The Western Balkans in the World: Linkages and Relations with Non-Western Countries 0367197995, 9780367197995

Table of contents :
Cover
Half Title
Series
Title
Copyright
Contents
List of illustrations
List of tables
List of contributors
Acknowledgements
Introduction: the influence of external actors in the Western Balkans
Part I Regional dynamics
1 Security cooperation in the Western Balkans: cracks and erosion of Euro–Atlantic integration?
2 The economic development of the Western Balkans: the importance of non-EU actors
Part II Western Balkan case studies
3 Serbia: looking East, going West?
4 Bosnia and Herzegovina: abandoned by the West, embraced by the East?
5 Kosovo: between Western and non-Western states
6 North Macedonia: a fertile ground for external influences
7 Montenegro: always at a crossroads
8 Albania: new geopolitics and shifting linkages
Part III Non-Western actors
9 Russia: playing a weak hand well
10 China: a new geo-economic approach to the Balkans
11 Turkey: forced marriage or marriage of convenience with the Western Balkans?
12 UAE: sultanism meets illiberal democracy
Conclusions
Index

Citation preview

Academics and policy makers are increasingly interested in how Russia, China and Turkey are seeking to shape the Western Balkans. However, there has been little by way of systematic or comparative analysis of their involvement and how they each pose a challenge to the wider processes of Euro–Atlantic integration. This volume is a very timely contribution to our understanding of how these key international actors are seeking to exert influence in this important, but still unstable, region. —James Ker-Lindsay, London School of Economics and Political Science, UK The Western Balkan countries have once again become a playground for wider global politics. The authors demonstrate how non-Western actors increasingly interact with, and influence the politics (internal and external) of, the Western Balkan states. This book makes an important contribution to our understanding of the geopolitical relevance of the Western Balkans, and the wider challenges to the Euro–Atlantic integration of the region. —Soeren Keil, Canterbury Christ Church University, UK The Western Balkans in the World is a deeply thought-out, well researched and comprehensive exploration of the place of the region within the broader context of international relations. Instead of looking at each state in isolation, this volume analyzes the Western Balkans through a network of linkages, shared interests and soft power that are much broader than the region itself. The book is an extremely timely contribution to the scholarship on Western Balkans and foreign policy. —Jelena Subotic, Georgia State University, USA

The Western Balkans in the World

This book provides a detailed understanding of how different types of engagements impact upon the reform and EU integration of the Western Balkan region. It examines the influence of Russia, China, Turkey and the UAE in the region and analyses the range of existing links. Contributors offer an academic and multifaceted perspective of the role of external non-Western actors in the region that goes beyond, on the one hand, the tendency of some Western decision makers to perceive all engagement by third powers as a sinister threat and, on the other, the view of regional governments of all external involvement as a boon coming at a time of Western neglect and reduced foreign investments. By looking at the importance of Russia, Turkey, China and the UAE in the Western Balkans, the book sheds light on one key arena of global competition, offers new insights on the strengths and weaknesses of Euro–Atlantic integration and advances our knowledge of foreign policy and its economic, social and security dimensions for small and medium-sized countries. It will be of interest to academics, postgraduate and research students, and think-tankers with research interests in IR and Southeast European Studies. European decision makers will also gain an insight into the extent of non-Western influence in the region. Florian Bieber is Professor for Southeast European History and Politics at the University of Graz and director of the Centre for Southeast European Studies. Nikolaos Tzifakis is Associate Professor of International Relations at the Department of Political Science and International Relations of the University of the Peloponnese.

Southeast European Studies Series Editor Florian Bieber

The Balkans are a region of Europe widely associated over the past decades with violence and war. Beyond this violence, the region has experienced rapid change in recent times though, including democratization and economic and social transformation. New scholarship is emerging which seeks to move away from the focus on violence alone to an understanding of the region in a broader context drawing on new empirical research. The Southeast European Studies Series seeks to provide a forum for this new scholarship. Publishing cutting-edge, original research and contributing to a more profound understanding of Southeastern Europe while focusing on contemporary perspectives, the series aims to explain the past and seeks to examine how it shapes the present. Focusing on original empirical research and innovative theoretical perspectives on the region, the series includes original monographs and edited collections. It is interdisciplinary in scope, publishing high-level research in political science, history, anthropology, sociology, law and economics, and it is accessible to readers interested in Southeast Europe and beyond. Security Community Practices in the Western Balkans Edited by Sonja Stojanović Gajić and Filip Edjus Social Movements in the Balkans Rebellion and Protest from Maribor to Taksim Edited by Florian Bieber and Dario Brentin Romania and the Quest for European Identity Philo-Germanism without Germans Cristian Cercel The Western Balkans in the World Linkages and Relations with Non-Western Countries Edited by Florian Bieber and Nikolaos Tzifakis For more information about this series, please visit: www.routledge.com/ Southeast-European-Studies/book-series/ASHSER1390

The Western Balkans in the World Linkages and Relations with Non-Western Countries Edited by Florian Bieber and Nikolaos Tzifakis

First published 2020 by Routledge 2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN and by Routledge 52 Vanderbilt Avenue, New York, NY 10017 Routledge is an imprint of the Taylor & Francis Group, an informa business © 2020 selection and editorial matter, Florian Bieber and Nikolaos Tzifakis; individual chapters, the contributors The right of Florian Bieber and Nikolaos Tzifakis to be identified as the authors of the editorial material, and of the authors for their individual chapters, has been asserted in accordance with sections 77 and 78 of the Copyright, Designs and Patents Act 1988. All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. Trademark notice: Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation without intent to infringe. British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging-in-Publication Data A catalog record for this book has been requested ISBN: 978-0-367-19799-5 (hbk) ISBN: 978-0-429-24334-9 (ebk) Typeset in Times New Roman by Apex CoVantage, LLC

Contents

List of illustrationsix List of tablesxi List of contributorsxii Acknowledgementsxv

Introduction: the influence of external actors in the Western Balkans

1

FLORIAN BIEBER AND NIKOLAOS TZIFAKIS

PART I

Regional dynamics15   1 Security cooperation in the Western Balkans: cracks and erosion of Euro–Atlantic integration?

17

TOBIAS FLESSENKEMPER AND MARKO KMEZIĆ

  2 The economic development of the Western Balkans: the importance of non-EU actors

36

MATTEO BONOMI AND MILICA UVALIC

PART II

Western Balkan case studies59   3 Serbia: looking East, going West?

61

FLORENT MARCIACQ

  4 Bosnia and Herzegovina: abandoned by the West, embraced by the East? ADNAN HUSKIĆ

83

viii  Contents   5 Kosovo: between Western and non-Western states

108

GËZIM VISOKA

  6 North Macedonia: a fertile ground for external influences

126

ZORAN NECHEV AND IVAN NIKOLOVSKI

  7 Montenegro: always at a crossroads

146

JOVANA MAROVIĆ

  8 Albania: new geopolitics and shifting linkages

164

ENIKA ABAZI

PART III

Non-Western actors185   9 Russia: playing a weak hand well

187

DIMITAR BECHEV

10 China: a new geo-economic approach to the Balkans

205

ANASTAS VANGELI

11 Turkey: forced marriage or marriage of convenience with the Western Balkans?

225

AHMET ERDI ÖZTÜRK AND SAMIM AKGÖNÜL

12 UAE: sultanism meets illiberal democracy

241

WILL BARTLETT AND TENA PRELEC

Conclusions

260

FLORIAN BIEBER AND NIKOLAOS TZIFAKIS

Index265

Illustrations

Figures 0.1 1.1 2.1a 2.1b 2.2a 2.2b 2.3a 2.3b 2.4a 2.4b 2.5a 2.5b 2.6a 2.6b 2.7 3.1 3.2

Variables affecting linkage/influence correlation in the case of interdependent relationships between small and regional/ great powers Dynamics of external influences Albania: exports of goods, by main foreign trade partners (million USD) Albania: imports of goods, by main foreign trade partners (million USD) Bosnia and Herzegovina: export of goods, by main foreign trade partners (million USD) Bosnia and Herzegovina: imports of goods, by main foreign trade partners (million USD) Kosovo: exports of goods, by main foreign trade partners (million USD) Kosovo: imports of goods, by main foreign trade partners (million USD) North Macedonia: exports of goods, by main foreign trade partners (million USD) North Macedonia: imports of goods, by main foreign trade partners (million USD) Montenegro: exports of goods, by main foreign trade partners (million USD) Montenegro: imports of goods, by main foreign trade partners (million USD) Serbia: exports of goods, by main foreign trade partners (million USD) Serbia: imports of goods, by main foreign trade partners (million USD) Inward FDI stock in the Western Balkans, 2014 (million EUR) Frequency of alignment with EU declarations in the OSCE Serbia’s trade with key partners (2016)

10 25 38 38 39 39 40 40 41 41 42 42 43 43 50 68 69

x  Illustrations 3.3 Serbia’s total trade with key partners (2006–2016) 3.4 Opinion polls: if there was a referendum tomorrow with the question: “do you support the accession of our country to the European Union?”, what would you vote for? 4.1 Flow of Turkish FDI to Bosnia and Herzegovina per year (million KM) 4.2 Trade between Bosnia and Turkey (million KM) 4.3 Turkish development aid to Bosnia and Herzegovina (million USD) 4.4 Flow of Russian FDI to Bosnia and Herzegovina (million KM) 4.5 Trade between Bosnia and Russia (million KM) 4.6 Flow of UAE FDI to Bosnia and Herzegovina (million KM) 4.7 Trade between UAE and Bosnia and Herzegovina 4.8 Trade relations between Bosnia and China 4.9 Bosnia and Herzegovina: cumulative FDI per year (million KM) 6.1 Russia’s corporate influence in North Macedonia (2006–2015) 6.2 Amount of Russian investments in North Macedonia (2002–2016) 6.3 Amount of China’s investments in North Macedonia 2009–2014 (million USD) 6.4 Total trade growth between North Macedonia and China (2012–2017)

70 76 87 87 88 93 93 96 98 100 102 131 132 138 138

Map 1.1 The EU and NATO in South Eastern Europe in 2019

21

Tables

0.1 Linkages function and influence outcomes 1.1 Foreign and security policy situation February 2019 2.1 Relative shares in total exports and imports of the five most important trading partners for the Western Balkan countries in 2016 (other than the EU and the Western Balkans) (in percent of total) 2.2 Inward FDI stock by main partners in CEFTA economies, 2010–2015 (in million EUR and in percent) 2.3 Top foreign affiliates in the Western Balkans from non-EU/ non-WB countries, by total turnover, 2015 6.1 Level of compliance with EU in the area of the CFSP 6.2 Major Chinese investments in North Macedonia since 2006 9.1 Import dependence on Russia (percentage of domestic consumption, 2015) 9.2 Russian oil companies in the Western Balkans and Croatia 10.1 Summary of the political and cultural relations and linkages between China and the Western Balkan countries 10.2 Western Balkan–China trade composition 10.3 Chinese investment (stock) in the Western Balkans 10.4 Large-scale infrastructure projects in the Western Balkans in cooperation with China

6 31

46 51 53 128 137 195 196 212 215 215 217

Contributors

Editors Florian Bieber is Professor for Southeast European History and Politics at the University of Graz and director of the Centre for Southeast European Studies. He is the coordinator of the Balkans in Europe Policy Advisory Group (BiEPAG) and author of The Rise of Authoritarianism in the Western Balkans. Nikolaos Tzifakis is Associate Professor of International Relations at the Department of Political Science and International Relations of the University of the Peloponnese. His publications include articles in journals such as Cambridge Review of International Affairs, Conflict Security  & Development, Ethnopolitics, European Foreign Affairs Review, Global Society, Problems of PostCommunism and Voluntas. In 2008, he was awarded the Marcel Cadieux Distinguished Writing Award for his co-authored article with Asteris Huliaras, published in International Journal.

Contributors Enika Abazi, Ph.D., is Director of the Paris Peace Research Institute and Associate Professor at the University of Lille (France). Her research, publications and teaching focus on post–Cold War conflicts and interventions, war narratives and international representations, security and defense reforms, European integration and Southeast European politics, and transformation of social sciences and the humanities in post-communist countries. Samim Akgönül is an historian and political scientist, Professor at Strasbourg University and Researcher at the French National Center for Scientific Research (CNRS). He studies the evolution of minority concepts as well as religious minorities in Eastern and Western Europe. He is the author of several books on Turkish history and civilization, minorities and migrants in contemporary Europe, and state-religion relations in Europe. Will Bartlett is Visiting Senior Fellow at the Research Unit on South East Europe (LSEE) at the London School of Economics and Political Science and

