between 10-23 billion cubic meters, one third of the actual capacity of South Stream.

A widely shared perception is that as Russia’s foreign policy in the Balkans leverages energy links to promote diplomatic and security ties, and vice-versa, the EU may be de facto disengaging from the region.

The Europeans remain committed to  the principle of stabilization through integration, adopted in the late 1990s in the form of both military and civilian missions – the largest of which is currently EULEX in Kosovo, aiming at promoting the rule of law with an executive mandate.

However, if the EU is to be a decisive actor in the future, Brussels will have to identify new synergies in its pursuit of the enlargement process and the creation of a security architecture in the Balkans. This will allow the promotion of its interests – within the framework of a common European space – while also entailing an economic cooperation with Russia from a better bargaining position.