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Placebo agreement between Serbia and the Eurasian Economic Union

The beginning of the implementation of the agreement on free trade between Serbia and the Eurasian Economic Union has received just as much publicity these days, as it did less than two years ago when it was signed. The promoters of this cooperation in both Belgrade and Moscow did not have to work hard, looking for new positive angles for this cooperation. There are no such angles, nor has anything changed qualitatively in the meantime. It was enough for them to copy from the archives their earlier praises for this endeavour and to repeat them on this occasion, when the agreement enters into force. That’s what they did.

If we remove the layers of celebratory phrases with a big shovel about “expansion into the big Eurasian market”, and about “great potentials for export of the Serbian economy”, what remains below the line as the real sum of the benefits of this agreement? A little something remains. In any case, immeasurably less than the significance given to the agreement in October 2019, when it was concluded, and even less today when it began to be applied.

With this agreement, Serbia only “repackaged” the existing free trade agreements it has with Russia (since 2000), Belarus (since 2009) and Kazakhstan (since 2010). In that sense, the new agreement does not bring anything new to the Serbian economy, because it has been able to trade freely with these countries so far. The agreement expands the open market to the remaining two members of the Eurasian Economic Union, with which Serbia has not had a free trade agreement so far – Armenia and Kyrgyzstan. That is a novelty, and we will try to compare how important it is for the Serbian economy with some examples closer to us.

As for Armenia, Serbia trades with that country annually as much as with Bosnia and Herzegovina in five days (about 26 million dollars). As for Kyrgyzstan, Serbian companies annually export goods and services there as much as to Montenegro in three days (about six million dollars).

From an economic point of view, this agreement is obviously worthless. It has not brought any new quality, it has only confirmed the existing contractual status, and it does not open any new doors for the penetration of Serbian products and services. Even if it opens such a door, Serbian industry does not have the capacity to use it. And finally, if an economic agreement already has no economic value, then why and to whom is it important?

Obviously not to Serbia. Until now, it has had free trade with the Eurasian Union. This primarily refers to business with Russia, which carries over 90% of the total exchange with this alliance, and when the existing arrangements with Belarus and Kazakhstan are joined, then it is 99% of Serbian trade with the Eurasian Union.

When it is not important for Serbia, then this agreement is important for the Eurasian Economic Union, more precisely for Russia, as its hegemon. Moscow got two important points with it. One is internal, because with the arrival of Serbia, Russia maintains the illusion that it has partners in the world, that it is not isolated and that it has not lost the ability to attract and integrate. Moscow is making a huge effort to present itself to its citizens in such a light, especially after 2014, when the entire Western world imposed economic sanctions on it because of Crimea and interference in the crisis in Ukraine.

The Eurasian Economic Union itself is one of the instruments for achieving that goal. It was created in 2015, at a time when Russia was already isolated on the international scene, as an attempt to respond to this blockade, in a way that was supposed to raise the shaken national self-confidence. Under the motto – if there can be a European Union, why can’t there be a Eurasian Union, and we will be the boss of it? The second Moscow point is foreign policy, because it wants to show (to everyone who is interested in it) that Serbia is still in the Russian orbit of interest and that its European ambitions are not without an alternative, as they say.

Just as there is no economic benefit from an agreement with the Eurasian Economic Union, Serbia therefore has no visible political benefit from this arrangement. There was no rebuke from Brussels on this occasion, but also no applause. Indifference arrived two years ago when it was signed, and now when it begins to be implemented, through the attitude that Serbia, when it joins the EU, will have to terminate all other trade agreements, because from that moment on it will apply European ones.

However, these indifferences will not be in any future European report on Serbia, nor in the attitudes of the main factors in the EU. They will state that Serbia is further strengthening its widespread ties with Russia, in a way that does not benefit it, and thus strengthens doubts that it is really determined to follow the course towards the EU and that it sincerely wants to become its member. Officially, this will be expressed through the usual remarks that Belgrade does not harmonize its foreign policy with the EU policy, but that is even less important. More important will be the long-term conviction of European leaders that Serbia does not miss the opportunity to show loyalty to its strong ties with Russia, even when it has no use from it.

Is concluding an agreement with a fictitious economic community, with which Serbia has traded without barriers so far, worth cooling of relations with the EU? Is it worth making political and propaganda concessions to one group of countries, whose economies together are as “heavy” as the economy of one Italy? The same group that has the Defence Alliance (CSTO), as an eastern response to NATO, but not as organized, nor efficient, and least of all not as powerful. In short, unusable, which was shown in the recent war between Armenia (CSTO member) and Azerbaijan. While Azerbaijan received all the necessary bilateral support from friendly Turkey, a NATO member, Armenia received statements from Moscow calling for a peaceful solution to the crisis instead of military assistance. The outcome was known and catastrophic for the CSTO member.

Serbia, of its own free will, as a sovereign state, entered into a contractual arrangement with a cheap, Russian-Asian, copy of the European single market, consciously taking a “placebo” instead of the right product that would increase its economic metabolism. Unlike the real “placebo” which leaves no consequences, this one still has the potential to do political and even economic damage to Serbia. Its negative effect can last for years, until Serbia’s entry into the EU, but also shorter, if Serbia so decides. It is only a matter of its calculation and will, as a sovereign state, the same one with which it justified entry into the Eurasian Economic Union.

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