Contributors xiii Coordinator of the LSEE Research Network on Social Cohesion in South East Europe. His research interests focus on economic and social development in South East Europe. Dimitar Bechev is Research Fellow at the Center for Slavic, Eurasian and East European Studies, University of North Carolina at Chapel Hill. He is also nonresident senior fellow at the Atlantic Council, a think tank in Washington, D.C. His latest book, Rival Power, deals with Russia’s influence in Southeast Europe. Matteo Bonomi is Research Fellow at Istituto Affari Internazionali (IAI). He has worked and cooperated with various institutes, think tanks, foundations and administrative agencies in the EU and the Western Balkans. His doctoral dissertation was on “European Integration and the Crisis of the Nation State. Analysis of the Interlinkages between Law and Politics within the EU”, defended at the Scuola Superiore Sant’Anna in Pisa. Tobias Flessenkemper is a Senior Fellow at the Centre International de ­Formation Européenne (CIFE) in Nice and practitioner of European cooperation. Since 2018 he has been Head of the Council of Europe office in Belgrade. He was a 2012–13 fellow at the German Institute for International and Security Affairs (SWP), and in 2013, he co-founded the Berlin-based agency elbarlament.org – cultures of democracy. Adnan Huskić was born in Sarajevo. He works as a lecturer at Sarajevo School of Science and Technology where he teaches courses in IR, Domestic Politics and FPA. He is the President of the Centre for Elections Studies and Project Manager of the Friedrich Naumann Foundation in BiH. Marko Kmezić is Assistant Professor at the Centre for Southeast European Studies at the University of Graz, Austria. He is the author of EU Rule of Law Promotion: Reform of Judiciary in the Western Balkans (Routledge, 2016) and co-editor of Europeanization of the Western Balkans: The Failure of Conditionality (2018) and Stagnation and Drift in the Western Balkans (2013). Florent Marciacq is Research Fellow and Deputy Secretary General of the ­Austro-French Centre for Rapprochement in Europe and Senior Fellow at the Centre International de Formation Européenne (CIFE) in Berlin and Nice. He was until recently an associate researcher at the European Governance Research Group of the University of Luxembourg, OSCE Researcher in residence and Guest Researcher at the Austrian Defence Academy. Jovana Marović is Executive Director of the Politikon Network, a Podgoricabased think tank, member of the BiEPAG and a member of the working group for Chapter 23, Judiciary and Fundamental Rights, within the EU accession negotiations of Montenegro. Jovana holds a Ph.D. from the Faculty of Political Science in Belgrade. Zoran Nechev heads the Center for EU Integration of the Institute for Democracy ‘Societas Civilis’. He also is an academic guest at the Center for International

xiv  Contributors and Comparative Studies, ETH Zürich. As a former Senior Associate Fellow at the EU Institute for Security Studies, he was involved in activities related to ‘Global Strategy’, resilience and Balkan Futures studies as well as justice and home affairs in the Western Balkans. He is a PhD candidate at Vrije Universiteit Brussel. Ivan Nikolovski holds an MA in Political Science from the Central European University in Budapest. His academic and professional interests include European integration, divided societies, and social movements. He works as a junior researcher at the Center for European Integration within the Institute for Democracy ‘Societas Civilis’ – a think tank organization from Skopje. Ahmet Erdi Öztürk is currently Swedish Institute Research Fellow at Linköping University’s REMESO Institute. He received his Ph.D. in Political Science at the University of Strasbourg, He is the co-editor of Authoritarian Politics in Turkey: Elections, Resistance and the AKP (2017) and a guest editor of the Journal of Religion, Politics and Ideology (2018), as well as the author of more than two dozen journal articles, book chapters and encyclopedia entries. Tena Prelec is a final-year doctoral candidate at the School of Law, Politics and Sociology of the University of Sussex and a Research Associate at LSEE– Research on South Eastern Europe, European Institute, London School of Economics and Political Science. She is the recipient of a full doctoral grant by the UK’s Economic and Social Research Council (ESRC). Milica Uvalic is Full Professor in Economics at the University of Perugia (Italy). She was member of the UN Committee for Development Policy (2008–2012), Public Policy Scholar at the Woodrow Wilson Centre (Washington D.C., 2009) and Assistant Minister in the first post-Milošević government in FR Yugoslavia (2001). She has published extensively on the Western Balkans’ economic development, privatization, trade, FDI, labor markets, higher education and the EU–Western Balkans integration process. Anastas Vangeli is a doctoral researcher at the Graduate School for Social Research at the Polish Academy of Sciences in Warsaw. His doctoral project examines processes of symbolic power and principle diffusion through China’s Belt & Road initiative, with particular focus on the region of Central, East and Southeast Europe. He has extensively published on China, post-socialist Europe and the relationship between them. Gëzim Visoka is Assistant Professor of Peace and Conflict Studies at Dublin City University (DCU). Dr.  Visoka has widely published on post-conflict peacebuilding and state-building, foreign policy and diplomatic recognition, and the Western Balkans. His most recent monograph is Acting Like a State: Kosovo and the Everyday Making of Statehood (Routledge).

Acknowledgements

This book grew out of our work with the Balkans in Europe Policy Advisory Group (BiEPAG), funded by the European Fund for the Balkans (EFB) in cooperation with the Center for Southeast European Studies of the University of Graz. We are grateful to a stimulating group of fellow members, who have also in a significant part contributed to this book. We would also like to thank Rob Sorsby and the team at Routledge for embracing this book, providing us the necessary support during the production phase. Special thanks are also extended to László Szerencses for his assistance with the index and Paul Butcher for proofreading. Last, but not least, we are immensely indebted to the contributors of this volume, who entrusted us with their original research and inspiring ideas. Graz and Athens, May 2019

Introduction The influence of external actors in the Western Balkans Florian Bieber and Nikolaos Tzifakis

Following the end of the Kosovo War in 1999, the EU decided to use its enlargement policy as the overarching framework for its efforts to consolidate peace and stability in the Western Balkans. The Europeanization of the region – denoting the implementation of liberal political and economic reforms and the adoption of the acquis communautaire through the travails of accession conditionality – coupled with the normalization of bilateral relations and the process of transitional justice appeared to be the best safeguard against the rise of aggressive nationalism and a renewed outbreak of hostilities. The EU invitation to the Western Balkans has, in due time, been complemented by a similar offer from NATO (though less systematically in the sense that the Atlantic alliance’s enlargement has advanced on a case by case, rather than regional, basis). The Western Balkan countries enthusiastically embraced the perspective of their full integration into the Euro–Atlantic structures – with the notable exceptions of Serbia and Bosnia and Herzegovina in the case of NATO accession – and elevated these twin goals to become their fundamental foreign policy orientation. They have also initiated some necessary reforms for their full transformation into liberal democracies with functioning market economies. However, the region’s Euro–Atlantic integration has not advanced as originally planned. While the EU offer (unequivocally pronounced at the Thessaloniki Summit in 2003) has never been withdrawn from the table, the emergence of new challenges and more pressing priorities have shifted the attention of the EU and its members elsewhere since 2009. The economic crisis followed by the Eurozone crisis, the migration/refugee crisis and Brexit have completely sidelined the enlargement policy within the EU, whereas developments in the neighborhood (ranging from the Arab Spring and the Syrian conflict in the South to the Ukrainian conflict and renewed tensions with Russia in the East) have taken precedence over the Western Balkans. Similarly, the United States has prioritized its engagement in Asia and the Pacific (the “Pivot” to Asia), followed by a struggle to win the “war on terror” and stabilize the Middle East, and manage Russian revisionism (Clinton, 2011; Brands, 2016). In this respect, although the processes of EU and NATO enlargement have not been paused, the West has increasingly followed a hands-off approach towards the Western Balkans, contenting itself with preventing a recurrence of hostilities.

2  Florian Bieber and Nikolaos Tzifakis The West’s relative disengagement from the Western Balkans has been matched by a region-wide trend of political leaderships taking steps to roll back democratic reforms and consolidate their increasingly illiberal governance. As the 2017 Nations in Transit report put it, “over the last six years leaders in the Balkans rallied their bases with attacks on civil society and the press, hollowing out independent institutions even as they moved ahead with EU accession” (Freedom House, 2017, p. 2). A host of other observers, including the Balkans in Europe Policy Advisory Group (BiEPAG), have noted the bleak picture of the state of democracy in the region, citing a series of region-wide problems such as election irregularities, inefficient institutional checks and balances, weak independent state institutions and a lack of media freedom (Kmezić and Bieber, 2017). The decline of Western attention paid to the Western Balkans has also coincided with the manifestation of greater interest in the region by other external actors, such as Russia, China, Turkey and the United Arab Emirates (UAE). Their engagement extends from economic investment, particularly in large-scale infrastructure, to political support for governments and parties, as well as active media engagement. Beyond that, there has been more illicit and covert engagement, often the subject of intense speculation. Russia has used a variety of instruments to exercise influence in the region, focusing its efforts on actors with a cultural/religious affinity to appeal to, namely Serbia, Republika Srpska (the Serb entity of Bosnia and Herzegovina), Montenegro and the Republic of North Macedonia. Diplomatically, it has taken advantage of its great power status to act as a spoiler of various Western initiatives. For instance, it has opposed the recognition of Kosovo independence; it has indirectly encouraged the secessionist rhetoric of Milorad Dodik, leader of Republika Srpska; and it has sought to thwart EU and U.S. diplomatic efforts to resolve the recent political crisis in North Macedonia. At the political level, United Russia, the ruling party in Russia, has developed close ties with several like-minded political parties in Serbia, Montenegro, Republika Srpska and North Macedonia. Importantly, this interparty cooperation revolves around a common opposition to NATO expansion in the Western Balkans (B92, 2016). In the energy field, Russian firms have acquired a dominant position in the markets of Serbia and Republika Srpska through the purchase of local refineries and petrol stations, while Gazprom is the main gas supplier to most Western Balkan countries (Bechev, 2015, p. 2). Moscow’s energy diplomacy also entails promises to the countries of the region to include them in plans for new transnational energy pipelines (initially South Stream and then Turkish Stream). Finally, RT and Sputnik operate services in the Serbian language, spreading anti-Western and pro-Russian ideas and information (Wiśniewski, 2016). As for Turkey, it has exercised a multidimensional foreign policy towards the region that builds on the employment of a series of instruments and the formation of different types of linkages. At the intergovernmental level, it has attempted to foster relations with all countries, signing a series of military cooperation, free trade and visa waiver agreements. It has also undertaken diplomatic initiatives to promote reconciliation, the most notable being the organization of trilateral

Introduction 3 meetings with the leaderships of Bosnia and Serbia, and with the leaderships of Bosnia and Croatia (Ekinci, 2013, pp. 14–15). Above all, Turkey has paid particular attention to the enhancement of cultural, religious, educational and information linkages, predominantly with the Muslim populations in the region. The Turkish Development Agency (Turkish Cooperation and Coordination Agency, TIKA) has financed the restoration of several Ottoman-period cultural and historical monuments and mosques (Öktem, 2012, pp. 38–40). The Yunus Emre Foundation, a public foundation promoting Turkish language and culture, has opened Cultural Centers in all Western Balkan countries, offering courses attended by thousands of students in the region (Vračić, 2016, p. 13). In addition, Turkey’s Diyanet, the Presidency of Religious Affairs, provides religious education and facilitates the linkage of Balkan Muslim communities with Turkey (Öktem, 2012, pp.  43–45). What is more, state-led initiatives in the fields of culture, religion and education are complemented by similar activities undertaken by a few Turkish municipal authorities and a handful of Islamic networks, the most influential being the Gülen movement, once a partner and now the archenemy of Turkey’s President, Recep Tayyip Erdoğan. Lastly, in terms of information linkages, TRT, Turkey’s national public broadcaster, and the Anadolu Agency, the Turkey-based news agency, operate throughout the entire region, broadcasting content in all local languages (Vračić, 2016, pp. 14, 25). China has attempted to develop relations with all Western Balkan countries with the exception of Kosovo, whose independence it refuses to acknowledge. While China has clearly privileged the enhancement of its relations with Serbia, signing dozens of agreements, including one on a strategic partnership (Poulain, 2011, p. 6; Dhimolea, 2017), it has sought to sign economic and technical cooperation agreements with the rest of the Western Balkan countries as well. China acts mainly as an investor in the region, disposing billions of dollars in the form of low-interest loans with long maturity periods for the execution of construction projects in the fields of power generation and transport infrastructure (Tonchev, 2017, p. 4). China’s primary interest seems to be the improvement of the region’s internal connectivity in order to facilitate the transport of Chinese manufactured products from the Greek port of Piraeus to Europe. In this respect, Beijing has been financing several projects, such as the reconstruction of a Belgrade–­Budapest railway; the construction of the Bar–Boljara highway (connecting Montenegro and Serbia); the construction of a highway between Albania and Montenegro; and the construction of highways within Albania, Bosnia and North Macedonia (Tonchev, 2017, pp. 2–3; Dhimolea, 2017). Finally, the UAE has increasingly shown interest in the region’s economic development. It has delivered a share (albeit small) of its Official Development Assistance to the Western Balkans, consisting mostly of grants. In 2015, it donated US$35.7 million, focusing on development projects in Albania and Montenegro (UAE MOFAIC, 2016, p. 30). More importantly, the Emirates have made substantial commercial investments in the region in the fields of construction, agriculture, defense and aviation (Bartlett et al., 2017). Most investments have been directed towards commercial real estate and tourism in Bosnia and Herzegovina

4  Florian Bieber and Nikolaos Tzifakis and Serbia. The iconic cases are without doubt the ‘Belgrade Waterfront’ and ‘Buroj Ozone’. The first is a US$3 billion project by Eagle Hills, an Abu Dhabibased company, for the redevelopment of the Sava riverbank in Belgrade, with the construction of thousands of residencies, several hotels, the largest shopping mall in the Balkans and a 200-meter-high tower (Bartlett et al., 2017, p. 104). The second is a US$2.5 billion project by Buroj Property Development, a Dubai-based company, for the construction of a tourist city in Trnovo, Bosnia, that would contain thousands of housing units, luxurious hotels, a shopping mall and a hospital (Brunwasser, 2016). In addition, the UAE has been active by forging a partnership with the Serbian government in the creation of Air Serbia. Most Western Balkan governments have welcomed external actors’ increased activity in the region for several reasons. At the political level, Russia’s spoiler role represents a unique source of support for all those actors in the region who oppose certain Western initiatives and proposals for peacebuilding and crisis management. It also allows some regional governments to play off Russia against the EU and the United States, increasing their bargaining power. In the case of the Kosovo question, China’s approach is an additional support for Serbia’s position. Besides the cultural and economic aspects of the Turkish engagement, its role, together with the UAE and other Middle Eastern countries, is appreciated by those who would like to see Islam playing a greater role in the region. At the economic level, foreign assistance and new investments and infrastructure projects are desperately needed for development. What is more, these investments often do not come with the usual strings attached to EU support. Most Western Balkan leaders, who are not reformists by conviction, have come to believe that they can find alternative sources of financial assistance to consolidate their stay in power and, thus, they do not need to carry out EUprescribed reforms (Makocki, 2017). Last but not least, many of the projects financed by these external actors involve non-transparent procedures, facilitating the prevalence of corruption and the ceaseless operation of clientelistic networks (Makocki and Nechev, 2017). Thus, if external assistance and linkages with non-Western actors are at the service of aims that conflict with aspects of the West’s diplomatic initiatives and its liberal reformist agenda (e.g., promotion of democracy, rule of law and a market economy), they are a cause of serious concern. This risk has been acknowledged by Western decision makers as well. Federica Mogherini, High Representative of the European Union for Foreign Affairs and Security Policy and Vice-President of the European Commission, remarked in March 2017 that ‘[t]he Balkans can easily become one of the chessboards where the big power game can be played’ (European External Action Service, 2017). Similarly, David McAllister, Chair of the European Parliament’s Foreign Affairs Committee, observed a few days later that “[g]eopolitics has returned to the Balkans [. . .] We are seeing growing Russian influence, we are seeing growing Turkish influence, the United States is a player, the European Union is a player, so there are different interests at stake” (Rankin, 2017). And Hoyt Yee, United States Deputy Assistant Secretary of State, singled out Russia among the external actors active in the Western Balkans and

Introduction 5 depicted its influence in the region as ‘malign’ (United States Senate Committee on Foreign Relations, 2017, p. 1). Between the view of regional governments, who often perceive this plethora of external involvement as a boon to a region suffering from Western neglect and much reduced foreign investments following the global economic crisis, and the view that a sinister threat emanates from all engagement by non-Western actors, a more nuanced understanding has to emerge. This book seeks to offer an academic and multifaceted understanding of these external engagements. The aim of this volume is to map out and assess the influence of external non-Western powers in the Western Balkans and thus offer a better understanding of the different types of engagements and their repercussions for the region’s reforms and EU integration. The next section reviews the IR literature on linkages and influences between small powers and regional/great powers and articulates a framework for the empirical chapters of this book.

