Vucic Orban pipeline deal announcement Tuesday likely to raise further EU hackles

Serbian manoeuvres to deal with a potential energy crisis—likely worsened by EU decisions—grew still more complex Tuesday, Oct. 11, with announcements that Serbia and Hungary are considering the joint-construction of a new oil pipeline at the same time that Serbian President Aleksander Vucic was in meetings with the United Arab Emirates (UAE) to boost the government’s cash flow.

With regard to the coming energy crisis, Serbia and Hungary reportedly agreed to build a new pipeline to handle Russian oil imports to Serbia, which appeared as part of a complex tit-for-tat response to sharp EU criticism over Serbia’s stance on a multitude of issues, ranging from Kosovo independence to a lack of Serbian sanctions on Russia to a move to ban Russian oil imports to Serbia through the JANAF oil pipeline.

The ban came as part of a last-minute sanction package on the part of the EU to punish Russia for continuing to up the ante in the war on Ukraine. Serbia was clearly caught off-guard, however, as it was allegedly old regional nemesis Croatia who prodded the EU to include a ban on JANAF-piped oil to Serbia as part of the latest round of sanctions.

Although Serbia is not in the EU, it has aspired to join the union for years, and Vucic has repeatedly stated that this is the country’s goal.

Yet much has gone awry since Russia’s decision to invade Ukraine, as Serbia has been caught between a dire need for Russian oil and gas, the wishes of the EU and crisis-caused inflation. Vucic is on record for stating that oil and gas imports could be considered stabile only until November after which all bets are off. He has also stated that current gas reserves could handle only 70 percent of demand for a three-month period.

Yet the EU ban means that higher prices for oil are now guaranteed, as an estimated 50 percent of oil currently is supplied through the JANAF pipeline, and other imports will see sharp price increases.

On this note, it appears to be the controversial Hungarian Prime Minister Viktor Orban to the rescue—which is sure to bring still more ire from the EU. Orban has been a constant thorn in the side of the EU on topics ranging from his refusal to adhere to EU-levied migrant quotas to rule-of-law issues, as well as his refusal to sanction Russia despite the war. Orban has also stood in the way of sanctions against Russian Orthodox Church Patriarch Kirill, who is allegedly seen as a strong backer of Russian President Vladimir Putin, with some publications also claiming that the patriarch controls a massive fortune of up to USD 8 bln.

Just how a new pipeline would circumvent the ban is difficult to conceive. Likewise, as EU MEPs have already openly discussed the derailment of eventual Serbian EU accession—arguments that gained traction with news that Serbia had recently signed a bilateral consultation agreement with Russia—the new Serbian partnership with Hungary is tantamount to throwing fuel on the fire. Meanwhile, there is also the Austrian factor, as that country has also opposed sanctions on Russia due to its reliance on Russian gas.

Finally, a wild-card statement was released on Hungarian television with Vucic noting that both the UK and the US allegedly attempted to force Hungary and then Orban as a new prime minister to open up a second front against Serbia during the war in Kosovo.

Yet it can also be reasonably argued that the EU is unrealistically pushing Vucic into a corner. The energy factor and rising inflation is very real. Likewise, recognition of Kosovo is genuinely a non-starter for Vucic, due to the fact that the vast majority of Serbs—political parties aside—do not support Kosovo independence. Likewise, inflation and higher energy prices are the potential death knell of politicians anywhere.

In fact, the EU—and arguably the US—keep pushing Serbia toward cheaper gas and ironically closer relations with Russia. Yet Vucic has proven canny in that immediately in the wake of the Orban statements he announced a meeting with UAE President Sheikh Mohamed bin Zayed Al Nahyan in which the UAE leader approved USD 1 bln loan in order to ensure “full Serbian liquidity.”

Even this may cause blowback from the US, as news that OPEC and Russia had teamed up to cut production to artificially keep oil prices high was met with sharp criticism from Democratic Sen. Bob Menendez, who claimed that oil revenue was “underwriting” the war in Ukraine, according to ABC news. As the UEA is also a member of OPEC…

It would seem that Vucic battles are only just beginning.

Photo credit: U.S. Department of State from United States, Public domain, via Wikimedia Commons.

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