Small powers, linkages and influence: a framework of analysis The exercise of influence by a regional or great power over the policies of a small power presupposes the establishment of linkages among them. Linkages are not mere points of interconnection among actors. As Levitsky and Way (2010, p. 45) explain, linkages facilitate the transmission of ideas and norms and affect the actors’ interests, priorities and capabilities. Linkages create opportunities and constraints and generate benefits and costs, and thus they establish relationships of mutual dependence (Keohane and Nye, 2012, p. 8). Today, there is a plethora of types of linkage that may connect regional/great powers with small powers. Linkages may be formed across both public and private sectors and between different actors, such as individuals, NGOs, private firms, bureaucracies and states. In their authoritative work on Western influence upon the democratization of third countries, Levitsky and Way (2010, p. 43) argue that international linkages comprise “the density of ties (economic, political, diplomatic, social, and organizational) and cross-border flows (of capital, goods and services, people, and information)” among different countries. Levitsky and Way (2010, pp.  43–44) suggest that linkages exist across the following six dimensions: i) economic (flows of trade, investments and credit), ii) intergovernmental (diplomatic and military ties as well as participation in international institutions), iii) technocratic (elite-level education and professional links), iv) social (crossborder flows of people as tourists, migrants, refugees and members of diaspora communities), v) information (flows of news and ideas via mass media, the internet and telecommunications, and vi) civil society (ties at the level of NGOs, religious and party organizations, and other transnational networks). Notwithstanding the merits of such a sophisticated and comprehensive typology of linkages, we believe that it would be empirically more feasible to merge proximate dimensions (e.g., civil society, information and social) in a more succinct typology and analyze linkages across the following three analytical sectors: military/

6  Florian Bieber and Nikolaos Tzifakis political, economic and societal. In other words, we do not suggest eliminating from our study any linkages of those proposed by Levitsky and Way. We merely re-assemble them into a scheme containing a smaller number of categories to better observe interdependence between different types of linkages (e.g.,  between information and civil society linkages). Different linkage types do not necessarily operate uniformly in terms of exercise of influence. With the danger of oversimplifying a much more complicated picture, we may for analytical purposes argue that linkages may either function as mediums for the transmission of influence or as sources of influence in their own right. Whereas the former represent channels of contact that each actor may try to use to influence the other side, the latter to some extent determine each side’s potential influence in their relationship. Presumably, when linkages operate as sources of influence, they are simultaneously means for the transmission of this influence. In this respect, the two linkage functions are not contradictory, but maybe complimentary. Moreover, the purpose of all attempted influence is not identical. Following Hay’s understanding of power, we differentiate between influence aiming to shape the conduct of others, and influence aiming to shape the context within which others would subsequently take decisions and action. The first concerns the ability to “influence directly the actions and/or choices” of others, while the second refers to the ability of exerting indirect influence upon the “context which defines the range of possibilities of others” (Hay, 2002, pp. 185– 186). On the basis of these two analytical dichotomies, we suggest that linkages and influence may be correlated in one of the following four, non-mutually exclusive, ways (see Table 0.1). 1. Linkages as mediums for transmission of influence to shape the conduct of others Linkages often function as mediums when there are significant differences among the power bases of interconnected actors. This is typically the case of interstate (i.e., military/political and, in part, economic) ties between small powers and regional/great powers such as those examined in this book. In this type of relation, a connection may function as a channel of contact which A (the more powerful actor) uses to get B (the weaker actor) “to do something that B would not otherwise do” (Dahl, 1957, pp. 202–204). The stronger actor usually conveys a message containing a promise and/or a threat, and the weaker actor complies out Table 0.1 Linkages function and influence outcomes linkage function (medium/source) influence outcomes (conduct/context)

medium to shape conduct (compliance) medium to shape policy context (consensus)

source to shape conduct (compliance) source to shape policy context (consensus)

Introduction 7 of appreciation of the promised reward and/or fear of the punishment implied. Influence, measured as control over outcomes (Keohane and Nye, 2012, p. 10), is manifested in the smaller state’s compliance with its counterpart’s demands (Singer, 1963, pp.  426–427; Jönsson, 1981, pp.  251–252). Considering that all power relations presuppose the existence of some sort of communication for the transmission of influence, small powers increase their vulnerability to external pressures when they establish links with greater powers. Conversely, great powers are frequently motivated to create links with smaller powers so that they may gain some leverage over them. 2. Linkages as mediums for transmission of influence to shape the policy context of others Linkages may also channel ideas and norms aiming to indirectly influence the medium-term behavior of actors. Influence, measured as control over outcomes, is translated here into some degree of consensus among interconnected actors, frequently even without prior consultation, over policy prescriptions (Moon, 1985, p. 305). Influence is about what Nye (2004, p. 2) termed ‘soft power’ to describe the ability of an actor to “attract and co-opt” others to want what it wants. Or, to put it in Hay’s terms, it is about the ability to “shape the parameters of what is socially, politically and economically possible for others” (Hay, 2002, p. 185). According to Li (1993, pp.  353–354), the building of consensus among interlinked actors may imply the operation of one of the following two processes: identification or internalization. Identification describes an interaction where the influence of one actor over another has reached the point in which the latter wants to be closely associated with the former. As for internalization, it depicts an interaction whereby an actor has espoused the value system of its counterpart (Li, 1993, pp. 353–354). Processes of identification and internalization may result from all dimensions of linkages. For instance, at the military level, regular contacts and joint exercises among officers could bring about a convergence of strategic thinking. At the education level, if a substantial part of a country’s elite studies in another country, it would be exposed to the influence of that country’s value system and a convergence of thinking among the elites of both countries may emerge. Similarly, at the level of information linkages, the transmission in one country of news information generated in another country would affect the way people in the former country perceive international reality and how they position themselves towards it (Moon, 1985, pp. 307–308; Holzinger and Knill, 2005, p. 784). Levitsky and Way (2010, p. 50) suggest that the diffusion of one actor’s ideas and norms to another actor is more efficient when there are extensive and dense ties across all, or almost all, dimensions of linkages (‘cluster’ effect). In this respect, some countries follow a strategy of ‘informal penetration’ into third countries, consisting of more or less direct and legitimate instruments, such as assistance programs, cultural and education exchange programs, information and propaganda activities and subversive activities, with the aim of creating a large and influential constituency in support of their goals (Scott, 1968, p. 209; Li, 1993, p. 355).

8  Florian Bieber and Nikolaos Tzifakis 3. Linkages as sources of influence to shape the conduct of others Linkages operate as sources of influence over the conduct of others when they are derived from settlements that determine each actor’s costs and benefits from their relationship. It concerns linkages with tangible and countable effects (Li, 1993, pp. 351–352). To the extent that the costs and benefits of this type of linkage are almost always unevenly distributed (or perceived as such), they establish asymmetrical interdependent relationships (Keohane and Nye, 2012, pp.  9–10). The actor which stands to lose more from a severance of linkages would subsequently be in a less favorable bargaining position than its counterpart. Keohane and Nye (2012, pp. 10–11) remark that the impact of a possible aggravation of linkages can be measured along two dimensions. The first, termed ‘sensitivity’, refers to the extent to which an actor is liable to the costly effects of its dependence on another within the policy framework of their linkages. In other words, sensitivity concerns the exposure of an actor to the immediate effects of a change in flows and transactions within an interdependent relationship. The second dimension, termed ‘vulnerability’, refers to an actor’s availability of alternatives (and the cost of them) to transactions through the established linkages (Keohane and Nye, 2012, pp. 10–11). A classic example here is the relationship between an energy supplier and an energy consumer. While the latter’s sensitivity denotes its exposure to any change of price and/or volume energy resource flows, its vulnerability concerns its ability to reduce dependence on any specific energy supplier. A  state’s bargaining power is more easily exploitable in linkage dimensions (e.g.,  military/political and economic) where it can potentially control the stream of flows and transactions with its more sensitive and/or vulnerable partner to their mutual interdependence (Moon, 1985, p. 302). In these cases, the state with the greater bargaining power may attempt to take advantage of its position to shape the conduct of its counterpart. 4. Linkages as sources of influence to shape the policy context of others The establishment of linkages that function as sources of influence may also affect the context within which interconnected countries take decisions. This is because linkages bearing costs and benefits inevitably affect the preferences and interests of stakeholders in both countries. The distribution of benefits creates constituencies in each country that develop a community of interests in the preservation and growth of linkages (e.g., trade, investments and tourism). Contrary to the diffusion of ideas and norms, the emergence of consensus may in this case be immediate and even precede the establishment of linkages to the extent that the expectation of benefits alone frequently suffices to generate a convergence of views. Interestingly, if linkages and their effects are imperiled, domestic interested groups/ stakeholders may exercise pressure on their government, further weakening its bargaining power (Levitsky and Way, 2010, pp. 47, 51). Our typology of linkage functions and influence outcomes serves certain analytical purposes. First, it allows for the possibility that different types of linkages

Introduction 9 may generate influence in opposite directions. For instance, a small power may have greater bargaining leverage than its larger partner in certain issues owing to the fact that it controls much-needed resources. Second, it highlights different ways in which influence is exerted, ranging from its immediate and direct coercive imposition to its medium-term and indirect diffusion. Having said that, we should acknowledge that empirical reality may frequently look much messier, with linkages and their effects appearing more intermingled and obscure. While linkages are a prerequisite for the exercise of influence, their establishment does not guarantee that an influence attempt will be successful. First of all, linkages are by definition bi-directional and both parties in a relationship may aspire to influence some of their counterpart’s policies. Moreover, disparities in power bases between small and regional/great powers may be neutralized by asymmetries in resolve (Jönsson, 1981, pp. 254–256). On many occasions in history, small powers have chosen to assume the consequences of non-compliance. Likewise, the consensus between two deeply interconnected actors is never universal. Countries sharing common values do not necessarily agree on every policy aspect. A case in point here are the frequent disagreements over all kinds of issues among EU member states. What is more, the linkage effects of asymmetric interdependent relations are not always easily exploitable. As Wagner put it (1988, p.  473), not all asymmetries in economic linkage effects reflect “unexploited opportunities to trade economic resources for political concessions”. Besides, an actor with weak bargaining power may still assess that the cost of compliance is higher than the cost of punishment (Wagner, 1988, pp. 474, 477). Therefore, the preceding analysis has explained ‘how’ but not ‘when’ linkages are correlated to the exercise of influence. There are certainly some conditions that seem to increase the likelihood of correlating linkages to successful influence attempts. The impact of linkages is indeed contingent on a variety of factors, located at all levels of analysis (see Figure 0.1). At the international level, several variables come into play. For instance, it matters whether the international system is hegemonic or competitive; whether the interests of different regional/great powers linked to a small power are similar or contradictory; whether a small power may select alternative linkages to those already established; how geographically proximate a small power is to the regional/great powers linked to it; and what linkages are formed in parallel by the small power’s main adversaries/competitors and partners/allies (Lindell and Persson, 1986, pp. 81–83; Menkhaus and Kegley, 1988; Kopstein and Reilly, 2000; Levitsky and Way, 2010, pp. 41, 50). All of these variables are about the small power’s room of maneuver in an interdependent relationship with a mightier partner. At the state level, the small power’s ‘openness’ to linkages with one or more regional/great powers determines its exposure to external influences (Kopstein and Reilly, 2000, pp. 13–16, 36). According to Tolstrup (2013, 2014), a critical variable here is the gatekeeping role of a country’s elite (predominantly the political elite, but also the economic and civil society elites), which may promote linkages with certain countries/actors and downplay established linkages with others. And, at the domestic level, different variables determine the chances that regional/

10  Florian Bieber and Nikolaos Tzifakis Levels of Analysis International

State (Small power)

Domestic

Variables • Hegemonic/Competitive system • Convergence/Divergence of interests of regional and great powers • Parallel linkages of main adversaries/competitors and partners/allies • Availability (and cost) of alternative linkages • Geography • Openness to linkages • Gatekeeper elite

• • • • • •

Political system Economic system National/Cultural identity Dominant ideology Interest groups/stakeholders, civil society Media

Figure 0.1 Variables affecting linkage/influence correlation in the case of interdependent relationships between small and regional/great powers

great powers will manage to form linkages with a small power and exert influence upon it. These variables include the small power’s political and economic systems (e.g., degree of liberalization); its cultural/national identity (e.g., sense of similarity to the culture and value system of other countries); its dominant ideology (e.g., like-mindedness with other countries); and the interests and attitudes of certain domestic actors such as interest groups/stakeholders, civil society and media (Knill, 2005, p. 770; Holzinger and Knill, 2005, p. 790; Levitsky and Way, 2010, pp. 47, 51; Tolstrup, 2014, p. 129). Having briefly discussed the correlation of linkages and influence in the case of interdependent relationships between small powers and regional/great powers, the next section tries to transfer our theoretical discussion to the contemporary empirical reality in the Western Balkans.

The structure of the book This volume undertakes the exercise of mapping out the range of linkages that Western Balkan countries have established with the most active non-Western actors in the region, namely Russia, China, Turkey and the UAE. Our main objective is to assess the ability of these external actors to influence developments in the region. What we are particularly keen to explore is whether the participation

Introduction 11 of any of these external actors in Balkan affairs represents a threat to the implementation of the Western liberal reformist agenda, that is, the integration of the countries into the EU and NATO and the pursuit of domestic reforms resulting in liberal democratic market economies. As already mentioned, the book perceives linkages to fall into one of the following three analytical sectors: military/political, economic and societal sectors. In the military/political sector, we identify intergovernmental agreements (e.g.,  alliances, military, police and intelligence cooperation, arms/equipment transfers, etc.) and density and regularity of ties and contacts among decision makers (e.g., official visits and summits), between bureaucracies and public officers from different countries (e.g., training and exercises), and between political parties with similar ideologies. In the economic sector, we examine trade flows (main partners); investments (country of origin of most FDIs, especially of strategic and very large investments, the role of state vs. private investors); financial/ development assistance (i.e., origin, size, grant/loan proportion, and objectives); energy linkages (reliance on external suppliers and participation in regional energy networks) and transnational business linkages. Lastly, in the societal sector, we study cultural, religious and educational cooperation and exchanges at both state and non-state levels (e.g., activity of the Gülen movement), and transnational ties and flows of people and ideas/information (e.g., media, civil society, migration/ refugees, diaspora networks, studies and tourism). This volume is divided into three parts. The first part (Chapters 1–2) maps out the region-wide dynamics of linkages among Western Balkan countries and external actors across individual sectors (i.e., military/political and economic sectors). It rests at the sub-systemic level of analysis to observe whether there are regionwide patterns of sensitivity and vulnerability interdependence of local actors and/ or successful strategies of informal penetration by external powers. It also demonstrates across individual sectors whether different external influence attempts serve similar, complementary or conflicting interests. The second part (Chapters  3–8) focuses on the state level and examines the external linkages of each Western Balkan country. It gives an inside-out account of how variables such as economic interests and cultural and religious affinity are inscribed in the formation of linkages and how elites and domestic actors in the Balkans determine with their choices their country’s openness and exposure to external influence. It also demonstrates how sensitive and vulnerable each Western Balkan country is to its interdependent relationship with external actors and whether it has been critically penetrated by any external actor. What is more, it offers a comparative account of the salience of these countries’ linkages with external non-Western actors in contrast to their corresponding linkages with Euro–Atlantic institutions. In this way, it puts in proportion the importance of each Western Balkan country’s linkages with external non-Western actors. Finally, it assesses how the linkages of Western Balkan countries with external actors are translated into influence. At the societal level, influence is assessed by the results of opinion surveys in Western Balkan countries, measuring public perceptions of external powers. More importantly, at the political level, influence outcomes are

12  Florian Bieber and Nikolaos Tzifakis measured in the (full or selective) alignment, convergence or distance of Western Balkan states from the foreign policy of the external actors with whom they share very dense linkages. The third part (Chapters  9–12) undertakes an outside-in approach and analyzes the influence of external non-Western powers in a region. The part adds an overview of those actors’ preferences and motives to the preceding analysis; it assesses how important the Western Balkans are for the promotion of their interests, and how their involvement in the region fits into their overall foreign policy agendas. Importantly, it examines whether (and to what extent) the involvement of these external actors contradicts or imperils the region’s liberal reformist agenda. It also questions whether any of these actors proposes or promotes any alternative perspective or vision to the region’s full integration into the Euro–Atlantic structures. Overall, the book undertakes a multi-sectoral and multi-level investigation of linkages and influence among Western Balkan countries and external non-­Western actors. In this way, it offers both an agential account of how local and external actors determine with their choices the formation of linkages and a structuralist account of how linkages, once formed, affect outcomes in the region.

References B92, 2016. Serbian Parties Sign Declaration with United Russia, 29 June. www.b92.net/ eng/news/politics.php?yyyy=2016&mm=06&dd=29&nav_id=98469 [Accessed 25 July 2017]. Bartlett, W., Ker-Lindsay, J., Alexander, K., and Prelec, T., 2017. The UAE as an Emerging Actor in the Western Balkans: The Case of Strategic Investment in Serbia. Journal of Arabian Studies, 7 (1), 94–112. Bechev, D., 2015. Russia in the Balkans: How Should the EU Respond? Brussels: European Policy Centre, Policy Brief, 12 October. Brands, H., 2016. Barack Obama and the Dilemmas of American Grand Strategy. The Washington Quarterly, 39 (4), 101–125. Brunwasser, M., 2016. Bosnia’s Biggest Foreign Investment: Bonanza or Threat? BBC News, 23 September. www.bbc.com/news/business-37429682 [Accessed 25 July 2017]. Clinton, H., 2011. America’s Pacific Century. Foreign Policy, 189 (1), 56–63. Dahl, R. A., 1957. The Concept of Power. Systems Research and Behavioral Science, 2 (3), 201–215. Dhimolea, A., 2017. Chinese Economic Cooperation in the Balkans: Challenges and Future Expectations. Balkanalysis.com, 11 May. www.balkanalysis.com/blog/2017/05/11/ chinese-economic-cooperation-in-the-balkans-challenges-and-future-expectations/ [Accessed 10 June 2017]. Ekinci, M. U., 2013. Turkey’s ‘Zero Problems’ Era in the Balkans. Ankara: SETA Foundation for Political, Economic and Social Research, p. 1. European External Action Service, 2017. Remarks by High Representative/Vice-President Federica Mogherini Following the Foreign Affairs Council. 170306_11. Brussels, 6 March. https://eeas.europa.eu/headquarters/headquarters-homepage/22056/remarkshigh-representativevice-president-federica-mogherini-following-foreign-affairs-coun cil_en [Accessed 20 July 2017].

Introduction 13 Freedom House, 2017. Nations in Transit 2017: The False Promise of Populism. https:// freedomhouse.org/sites/default/files/NIT2017_booklet_FINAL_0.pdf [Accessed 20 July 2017]. Hay, C., 2002. Political Analysis. Basingstoke: Palgrave Macmillan. Holzinger, K., and Knill, C., 2005. Causes and Conditions of Cross-National Policy Convergence. Journal of European Public Policy, 12 (5), 775–796. Jönsson, C., 1981. Bargaining Power: Notes on an Elusive Concept. Cooperation and Conflict, 16 (4), 249–257. Keohane, R. O., and Nye, J. S., 2012. Power and Interdependence. 4th edition. Boston: Longman. Kmezić, M., and Bieber, F., ed., 2017. The Crisis of Democracy in the Western Balkans. An Anatomy of Stabilitocracy and the Limits of EU Democracy Promotion. Balkans in Europe Policy Advisory Group (BiEPAG), Policy Study. Knill, C., 2005. Introduction: Cross-National Policy Convergence: Concepts, Approaches and Explanatory Factors. Journal of European Public Policy, 12 (5), 764–774. Kopstein, J. S., and Reilly, D. A., 2000. Geographic Diffusion and the Transformation of the Postcommunist World. World Politics, 53 (1), 1–37. Levitsky, S., and Way, L. A., 2010. Competitive Authoritarianism: Hybrid Regimes After the Cold War. Cambridge: Cambridge University Press. Li, C. P., 1993. The Effectiveness of Sanction Linkages: Issues and Actors. International Studies Quarterly, 37 (3), 349–370. Lindell, U., and Persson, S., 1986. The Paradox of Weak State Power: A Research and Literature Overview. Cooperation and Conflict, 21 (2), 79–97. Makocki, M., 2017. China in the Balkans: The Battle of Principles. European Council on Foreign Relations Commentary, 6 July. www.ecfr.eu/article/commentary_china_in_the_ balkans_the_battle_of_principles_7210 [Accessed 15 July 2017]. Makocki, M., and Nechev, Z., 2017. Balkan Corruption: The China Connection. Paris: EUISS Issue Alert, 22 July. Menkhaus, K. J., and Kegley, C. W., 1988. The Compliant Foreign Policy of the Dependent State Revisited: Empirical Linkages and Lessons from the Case of Somalia. Comparative Political Studies, 21 (3), 315–346. Moon, B. E., 1985. Consensus or Compliance? Foreign-Policy Change and External Dependence. International Organization, 39 (2), 297–329. Nye, J. S., 2004. Soft Power: The Means to Success in World Politics. New York: Public Affairs. Öktem, K., 2012. Global Diyanet and Multiple Networks: Turkey’s New Presence in the Balkans. Journal of Muslims in Europe, 1 (1), 27–58. Poulain, L., 2011. China’s New Balkan Strategy. Central Europe Watch, 1 (2). Rankin, J., 2017. Russian Destabilisation of Balkans Rings Alarm Bells as EU Leaders Meet. The Guardian, 9 March. www.theguardian.com/world/2017/mar/08/top-mep-sayseu-must-do-more-to-stop-russia-destabilising-balkans [Accessed 20 July 2017]. Scott, A. M., 1968. Nonintervention and Conditional Intervention. Journal of International Affairs, 22 (2), 208–216. Singer, J. D., 1963. Inter-Nation Influence: A Formal Model. American Political Science Review, 57 (2), 420–430. Tolstrup, J., 2013. When can External Actors Influence Democratization? Leverage, Linkages, and Gatekeeper Elites. Democratization, 20 (4), 716–742. Tolstrup, J., 2014. Gatekeepers and Linkages. Journal of Democracy, 25 (4), 126–138. Tonchev, P., 2017. China’s Road: Into the Western Balkans. Paris: EUISS, Issue Brief, p. 3.

14  Florian Bieber and Nikolaos Tzifakis UAE MOFAIC, 2016. United Arab Emirates Foreign Aid 2015. Abu Dhabi: United Arab Emirates, Ministry of Foreign Affairs and International Cooperation. United States Senate Committee on Foreign Relations, 2017. Testimony by Deputy Assistant Secretary Hoyt Yee Senate Foreign Relations Committee Subcommittee on Europe and Regional Security Cooperation, 14 June. www.foreign.senate.gov/imo/media/ doc/061417_Yee_Testimony.pdf [Accessed 20 July 2017]. Vračić, A., 2016. Turkey’s Role in the Western Balkans. Berlin: Stiftung Wissenschaft und Politik, SWP Research Paper 11. Wagner, R. H., 1988. Economic Interdependence, Bargaining Power, and Political Influence. International Organization, 42 (3), 461–483. Wiśniewski, J., 2016. Russia Has a Years-Long Plot to Influence Balkan Politics. The U.S. Can Learn a Lot from It. The Washington Post, 19 September. www.washingtonpost. com/news/monkey-cage/wp/2016/09/19/heres-how-russias-trying-to-sway-opinion-inserbia-and-the-balkans/?utm_term=.d8689e74850c [Accessed 10 August 2017].

Part I

Regional dynamics

1 Security cooperation in the Western Balkans Cracks and erosion of Euro–Atlantic integration? Tobias Flessenkemper1 and Marko Kmezić Since the end of the Yugoslav conflicts of the 1990s, the threats posed to European security by the Western Balkans have greatly diminished. The initial phase of internationally managed conflict settlement and reconstruction in the region has been followed by the phase of Euro–Atlantic integration – the increasing association with and eventual membership of the Western Balkans in the European Union (EU) and the North Atlantic Treaty Organization (NATO). This chapter concerns the latter phase in security cooperation, tracing “leverage and links” (Levitsky and Way, 2005, 2006) between international actors and the countries of the region. This gradual enhancement of relations suggests that the success of the EU and the NATO influence on security, democracy and the rule of law in the Western Balkan countries is conditioned by high leverage, as manifested in an asymmetrical power relationship between these organizations and the target state and dense linkages due to the density of ties between them. The more an accession country becomes entangled in linkages with the NATO and the EU, the more “vested interests” (Tolstrup, 2010) will consolidate on both sides, which ultimately leads to the domestic elites’ aspiration to preserve such ties. Following this logic, over the past twenty years the Euro–Atlantic integration of the Western Balkans has become a joint project of the regional political and economic stakeholders, the EU, the United States (U.S.), and their partners. However, the last two decades have brought more frustration than progress to the Western Balkans’ Euro–Atlantic integration (Džankić et  al., 2018). Following Albania and Croatia, which entered in the sixth enlargement in 2009, eleven years after declaring its independence, the Republic of Montenegro became the third Western Balkan country to join NATO in 2017. Montenegro’s entry into the alliance demonstrated the lack of the organization’s compromisebased ­decision-making and the erosion of coherence between the main actors ­driving the Euro–Atlantic integration project. Controversial messages from leading NATO partners concerning the perspective of the Alliance’s future enlargements, as well as the deprivileged position of the newcomers, risk eroding the normative foundations of the Western Balkan countries’ integration into Western structures and opens the possibility for external and internal security cooperation with other actors. The area of internal security cooperation broadly encompasses issues relating to policing, the rule of law and civil protection which primarily

18  Tobias Flessenkemper and Marko Kmezić concern EU integration, while external security in this article concerns questions of NATO membership and foreign policy cooperation in the framework of the EU’s ­Common Foreign and Security Policy (CFSP). This chapter analyzes how the erosion of the coherence of the Euro–Atlantic project created cracks through which Russia and Turkey were able to influence external and internal security cooperation in the Western Balkans. Russia’s growing assertiveness can be observed in attempts to impact external security cooperation across the region. President Vladimir Putin’s seemingly permissive attitude to Euro–Atlantic integration in the early 2000s has turned, rather sharply, to vocal criticism and active opposition to NATO enlargement to the Western Balkans and the political and economic dimensions of EU integration, thus affecting security cooperation, including the internalization of rule of law norms (Bechev, 2017; Samorukov, 2017). Russia is not the only actor with objectives antagonistic to those initially set forth by the Euro–Atlantic integration perspective more than 20 years ago. Despite its membership in NATO, Turkey’s role in the region since the attempted coup d’état in July 2016 has changed from promoting and supporting Euro–Atlantic expansion to the Western Balkans to becoming a more inward looking self-oriented actor less interested in regional affairs. Turkey’s external and internal security objectives for the region have become dominated by the selfpreserving policy priorities of President Recep Tayyip Erdoğan. These include supporting political actors with similar authoritarian leanings and pushing back political adversaries’ presumed influence in the Western Balkans, in particular those associated with the “ ‘Gülen movement”. Other actors such as China and the countries of the Gulf Cooperation Council (GCC), in turn, have little engagement in the field of security and do not seem to be aiming to intervene in the Euro– Atlantic integration project in a disrupting manner. However, attitudinal and normative effects of their engagement in the fields of economy, education and culture may in the long run facilitate consolidation of informal practices and corruption thus indirectly distancing the region from the goal of EU membership. This chapter outlines the current international context of the Western Balkans’ Euro–Atlantic integration, reflecting on the most recent developments that shape geopolitical developments on a broader level, but also their implications for the apparent halt in the political transformation of the Western Balkans. It explores the convergence between linkages and influence between regional and great powers on the integration of the Western Balkan countries, seeking to define how they translate to the development of eroding Euro–Atlantic enlargement strategy. We conclude this chapter by proposing how best to remove the observed deficiencies on the Euro–Atlantic integration path of the remaining non-EU and NATO countries from the region.

The international context of the Western Balkans Euro–Atlantic integration In spring 2015 the Council of the European Union concluded that “[t]he global and European security environment has changed dramatically in recent years” (Council

Security cooperation in the Western Balkans 19 of the EU, 2015). These changes had consequences in the Western Balkans as well. Montenegro’s entry into NATO was preceded by an alleged coup d’état attempt in October 2016, which the country’s public prosecutor attributes in an ongoing court trial to Russian interference. While NATO accession was never without internal controversies in Montenegro, a number of media outlets with pro-Russian agendas as identified in research conducted by the Center for Investigative Journalism of Montenegro (Centre for Investigative Journalism of Montenegro, 2018), as well as Russia-based international news outlets such as Russia Today and Sputnik, continuously campaigned against the country’s NATO membership. In parallel, Serbia and Russia stepped up their technical military cooperation in late 2016. The regional controversy over potential NATO membership considerably increased after Russian military intervention in Ukraine, the annexation of Crimea in March 2014 and the introduction of punitive measures against Russia agreed upon by the EU and NATO member states. Russia’s policy and public diplomacy explicitly aimed to stop NATO enlargement; not least as Montenegro’s membership completed the alliance’s effective coverage of the entire Adriatic shore, apart from a tiny strip of Bosnia and Herzegovina’s coast. Furthermore, Montenegro’s participation in the EU’s restrictive measures under the CFSP contributed to further antagonizing Russia. The situation has worsened after the agreement between Athens and Skopje in 2018, as North Macedonia’s planned NATO membership has become the next issue of contestation. Russia’s external challenge to Euro–Atlantic integration interacts with the mixed signals for the Western Balkans’ European integration that have been coming from Brussels over the last few years. Enlargement fatigue was explicitly expressed by the European Commission President Jean-Claude Juncker at the beginning of his mandate in 2015, when he stated the obvious – that there will be no enlargement during his term – and downgraded the enlargement portfolio in the current Commission. In addition, the “creeping nationalization” (Hillion, 2010) of the enlargement process, whereby member states have effectively increased the frequency of instances in which they block or delay decisions on enlargement in the Council, has negatively impacted the EU’s transformative power and its ability to successfully export democracy through its enlargement policy. In the Western Balkans this has led to the flourishing of regimes that can be described by concepts such as “illiberal democracy” (Zakaria, 1997) or “competitive authoritarianism” (Levitsky and Way, 2002). They present themselves as a new kind of “normalcy”, able to incorporate the democratic formal procedures while, using the rhetoric of democracy, conserving an “un-democratic” regime core. As autocrats are more likely to emulate, cooperate and seek support from other autocrats or to opportunistically play off different external actors, the dynamics and mechanisms of democratic decline in the Western Balkans are crucial to understanding how the region could become a source of renewed instability should more authoritarian regimes promise short-term “stabilitocracy” (Kmezić and Bieber, 2017) at the expense of long-term, sustainable stability. Furthermore, the overall Euro–Atlantic dynamic resonates in the region and influences perceptions of security. The symptoms of the crisis of the norms and

20  Tobias Flessenkemper and Marko Kmezić values of Euro–Atlantic integration – the normative foundation of the European security architecture of liberal democracies – are thereby not limited to the Western Balkans region. After the “migration crisis” that peaked in 2015, the “Brexit” referendum in June 2016 and the election of Donald Trump as U.S. President in November 2016, a profound sense of fragility beset the EU and NATO. The EU member states, in addition to the continuing economic and Euro governance crises, found it difficult to maintain coherence on border security and migration policy, both key questions which necessarily affect and are intertwined with Western Balkan security. Hence, the two organizations which were seen as the basis of stability and security for the region found or were found to be caught in internal crisis. That President Trump within the span of a few months first called NATO “obsolete” and then “no longer obsolete” (Baker, 2017) contributed to a perceived sensation of a broadening crack in the Euro–Atlantic alliance. This opened the doors of Western Balkan security for further incursions, questioning and supporting erosive tendencies in the Euro–Atlantic security architecture created since the 1990s. During this period of real and perceived security fragility, Montenegro joined NATO. Yet, at the NATO summit in Brussels on 25 May 2017, when Montenegro was officially welcomed for the first time into the alliance, the public witnessed the bizarre scene of U.S. President Donald Trump seemingly pushing aside the Montenegrin Prime Minister, Duško Marković, at the photo opportunity, to the obvious bafflement of EU member state leaders (Chokshi, 2017). The combination of forceful Russian interference, insensitive American neglect, and puzzled European heads of state and government in Brussels genuinely symbolizes the Western Balkan Euro–Atlantic security predicament in the 2010s.

Together or apart: cracks in the Euro–Atlantic external security structure In 2019, the Balkan peninsula is surrounded by and part of a single military alliance stretching from the Black Sea to the Adriatic. Albania, Bulgaria, Croatia, Greece, Montenegro, Romania and neighboring Turkey, as well as, in the north, Italy, Slovenia, Hungary and Slovakia, are all members of NATO. Even the small dot of the Bosnian-Herzegovinian maritime outpost of Neum is de facto under NATO’s supervision thanks to the presence of UN-mandated EU and NATO deployments in the country. The overwhelming majority of the Balkan states are therefore members of the most significant collective defense organization in Europe. The alliance’s coverage appears solid on the map. The process of Euro– Atlantic integration seems to have been moving along successfully, with the ­gradual completion of NATO’s expansion in the region. Yet a second glance at the map leads the observer to the conspicuous “white hole” in the center of the region. An analysis of the policies of the current members of the EU and NATO points to the crucial cracks and the lack of common political positions within the Euro–Atlantic community. In essence, the military and political integration of the region will remain open, conditioned and contested so long as there is no sustainable “closure” of issues related to the dissolution

Security cooperation in the Western Balkans 21

Map 1.1 The EU and NATO in South Eastern Europe in 2019.

of Yugoslavia and, the single most important question, the position of Serbia. The unresolved territorial finalité politique of Serbia, which also impacts on the predicament of Bosnia and Herzegovina, has created “cracks” inside the region affecting the Euro–Atlantic integration set-up. At least since 2003, Russia in particular has started to pursue its own policies in this regard by ending its contribution in EU-NATO–led security activities in the region. Russia moved into the cracks with diplomatic, political and media activities on the Kosovo question, and with ever-increasing assertiveness as of 2006 with the beginning of the talks on Kosovo’s status (Maass, 2017; Bechev, 2017). Shortly beforehand, the negotiated independence of Montenegro in 2006 could be considered a peak of Euro–Atlantic support for state-building in the region, keeping adversaries of Montenegro’s independence at bay. Yet the Kosovo status negotiations resulted in a marriage of convenience and cooperation between

22  Tobias Flessenkemper and Marko Kmezić Russia and Serbia, due to the former’s leverage as a permanent member of the UN Security Council with the power to veto any binding decision on Kosovo in the interest of Serbia (Radeljić, 2017). It was often difficult for key EU member states to reach a common position on important security-related foreign policy issues, as observed in the 1990s wars in Yugoslavia or their varied response to the U.S.-led intervention in Iraq in 2003 (Ginsberg and Penksa, 2012). Since 2008, the Kosovo status issue opened yet another EU and NATO internal fracture, which is particularly difficult for the EU. The slowing integration dynamics within the EU became ever more apparent after the 2004 enlargement and came to a dramatic halt with the rejection of the EU constitutional treaty by the voters of France and the Netherlands in 2005. The EU Common Foreign and Security Policy (CFSP) in the region focused on the consolidation of the European Security and Defense Policy (ESDP) activities in the region with a plethora of EU missions in Bosnia and Herzegovina, operations in North Macedonia and the preparations of EU activities in Kosovo, yet those operations could not make up for the failure of EU member states to agree on fundamental questions such as Kosovo’s independence or the dispute about North Macedonia’s name. Hence, the Unilateral Declaration of Independence by the Republic of Kosovo on 17 February 2008 became the single deepest manifest crack in the Euro–Atlantic integration project for the Western Balkans. EU and NATO member states split into a group of recognizers and a group of non-recognizers, whereby, apart from Spain, the non-recognizers are themselves part of the broader region: Greece, Romania, Slovakia and Cyprus, not a NATO member. The recognizers of Kosovo from the Western Balkans were the initial three Adriatic Charter members, Albania, Croatia and North Macedonia, as well as Montenegro. Bosnia and Herzegovina and Serbia are part of the group of nonrecognizers, and Bosnia and Herzegovina also has the least developed relationship with Kosovo of all countries in the region. Russia’s leverage on non-members of NATO in the region falls into three categories. First, Serbia proper, where there is no political majority wishing to join and where a declaration of neutrality was passed in December 2007 in the midst of the Kosovo status process (Bechev, 2017). Second, Bosnia and Herzegovina and Kosovo, where a majority of the citizens and their representatives may be ready to join NATO, but which due to the veto of Republika Srpska and the unresolved questions of Serbia–Kosovo relations are not able to join. At the same time, both countries remain areas of NATO/EU peacekeeping deployments. The third case points to an EU-internal fracture: North Macedonia, where for over 10 years since the Bucharest summit in 2008 the NATO accession process has been vetoed by Greece due to the name dispute. Equally interesting is the consideration that since the 2018 Prespa agreement between Greece and North Macedonia, which envisaged the resolution of the long lasting name dispute between North Macedonia and Greece, hence paving the way for a renewed NATO membership application under the name “Republic of North Macedonia”, Greek public opinion has become a primary target of Russian influence with the aim of stopping further NATO enlargement (Hellenic Republic Ministry of Foreign Affairs, 2018). In

Security cooperation in the Western Balkans 23 other words, the Prespa Agreement has spoiled Greek–Russian relations as the new Greek position has removed a key obstacle for NATO enlargement (Kotzias, 2018). In addition, the Greek authorities expelled Russian diplomatic ­personnel with the justification that they were supporting opposition to the agreement with North Macedonia, hence exploiting domestic political cleavages in Greece ­(Konstandaras, 2018). In an attempt to avoid further delay in the EU integration process, during the first half of 2008 the EU member states advanced with signing the Stabilization and Association Agreements (SAA) with Serbia and Bosnia and Herzegovina, and launched a visa liberalization roadmap for all Western Balkan countries. While the visa liberalization process was designed not least to offer particularly the Serbian public a European perspective in the wake of Kosovo’s independence (Flessenkemper and Bütow, 2011), the signature of the SAA with Bosnia and Herzegovina was made possible as EU member states lowered their expectations for a fundamental reform of Bosnia and Herzegovina’s internal security structures. The noteworthy failure of EU conditionality in the field of police reform can be compared with the relative success of a military reform in Bosnia and Herzegovina, which paved the way for the country’s closer cooperation with NATO. While the main reason for the different outcomes of the two reform processes is mainly due to domestic elites’ interest in preserving the status quo in police control rather than in the army, the lack of EU acquis on police organization, as opposed to the clear NATO standards in the area of civilian military oversight, also played an important role. Yet a consensus on NATO accession for Bosnia and Herzegovina is still missing, and the country’s Euro–Atlantic integration is still conflated with the questions of constitutional reform and the future of the international administration, which effectively led to a top-down blockade of the accession processes (Tolksdorf, 2013). At the same time, at the UN-level the five permanent members of the Security Council also remain split between the U.S., UK and France on the one side, and Russia and China objecting to the independence of the Republic of Kosovo on the other. Since 2014, Russia’s grudging acknowledgement in the UNSC of Bosnia and Herzegovina’s Euro–Atlantic integration has ended. As of 2015, for instance, Russia objected to the previously agreed language “emphasizing the importance of Bosnia and Herzegovina’s progress towards Euro–Atlantic integration” (UNSCR 2183 (2014)). Instead the annual resolutions on Bosnia and Herzegovina to extend the mandate of the international troops remain silent on the issue of integration. Within a few years after the Thessaloniki European Council in 2003, the strategic consensus on Euro–Atlantic integration in the Western Balkans had cracked. The above described problems in the Euro–Atlantic construction have created space for Russia to pursue its agenda of limiting the growth of NATO and, lately, to advocate against EU integration. The de facto end of the EU membership perspective since May 2009 decreased the Union’s leverage over Turkey and gave it reason to toy with excluding itself from previous commitments on prioritizing political and security relations with Albania, Bosnia and Herzegovina and Kosovo, hence moving to become a more autonomous actor in the region. Yet, unlike

24  Tobias Flessenkemper and Marko Kmezić Russia, it is doing this rather to serve the internal political agenda of the AKP-led government than to obstruct the Euro–Atlantic integration project.

(Mis)using the security cracks of Euro–Atlantic integration At the beginning of August 2008, war returned to Europe, this time between Russia and Georgia. Supported by Russia, the two Georgian provinces South Ossetia and Abkhazia declared their independence. The war in Georgia signaled that Russia would not content itself with asserting its role in the diplomatic arena, but was seeking dominance on the ground and in the information realm. Already riddled by the difficulties of the Kosovo status process between 2006 and 2008, the crisis in Georgia in particular took away attention from the build-up phase of the – to date – largest EU security and defense policy operation: EULEX Kosovo. The European Union Rule of Law and Police Mission in Kosovo aimed to support supervised independence, which was the formula agreed by EU member states. EULEX as a mission managed to close the ranks among all 27 EU member states, including the five non-recognizers of Kosovo. While often ineffective as an operation, EULEX was a proper tool to patch together the policy fractures within the EU that had been created during 2008. By strengthening NATO–EU cooperation on the ground in Kosovo, NATO was able to regain a certain degree of cohesiveness after the blow of the Bucharest summit. Yet, the Georgia war as a source of distraction for the EU and NATO from the tasks at hand in Kosovo and elsewhere in the Western Balkans cannot be underestimated. The war in Georgia also showed that Russia was ready not only to deploy its diplomatic capital but also to use force in the pursuit of its foreign policy aims. The Ukrainian conflict in 2013–2014 was different, yet had similarities regarding threats to territorial integrity and would equally test the European Union, as well as NATO members, vis-à-vis Russian assertiveness, culminating in the ongoing (at the time of writing in 2018) low intensity war in Eastern Ukraine and the illegal annexation of Crimea by the Russian Federation. While the EU and NATO are avoiding any significant cracks in their approach towards the crises in Eastern Europe so far, the last decade (2008–2018) saw an increasing vulnerability of the Euro–Atlantic security integration project in the Western Balkans, including alignment and participation in EU CFSP/CSDP. As discussed, the Euro–Atlantic project had become assailable due to three simultaneously existing sets of unresolved problems (see Figure 1.1): • • •

Lacking EU cohesion vis-à-vis the region (e.g., Kosovo recognition, North Macedonia name dispute), Lingering bilateral disputes between the states of the region (including EU member states), and Continuing internal fragility due to high-stake political antagonisms and ethnic tensions within the Western Balkans states themselves.

Due to a lack of cohesion among domestic and Euro–Atlantic actors, other actors could penetrate these problem fields. Furthermore, these problems are mutually

Security cooperation in the Western Balkans 25

EU coherence / rifts on (Western) Balkans questions

GR-MK KOS-SRB BA-HR

External influences exploiting cracks to foster erosion of Euro–Atlantic integration

(Western) Balkans countries` bilateral disputes

Kosovo North Macedonia EU-Membership

BA, MK, ME, KOS (SRB) Internal tensions within Western Balkans countries

Figure 1.1 Dynamics of external influences

reinforcing: the lack of EU cohesion impacts, as seen, on security arrangements in the region (policing and military arrangements), which can contribute to a continuous sense of fragility within the countries. The bilateral disputes and open political questions further perpetuate a feeling of instability. How are the spaces for erosive external influences used and how do they interact along the above described three intertwined levels? The following section explores how linkages are translated into influence within the field of security. While the multiple cracks create unfavorable conditions, they are not sufficient to explain the weakening transformative effect on the Euro– Atlantic integration in the region. Hence, we specifically look into initial reasons for opening the security dilemma among the Western Balkan countries, namely the context of the global economic crisis, followed by the unprecedented influx of migrants and refugees from the Middle East and Northern Africa to Europe, where the Balkan route was one of the main entry points to the EU, and finally the illegal annexation of Crimean peninsula by the Russian Federation, which in the framework of international public law is often associated with the case of Kosovo’s independence (Kmezić, 2014).

Changing context of security cooperation with the Western Balkans A key task for the Euro–Atlantic integration of the Western Balkan countries has been the development of accountable and democratically controlled police and independent rule of law institutions (Kmezic, 2017). This task was initially

26  Tobias Flessenkemper and Marko Kmezić directly overseen by the international community, inter alia, through the deployment of international personnel taking part in various UN- and EU-led peacekeeping missions in the region. Specifically, from the 1990s to the mid-2000s the focus of Euro–Atlantic engagement in the field of internal security was to support ­democratic policing practices and train and equip police and ­internal security structures to prevent them from relapsing into fundamental human rights violations, as had happened during Communism and the conflicts of the 1990s ­(Flessenkemper, 2018). After the end of hostilities in 1999, when the EU ­Stabilization and Association process and the perspective of EU membership was extended to the region, the post-conflict cooperation was complemented by more extensive Euro–Atlantic assistance to establish democratic political systems based on the rule of law. This development took place ahead of the terrorist attacks in the United States on 11 September 2001, as well as in Madrid in 2004 and in London in 2005, that refocused Euro–Atlantic internal security integration on the repressive and investigative aspects of security. For the EU, this shift was completed by the agenda of the Austrian EU Presidency during the first half of 2006. Based on the “Strategy for the External Dimension of JHA: Global Freedom, Security and Justice”, agreed by the Council in December 2005 (Council of the EU, 2005), the EU merged its internal and external security pillars with the internal securitymigration management nexus synchronized with NATO priorities in the global fight against terrorism. Since then, security partnership and sectoral integration have become key priorities gradually shifting the focus of EU intervention from post-conflict reconstruction and the promotion of efficient policing practices to a comprehensive securitization of the internal security agenda. This also included the launch of the Police Cooperation Convention for South Eastern Europe by the Austrian EU Presidency 2006. In effect, the security cooperation with the Western Balkans was already changing before 2008 from a conflict prevention focus into a transactional relationship open for various kinds of security-related expediency at the expense of a qualitative transformation of the newly formed and democratizing countries’ political systems. Against the background of the opened cracks which the year 2008 brought, the only membrane protecting the emerging core European norms and values in the field of internal security was permeable for external and other influences challenging the normative foundations of Euro–Atlantic integration. An incentive for the Western Balkans states to comply with EU demands for the reform of police and military, to allow for the efficient mechanism of civilian oversight of border zone protection, was the perspective of visa liberalization for citizens of the region launched in 2008 (Trauner, 2011). At the same time, visa liberalization aimed to integrate the region into the wider EU border management system, as envisaged within the Justice and Home Affairs pillar. The increased focus on border security also meant strengthening human resources and the infrastructure of police and security services, for example in the field of providing expensive surveillance instruments or reconstructing border crossing facilities. Apart from financial assistance and training activities, the countries of the region benefited from the integration into international police cooperation mechanisms

Security cooperation in the Western Balkans 27 and gradual inclusion into the EU, albeit for the time being in observer capacity, such as the work of the EU justice and home affairs agencies including Europol and the European Border and Coast Guard Agency (Frontex). This approach mainly focused on capacity building and paving the way for regional and international cooperation, whereby the underlying assumption was that the Western Balkan countries would actually strive to consolidate as democratic societies and, in a later stage, share part of their sovereignty in supranational or at least intergovernmental EU structures on the basis of mutual trust and shared interests in security. Due to the unresolved legacies of the 1990s wars, which have often impacted institutional settings and government formation in the Balkan states, this approach was from the outset in direct collision with the condition for full cooperation with the International Criminal Tribunal for the former Yugoslavia (ICTY) in criminal justice matters regarding war crimes relating to the 1990s armed conflicts in the territory of former Yugoslavia. The ICTY, established by the UN Security Council in 1993, constantly met with obstruction and outright opposition, mainly for ethno-national ideological reasons, by significant parts of the political elites of the Western Balkans. As the work of the ICTY touched upon the understanding of the new states’ political foundations – most importantly the role of the security forces during that period – security cooperation would necessarily need to remain limited to mutually acceptable aspects and phenomena of criminality. The internal security sector reforms in the region were planned to take place in parallel with the ICTY’s ongoing investigations after 2000. Both were increasingly interlinked, as the European Union conditionality on security sector reform and EU integration rested upon full cooperation with the ICTY (Flessenkemper, 2018). Yet the Tribunal’s work remained controversial in Bosnia and Herzegovina, where it was long opposed by the Republika Srpska government. This was echoed by lacking cooperation in Serbia. The negative attitude towards the ICTY impacted on the Serbian authorities’ awareness and readiness to clean up and reform the security sector. The controversies surrounding the ICTY’s work would also become an effective conduit for Russian government representatives to posit that “double standards” were being applied in justice matters, treating ethnic Serbs differently from Croats, Bosniaks or Kosovo Albanians. During the UN Security Council session to mark the conclusion of the ICTY’s work at the end of 2017 the Russian UN Ambassador repeated the view that the Tribunal’s decisions had discredited the very idea of international justice, undermining the hope for reestablishing peace through justice (UN Security Council, 2017). This interpretation of the ICTY’s legacy and impact is not shared by the EU and NATO. Hence the Serbian government in particular finds itself in a situation in which it does not share the position of the European Union in a key matter of justice and security, but finds an advocate of its concerns in the Russian government. The lack of cooperation with international criminal justice, the undue influence on the judiciary, as well as the questioning of the principle of judicial independence, left vast space in the Western Balkan countries for political manipulation of the fundamental principles of an independent judiciary. In the meantime, this

28  Tobias Flessenkemper and Marko Kmezić gap was filled by narratives of “double standards” by an instrumentalization of the police and judiciary to expeditiously fulfill certain security expectations of other states. The pattern was set during the post-9/11 phase that saw a number of persons arrested, detained and deported without due process, such as the arrest of Abu Hamza in Bosnia and Herzegovina in 2008 (Gadzo, 2016). A well-­ documented case is the arrest of the German citizen Khalid al-Masri in Skopje in 2004 and his later deportation by the U.S. Central Intelligence Agency (CIA) (Raphael et al., 2016). After the attempted coup d’état in Turkey on 16 July 2016, it was the Turkish president who called for the cooperation of Western Balkan states in arresting and extraditing Turkish citizens alleged to be members of the movement of Fethullah Gülen and supporters of the coup d’état. In the Western Balkans, these persons were mainly teachers and personnel of educational institutions whose establishment the Turkish government had supported a few years earlier (Vračić, 2016). In one prominent case in Kosovo, six persons were deported to Turkey in a manner the local media described as “kidnapping” aided by the Ministry of Interior (Bytyci, 2018). In Bosnia and Herzegovina, Turkey made extradition requests as the Turkish prime minister demanded that authorities should take action against Gülen followers in education and business (Sito-Sucic, 2018). In both cases, however, reactions were more immediate than in North Macedonia regarding al-Masri, for which the government offered an apology many years later (Knight, 2018). In Kosovo, Prime Minister Ramush Haradinaj dismissed the Minister of the Interior and the intelligence chief for the deportation, and in Bosnia and Herzegovina the highest Court stopped the extraditions once their feeble legal grounds became known. These cases provide a flavor of the political dynamics at work where security forces operate in disregard of the rule of law, following not necessarily domestic judicial but external political agendas. In parallel, the shifts of the internal security paradigm opened up further opportunities for domestic elites to exercise more control through newly introduced policing methods. The EU approaches to security provided an enabling environment for the preexisting authoritarian tendencies among Balkan political elites to exercise undue control over the security apparatus. The “authoritarian turn” accelerated after 2014, when European Commission President Jean-Claude Juncker ruled out further enlargement in the foreseeable future and the events in Ukraine changed not only the internal but also the external security landscape in Europe. In the context of the looming migration crisis, which peaked during the summer of 2015, up-to-date surveillance technologies were deployed in the region, with the support and encouragement of the EU and its member states. In addition, foreign fighters from the Western Balkan countries were involved in global conflicts from Syria to Ukraine. While the sources of their motivation range from local factors, such as poverty or weak state institutions, to international factors including international crime networks, the main security challenge has been stopping their recruitment or handling their return. These tasks required the joint efforts of both the national governments and the international actors involved. Since 2004, the Republika Srpska (RS) Ministry of Internal Affairs and its counterpart in the Russian Federation have started to build up a relationship which

Security cooperation in the Western Balkans 29 has been continuously strengthened over time. The relations developed through exchange and mutual visits, culminating in the signing of a “memorandum of assistance” in 2015 (Ministry of Internal Affairs of the Russian Federation, 2017). Even before 2012, during the time of the EU Police Mission (EUPM) deployment in Bosnia and Herzegovina, Russian police investigation technology was provided to the RS Ministry of Internal Affairs. The technology was provided for special police functions, automated document reading, interception and forensics equipment, all areas in which the EU and other donors were also active. The deployment of different systems for the state-level and two entity police services in Bosnia and Herzegovina did not help the efforts to harmonize policing practice and standards. The lack of harmonization and integration of the security services in Bosnia and Herzegovina is considered a risk for the country’s integrity in case of an internal political crisis. Strengthening the internal security apparatus under the control of the RS government in the run-up to general elections in autumn 2018 (Miranova and Zawadewicz, 2018) evokes the breaking-up of security forces before the war of the 1990s, when ethno-national leaders of Bosniaks, Croats and Serbs divided forces among them (Hoare, 2007). The cooperation of the Russian authorities with the RS is an example of how, through intervention in the internal security structures with internal tensions, actions are translated into influence, both over the internal political dynamics within Bosnia and Herzegovina as in this case, but also over the chances of realizing the Euro–Atlantic agenda (Mujanović, 2017). At the same time, as a result of visa liberalization, integrated border management created a confluence of interests of EU policies and the domestic agendas of control over the territory. They could successfully combine, as the acceptance of introducing “repressive” elements of security were quickly absorbed by the Western Balkan authorities. The deployment of technology, mostly financed by foreign donors, provided the North Macedonian security sector with modern tools to fight crime and control migration (Flessenkemper, 2008; Trauner 2011). Against the background of the securitization of relations, not least during the visa liberalization process, North Macedonian authorities received substantial investments in internal security and policing technology. Yet the authoritarian tendencies prevalent in Russia and Turkey, including the abuse of investigative tools for political ends, started to serve as points of orientation for the North Macedonian government at the time. The government started to use technology intended for crime fighting to spy on the opposition and collect information about its own party members. Once this become public, it led to a crisis of the political system, and dramatic events after the elections in 2016 eventually resulted in a change of government. Nikola Gruevski, Prime Minister for almost 10 years from 2006 to 2016 and apparently at the end of his term in office, started cooperating with the Russian government in energy issues and other areas of economic concern to undermine North Macedonia’s Euro–Atlantic integration in order to preserve his position in power (Harding et al., 2017). The North Macedonian example shows how Euro–Atlantic investments in security without democratic transformation became a risk and platform for external actors’ political preferences, exacerbated

30  Tobias Flessenkemper and Marko Kmezić by the EU and NATO lacking cohesion. Technology and modernized internal security methods, however, enhanced and stabilized authoritarian tendencies, as they remained without functioning and effective parliamentary, judicial and constitutional oversight. How successfully the North Macedonian predicament can be reversed by Euro–Atlantic re-engagement remains to be seen. The North Macedonian case differs substantially from the project of the ­Russian-Serbian Humanitarian Center (RSHC), established in Niš, southern Serbia, and only 100 kilometers away from Camp Bondsteel, the main NATO base in Kosovo. The Niš Center is probably the most prominent security cooperation project involving Russia in Southeastern Europe. The RSHC is based on a cooperation agreement signed between the governments of Serbia and Russia on 25 April 2012. The center is not an international organization, but a legal entity under Serbian private law. On its own website the center describes itself as “an intergovernmental humanitarian non-profit organization”. Yet, while the project of building up a network of logistical centers did not succeed, the success of the Niš center has remained mostly symbolic. So far, the Serbian authorities have not granted any privileges to the endeavor, while NATO and Serbia have signed agreements for the free movement of personnel. In practice Serbia has also cooperated and participated in EU CSDP operations and coordinated on a practical level in civil protection with its neighbors and EU member states without recourse to the RSHC. The center nevertheless has become a lever of influence for the Russian government, as well as for parts of the Serbian political elite who are critical of or opposed to Euro–Atlantic integration. The symbolic value of the center is the Russia’s presence on the ground, however this would mean little without Russia’s control over the Serbian oil and natural gas market, which makes up just a fraction of the overall economy but is key for the country’s security (Vladimirov et al., 2018). In this respect, it is important to observe that Turkey’s influence has been complementary to NATO’s actions, as Turkey participated in all Western Balkan EU CSDP operations from the beginning (Tardy, 2014). Serbia’s dual approach, however, cannot be maintained in relation to CFSP alignment. Here, the Western Balkan states are required to support EU foreign policy objectives as part of their commitments under the Stabilization and Association Agreements (SAA) and as EU candidate countries. The influence of external actors thus has to be measured in terms of their ability to prevent CFSP alignment. As demonstrated in Table 1.1 above, Serbia and Bosnia and Herzegovina have not aligned themselves with the CFSP restrictive measures against the Russian Federation following the illegal annexation of Crimea in 2014. The nonparticipation in CFSP weighs more than any technical agreement in internal and external security. The original objective of Euro–Atlantic security integration, participating in common policies and thereby contributing to EU foreign policy coherence, is not met. The impact of the Euro–Atlantic security cooperation in the Western Balkans by external factors can rather be observed in the technical, political and normative areas, both in external and internal policies.

Member No PfP (nonrecognition) Accession treaty signed Member Dialogue

Croatia Kosovo

EU CFSP alignment (RF restr. measures)

Yes Yes No

EU talks EU talks

Yes n/a

EU candidate

EU Member SAA ratified

EU candidate Yes EU application No

EU/SAA

FPA: Framework participation agreement PfP: Partnership of Peace NATO PIC: Peace Implementation Council BiH

North Macedonia Montenegro Serbia

Member No MAP

Albania BiH

NATO

Table 1.1 Foreign and security policy situation February 2019

FPA FPA

FPA

Member n/a

FPA FPA

Yes No

Yes

Yes n/a

Yes No

CSDP Mission Kosovo participation Recognition

Euro-Atl. security operation

OSCE Mission OSCE Mission RSHC

OSCE Presence EUFOR (UNPROFOR) EUFOR, Mandate NATO HQ, OSCE Mission PIC n/a UNMiK/OMiK KFOR, EULEX OSCE Mission

Sec. cooperation with Russian role

32  Tobias Flessenkemper and Marko Kmezić

Conclusion Ten years after the emergence of key cracks in Euro–Atlantic security cooperation, the external influences can be concluded to be mostly erosive, but not equally competitive. Neither Russia nor Turkey have been able to shape the new security architecture in the Western Balkans. Yet the decreasing engagement of the U.S. in the region following the paradigm shift in the country’s post-9/11 foreign policy, which only accelerated during Barack Obama’s and particularly Donald Trump’s administrations, leaves the NATO member states internationally exposed to their internal lack of coherence. At the same time, the complex web of Euro–Atlantic security cooperation mechanisms and agreements points to an increasing integration of the region on a technical level. Russian and, to a much lesser extent, Turkish impact on the Western Balkan security sector is not seen as an answer to the open presence of other global powers in the regional security sector as such, but rather as a discursive influence on the security and other narratives of Europe as a whole (Hoffmann and Makarychev, 2019). On the other hand, Russia’s leverage on the future political and security choices of Serbia, Kosovo and Bosnia and Herzegovina remains important due to the lack of an adequate response by the EU and NATO towards open statehood and identity issues in the region. The predicament of continuous fragility has become even more likely as the European Union and the U.S. have entered a more conflictual phase in their relationship, and the EU’s ability to project its transformative security power in the region may be further reduced as a consequence of the UK’s pending exit in March 2019 and the persisting lack of ambition for further enlargement voiced by several EU member states. Since the cracks in Euro–Atlantic integration opened a decade ago, not a single structural question has been solved through a sustainable settlement. Russia has aptly positioned itself in the center of the EU’s and NATO’s Kosovo recognition dilemma and the bilateral disputes between Balkan states, while at the same time it has strategically positioned itself at the core of the oil and natural gas market in the region and is readily fueling internal tensions. Turkey’s role in the region on the other hand is largely downplayed following the country’s self-isolation after the failed 2016 coup d’état attempt. However, these two cases clearly signal the need for more sustained and concerted Euro–Atlantic efforts in the Western Balkans. Otherwise, the meddling of potential spoilers in the middle of the EU and NATO will likely remain a recurrent feature in the region, while the Western Balkan countries remain in the waiting room of the Euro–Atlantic security institutions.

Note 1 The views expressed in this article are solely those of the author.

References Baker, P., 2017. Only Thing Different About NATO Is President’s Opinion of It. New York Times, New York edition, 14 April, p. A13.

Security cooperation in the Western Balkans 33 Bechev, D., 2017. Rival Power. Russia in Southeast Europe. New Haven and London: Yale University Press. Bytyci, F., 2018. Six Turks Arrested in Kosovo Over Gulen Links Extradited to Turkey. Reuters, 29 March. https://uk.reuters.com/article/uk-turkey-security-kosovo/six-turksarrested-in-kosovo-over-gulen-links-extradited-to-turkey-anadolu-idUKKBN1H5214 [Accessed 1 August 2018]. Centre for Investigative Journalism of Montenegro, 2018. New Media Block: To Russia with Love. www.cin-cg.me/novi-medijski-blok-rusiji-sa-ljubavlju/. Chokshi, N., 2017. Trump Appears to Push Aside the Leader of Montenegro. New York Times, 25 May. www.nytimes.com/2017/05/25/us/politics/trump-push-aside-leadermontenegro-nato-summit.html [Accessed 1 August 2018]. Council of the EU, 2005. Strategy for the External Dimension of JHA: Global Freedom, Security and Justice. Brussels, 6 December. Document No. 15446/05. Council of the EU, 2015. Council Conclusions on CSDP. Brussels, 18 May. Document Number 8971/15. Džankić, J., Keil, S., and Kmezić, M. (eds.), 2018. The Europeanisation of the Western Balkans: The Failure of EU Conditionality? London and New York: Palgrave. Flessenkemper, T., 2008. EUPOL Proxima in Macedonia, 2003–05. In: Merlingen, M., and Ostrauskaite, R. (eds.), European Security and Defence Policy: An Implementation Perspective. London: Routledge. Flessenkemper, T., 2018. European Union Approaches to Police and Human Rights in the Western Balkans. The International Journal of Human Rights, 22 (8). https://doi.org/ 10.1080/13642987.2018.1503896. Flessenkemper, T., and Bütow, T., 2011. Building and Removing Visa Walls: On European Integration of the Western Balkans. Security and Peace/Sicherheit und Frieden, (3), 29. Gadzo, M., 2016. In Bosnia, Syrian Abu Hamza Jailed Without Trial. Al-Jazeera Balkans, 28 March. www.aljazeera.com/indepth/features/2016/03/bosnia-syrian-abu-hamzajailed-trial-160323093808061.html [Accessed 1 August 2018]. Ginsberg, R., and Penksa, S., 2012. The European Union in Global Security. London: Palgrave Macmillan. Harding, L., Belford, A., and Cvetkovska, S., 2017. Russia Actively Stoking Discord in Macedonia Since 2008, Intel Files Say. The Guardian International Edition, 4 June. www.theguardian.com/world/2017/jun/04/russia-actively-stoking-discord-in-mace donia-since-2008-intel-files-say-leak-kremlin-balkan-nato-west-influence [Accessed 1 August 2018]. Hellenic Republic Ministry of Foreign Affairs, 2018. Putting National Interest First: Soberly and Firmly, Statement 10 August 2018. www.mfa.gr/en/current-affairs/statementsspeeches/putting-national-interest-first-soberly-and-firmly.html [Accessed 15 August 2018]. Hillion, C., 2010. The Creeping Nationalisation of the EU Enlargement Policy. Stockholm: Swedish Institute for European Policy Studies (SIEPS). Hoare, M.A., 2007. The History of Bosnia. From the Middle Ages to the Present Day. London: Saqi Books. Hoffmann, T., and Makarychev, A. (eds.), 2019. Russia and the EU: Spaces of Interaction. London: Routledge. Kmezić, M., 2014. Why Kosovo Constitutes a Legal Precedent and Crimea Does Not (Yet). Balkans in Europe Policy Blog, 4 April. www.suedosteuropa.uni-graz.at/biepag/ node/64.

34  Tobias Flessenkemper and Marko Kmezić Kmezić, M., 2017. EU Rule of Law Promotion: Judiciary Reform in the Western Balkans. New York: Routledge. Kmezić, M., and Bieber, F., 2017. The Crisis of Democracy in the Western Balkans. An Anatomy of Stabilitocracy and the Limits of EU Democracy Promotion. Belgrade/Graz: Balkans in Europe Police Advisory Group. Knight, B., 2018. Germany Silent After CIA Victim al-Masri Receives Macedonian Apology. Deutsche Welle, 6 April. https://p.dw.com/p/2vbZK [Accessed 1 August 2018]. Konstandaras, N., 2018. Athens’ and Moscow’s Stunning Fall Out. New York Times, 23 July. www.nytimes.com/2018/07/23/opinion/athens-moscow-greece-russia-tensions. html [Accessed 1 August 2018]. Kotzias, N., 2018. Speech of the Minister of Foreign Affairs, Nikos Kotzias, at the Scientific Conference on the Legal Aspects of the Prespa Agreement. Ministry of Foreign Affairs, 19 July. Levitsky, S., and Way, L. A., 2002. The Rise of Competitive Authoritarianism. Journal of Democracy, 13 (2), 51–65. Levitsky, S., and Way, L. A., 2005. International Linkage and Democratization. Journal of Democracy, 16 (3), 20–34. Levitsky, S., and Way, L. A., 2006. Linkage Versus Leverage: Rethinking the International Dimension of Regime Change. Comparative Politics, 38 (4). Maass, A-S., 2017. EU-Russia Relations 1999–2015: From Courtship to Confrontation. London: Routledge. Miranova, V., and Zawadewicz, B., 2018. Putin Is Building a Bosnian Paramilitary Force. Foreign Policy, 8 August. https://foreignpolicy.com/2018/08/08/putin-is-building-abosnian-paramilitary-force/ [Accessed 20 August 2018]. Mujanovic, J., 2017. Russia’s Bosnia Gambit: Intrigue in the Balkans. Foreign Affairs, 6 September 2018. www.foreignaffairs.com/articles/bosnia-herzegovina/2017-09-06/ russias-bosnia-gambit [Accessed 1 August 2018]. Radeljić, B., 2017. Russia’s Involvement in the Kosovo Case: Defending Serbian Interests or Securing Its Own Influence in Europe? Region: Regional Studies of Russia, Eastern Europe, and Central Asia, 6 (2), 273–300. Raphael, S., Black, C., Blakeley, R., and Kostas, S., 2016. Tracking Rendition Aircraft as a Way to Understand CIA Secret Detention and Torture in Europe. The International Journal of Human Rights, 20 (1), 78–103, DOI:10.1080/13642987.2015.1044772. Samorukov, M., 2017. Russia’s Tactics in the Western Balkans, Carnegie Europe, November 3. Sito-Sucic, D., 2018. Bosnia Court Rejects Extradition of Turkish National Over Gulen’s Links. Reuters, 23 April. Tardy, T., 2014. CSDP: Getting Third States on Board. ISSUE Brief. Paris. EU Institute for Security Studies, 7 March. Tolksdorf, D., 2013. Police Reform and Conditionality. In: Flessenkemper, T., and Helly, D. (eds.), Ten Years After: Lessons from the EUPM in Bosnia and Herzegovina 2002–2012. Joint Report of the European Union Police Mission in Bosnia and Herzegovina (EUPM) and the European Union Institute for Security Studies (EUISS). Paris: EU Institute for Security Studies. Tolstrup, J., 2010. When Can External Actors Influence Democratization? Leverage, Linkages, and Gatekeeper Elites. CDDRL Working Papers, 118, 1–31. Trauner, Florian, 2011. The Europeanisation of the Western Balkans: EU Justice and Home Affairs in Croatia and Macedonia. Manchester: Manchester University Press.

Security cooperation in the Western Balkans 35 UN Security Council, 2017. 8120th Meeting of the United Nations Security Council, 6  December 2017, Briefing Security Council, Former Yugoslavia Tribunal President Expresses Pride in Closing Down Court by End of 2017, document number SC/13103. Vladimirov, M. et al., 2018. Assessing Russia’s Economic Footprint in the Western Balkans. Corruption and State Capture Risks. Center for the Study of Democracy, January. Vračić, A., 2016. Turkey’s Role in the Western Balkans. SWP (German Institute for International and Security Affairs) Research Paper 11. Berlin, December. Zakaria, F., 1997. The Rise of Illiberal Democracy. Foreign Affairs, November–December.

2 The economic development of the Western Balkans The importance of non-EU actors Matteo Bonomi and Milica Uvalic

The process of EU enlargement towards the Western Balkan countries has taken much longer than initially anticipated, following the launch of the Stabilization and Association Process (SAP) for the Western Balkans in mid-1999 and the announced prospects of EU membership, reconfirmed at the Thessaloniki Summit in 2003. The process of negotiating and signing Stabilization and Association Agreements (SAAs) with all the countries in question has effectively taken fourteen years (from 2001 to 2014),1 while EU conditionality has become stricter and more demanding. Only one country – Croatia – has become an EU member state (in July 2013), and only two have started accession negotiations – Montenegro in June 2012 and Serbia in January 2014. Although in February 2018 the European Commission again announced a credible enlargement perspective for the Western Balkans (EU Commission, 2018), it is yet to be seen what may happen over the next seven years. The slowness of the process of EU-Western Balkan integration and the current problems within the EU (Brexit, the migration crisis, rule of law standards, disagreements over the reforms of the Eurozone or the Transfer Union) have also influenced the Western Balkan populations, as recent public opinion polls suggest declining enthusiasm regarding their countries’ accession to the EU. In addition to the uncertain prospects of EU membership, the Western Balkans have also been facing a particularly unsatisfactory economic situation in recent years. The global financial and economic crisis severely affected the Western Balkan countries, given that they have become increasingly integrated with the EU economy through foreign trade, foreign direct investment (FDI), financial flows and banking sector integration (see Bonomi and Reljić, 2017). The global economic crisis has brought to the surface many structural problems of the Western Balkan economies, including insufficient competitiveness on global markets, rigid labor markets characterized by very high unemployment and low employment rates, continuous de-industrialization causing a substantial shrinkage of manufacturing, very low levels of economic development and limited prospects for catching up with the developed world (Uvalic, 2010, 2013). Since the last quarter of 2008, the Western Balkan countries have been strongly impacted by a sudden drop of foreign capital inflows (FDI, remittances, commercial loans), a fall in export demand on EU/global markets, and the reduced availability of cheap credit offered by local foreign-owned banks. In the meantime, economic recovery has been slow, with some countries experiencing a double-dip or even

Economic development of the Western Balkans 37 triple-dip recession (Serbia) (Bartlett and Prica, 2012; Cvijanović and Uvalic, 2018). Despite optimistic growth forecasts over the next few years, recent studies by the World Bank and the EBRD indicate that the longer-term prospects for their catching-up with the more developed countries in the EU are extremely bleak. According to the most recent EBRD estimates, it could take as much as 200 years for the Western Balkans to reach the level of GDP per capita of the more developed EU member states (Sanfey and Milatović, 2018). The unfavorable economic situation in the Western Balkans and the slow process of EU enlargement are among the main (though not only) reasons why these countries have been developing political and economic relations with a number of non-EU countries. EU policies sustaining the Western Balkans have greatly contributed to their gradual integration primarily with the EU economy, but other countries have also emerged as important trading partners, investors and providers of financial assistance – including China, Turkey and Russia. Although the main foreign policy objective of all the Western Balkan countries remains EU membership, developing closer economic relations with non-EU countries has been welcomed as a means of tackling current economic challenges – including insufficient inflows of FDI, limited public resources to finance infrastructure, and low competitiveness on EU markets. During the post-2009 period, most Western Balkan countries have diversified their economic relations, establishing more intensive trade links and concluding foreign investment deals with non-EU countries. Financial assistance to the Western Balkans continues to be provided primarily by the EU, its institutions and its member states, but some non-EU countries have also been offering various forms of assistance. This chapter will seek to evaluate the role and the relative importance of nonEU countries for the Western Balkan economies and their future economic development. We will analyze the role of non-EU countries in the Western Balkan region in the two most important areas of economic cooperation, namely foreign trade and FDI. Given that the main source of statistics on donors’ official development aid provided by the OECD covers only donors that are members of the Development Assistance Committee, namely the world’s most developed countries, the available information on financial assistance is rather incomplete and not always transparent. For this reason, this area will not be considered.2 In the field of energy, Russia has long been a major supplier of gas to most Western Balkan countries (see Introduction, this volume), but this is not specific to the region, as many EU member states are also heavily dependent on Russian energy supplies. In the last section, some main conclusions will be drawn regarding existing economic linkages between the Western Balkans and non-EU actors, in order to assess the extent to which these external actors are likely to influence future developments in the Western Balkan states.

Trade patterns in the Western Balkans This section will analyze the six Western Balkan countries’ patterns of foreign trade in goods with their major trading partners over the last 10 years, in order to determine the relative importance of three groups of trade partners: the EU28, the

38  Matteo Bonomi and Milica Uvalic other Western Balkan countries (WB6), and the other main trading partners. We will consider the WB6 as one trading partner, given that the region today effectively represents a free trade area as a result of trade liberalization implemented within CEFTA 2006 (the data reported as “WB6 trade” refer to a given country’s trade with the other five Western Balkan countries). In the third group, we will include the next four or five most important trading partners of the Western Balkans, other than the EU28 and the WB6, usually countries with a share of exports/ imports above 1 percent of the total. The trade patterns of the six Western Balkan countries during the 2006–2016 period are presented in Figures 2.1–2.6. Over the last 10 years, the EU28 has been Albania’s main trading partner for both exports and imports, in 2016 accounting for 78 percent of its exports and

3000 2500 2000 1500 1000 500 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 EU28

WB6

China

Turkey

Switzerland

USA

Other

Figure 2.1a Albania: exports of goods, by main foreign trade partners (million USD)

6000 5000 4000 3000

2000 1000 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 EU28

WB6

China

Turkey

USA

Russia

Other

Figure 2.1b Albania: imports of goods, by main foreign trade partners (million USD) Source: Prepared by the authors on the basis of IMF data available online.

Economic development of the Western Balkans 39 63 percent of its imports. Despite substantial year-to-year variations, between 2006 and 2016, the value of Albania’s exports to the EU has doubled, whereas imports from the EU increased by about 50 percent (see Figure 2.1b). Over the same period, there has also been a notable increase in Albania’s trade with neighboring countries. Particularly from 2008 onwards, the other five countries in the Western Balkan region have become an increasingly important export market for Albanian goods, in 2016 accounting for over 13 percent of total exports, though only around 6 percent of its imports. Albania’s other important trading partners (non-EU, non-WB) are, on the export side, China (3 percent of total) and to a far lesser extent Turkey and Switzerland (both around 1 percent), and on the import side they are China (9 percent), Turkey (8 percent) and the U.S. and Russia (both with less than 2 percent). These non-EU/non-WB trade partners are clearly more important for Albania’s imports than exports; it is to be noted that in the last few years imports from both China and Turkey have been higher than those from the rest of the Western Balkans.

7000 6000 5000 4000 3000 2000 1000 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 EU28

WB6

Turkey

Switzerland

Russia

Egypt

Other

Figure 2.2a Bosnia and Herzegovina: export of goods, by main foreign trade partners (million USD)

15000 10000 5000 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 EU28

WB6

China

Russia

Turkey

USA

Other

Figure 2.2b Bosnia and Herzegovina: imports of goods, by main foreign trade partners (million USD) Source: Prepared by the authors on the basis of IMF data available online.

40  Matteo Bonomi and Milica Uvalic The EU is also Bosnia and Herzegovina’s dominant trading partner, though slightly less important than for Albania. In 2016, 71 percent of Bosnia and Herzegovina’s exports and 62 percent of its imports were to/from the EU. The Western Balkan regional market is also quite important, representing 15 percent of Bosnian exports and 13 percent of its imports in 2016. Among the other trading partners, on the export side, Turkey is the most important partner (4 percent), followed by Switzerland and Russia (each with less than 2 percent) and Egypt (less than 1  percent), while on the import side the most important are China (7 percent), Russia and Turkey (both around 4 percent) and the U.S. (2 percent). The regional market in the Western Balkans is therefore much more important for Bosnia and Herzegovina than any of these external extra-EU trade partners taken individually. 500 400

300 200 100 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 EU28

WB6

Kazakhstan

Switzerland

China

India

Turkey

Other

Figure 2.3a Kosovo: exports of goods, by main foreign trade partners (million USD) 4000 3500 3000 2500 2000 1500 1000 500 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 EU28

WB6

Turkey

China

USA

Brazil

Other

Figure 2.3b Kosovo: imports of goods, by main foreign trade partners (million USD) Source: Prepared by the authors on the basis of data available on line of the IMF and the Kosovo Agency of Statistics.

Economic development of the Western Balkans 41 Kosovo’s trade patterns exhibit anomalous features. Since its unilateral declaration of independence in early 2008, Kosovo’s trade with the EU has mainly stagnated, remaining at a relatively low level throughout the whole 2007–2016 period. In 2016, Kosovo’s exports to the EU represented only 23 percent of the total, although its imports from the EU were almost twice as large at 43 percent of the total. Trade with the other countries in the Western Balkan region has expanded rapidly during the last decade, thanks to an increase in both exports and imports, accounting for almost 47 percent of Kosovo’s exports and 27 percent of its imports in 2016. Among the other trading partners, Kazakhstan is by far the most important single destination of Kosovo’s exports, accounting for 13 percent of the total in 2016, though there has been a notable reduction with respect to previous years (during 2007–2015 Kosovo exported relatively more to Kazakhstan than to the EU28 or to the other countries in the Western Balkan region). Other important export markets include Switzerland (over 5 percent), China (almost 4 percent) and India (3  percent). Within this third group of countries, Kosovo mainly imports from Turkey (10 percent) and China (9 percent), while the U.S. and Brazil are less important (2 percent and 1 percent, respectively, of total imports). North Macedonia’s trade is prevalently with the EU and, similarly to most Western Balkan countries, the relative importance of this trade link has increased 6000 5000 4000 3000 2000 1000 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 EU28

WB6

Turkey

USA

Russia

China

Other

Figure 2.4a North Macedonia: exports of goods, by main foreign trade partners (million USD) 10000 5000 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 EU28

WB6

China

Turkey

South Africa

USA

Russia

Other

Figure 2.4b  North Macedonia: imports of goods, by main foreign trade partners (million USD) Source: Prepared by the authors on the basis of IMF data available online.

42  Matteo Bonomi and Milica Uvalic over the last 10 years. In 2016, the EU was responsible for 80 percent of North Macedonia’s exports and 62 percent of its imports. The Western Balkan regional market has also been quite important throughout the period, in 2016 accounting for 12 percent of North Macedonia’s exports and 9 percent of its imports. Among the other important trade partners, we find, on the export side, Turkey (1.5 percent) and the U.S., Russia and China (with 1 percent each), and on the import side, China (over 6 percent), Turkey (over 4 percent) and South Africa and the U.S. (both with less than 2 percent). Montenegro’s trade patterns have changed quite significantly in recent years. Contrary to most other Western Balkan countries, where trade with the EU has tended to increase over the last 10 years, in Montenegro the trend has been in the opposite direction. Although Montenegrin exports have been extremely volatile, between 2006 and 2016 the volume of exports going to the EU has declined by more than half, bringing the EU share down from over 60 percent in 2008 to only 38 percent in 2016. The share of imports from the EU, meanwhile, has been 800 600 400 200 0

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 EU28

WB6

China

Turkey

Switzerland

Bangladesh

Russia

Other

Figure 2.5a Montenegro: exports of goods, by main foreign trade partners (million USD) 4000 3000 2000 1000 0

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

EU28

WB6

China

Turkey

USA

Japan

Other

Figure 2.5b Montenegro: imports of goods, by main foreign trade partners (million USD) Source: Prepared by the authors on the basis of data available on line of the IMF and the Statistical Office of Montenegro.

Economic development of the Western Balkans 43 relatively stable: after a slight drop in 2009, they accounted for just under 50 percent of the total (48 percent in 2016). As in the case of Kosovo, the regional market has been very important for Montenegro, maintaining a relatively stable share of both exports and imports throughout the 10-year period – in 2016, the other countries in the Western Balkan region accounted for as much as 43 percent of exports and 29 percent of imports. Among the other trade partners, in 2016, China was the most important export market (almost 6 percent), followed by Turkey and Switzerland (with less than 2 percent each) and Bangladesh (less than 1 percent), while on the import side, China was again first (9 percent), followed by Turkey (over 3 percent) and the U.S. and Japan (both around 1 percent). Serbia’s main foreign trade partner is the EU, representing 66 percent of its exports and 63 percent of its imports in 2016. Similar to Albania and North Macedonia, Serbia’s trade with the EU has increased in relative importance over the last 10 years, regarding both exports and imports. The regional Western Balkan market is important primarily for Serbia’s exports (18 percent) and far less so for its imports (3.4  percent). Within the third group, Russia is the most important Serbian export partner (5.3 percent), followed by Turkey and the U.S. (both with 20000 15000 10000 5000 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

EU28

WB6

Russia

Turkey

USA

UAE

Other

Figure 2.6a Serbia: exports of goods, by main foreign trade partners (million USD) 25000

20000 15000 10000 5000 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 EU28

WB6

China

Russia

Turkey

USA

Other

Figure 2.6b Serbia: imports of goods, by main foreign trade partners (million USD) Source: Prepared by the authors on the basis of IMF data available online.

44  Matteo Bonomi and Milica Uvalic less than 2 percent), while for Serbia’s imports, China is the most important (over 8 percent), followed by Russia ( just under 8 percent), Turkey (3.5 percent) and the U.S. (only 1.7 percent). The ongoing analysis of Western Balkan countries’ trade orientations over the last 10 years allows for some conclusions regarding the relative importance of each of the three groups of trade partners – the EU, the Western Balkans and the other (non-EU, non-WB) partners. (1) The EU is by far the most important trading partner of the Western Balkans. This is not surprising, considering that the Western Balkan countries have been granted privileged access to the EU market – initially, in 2000–01, through autonomous trade preferences and more recently through the trade-related provisions of the Stabilization and Association Agreements. Although the global economic crisis led to a slight reduction in EU–Western Balkan trade, in 2016 the EU28 was still the main trading partner of the six Western Balkan countries (WB6), representing around 70 percent of goods exports and 54 percent goods imports. With gradual economic recovery also stimulating foreign trade, during the 2011–2016 period the WB6 exports to the EU have been increasing more rapidly than their exports to the rest of the world, while their imports have remained relatively stable (Uvalic, 2019). The EU also accounts for a dominant share – over 50 percent – of exports and imports for all the individual Western Balkan countries, with two exceptions: Kosovo and Montenegro. During the 2006–2016 period, Albania, North Macedonia, Serbia and to a slightly lesser degree Bosnia and Herzegovina have steadily increased their exports to the EU, while imports from the EU have been more volatile but still relatively stable. In 2016 Kosovo and Montenegro exported much more to the Western Balkan countries (47 and 45 percent, respectively) than to the EU, but imported far more from the EU than from their neighbors (43 and 48 percent, respectively), so both countries have a huge deficit in trade with the EU. (2) The regional market – partners in the Western Balkans – has remained an important trading partner throughout the observed period for Bosnia and Herzegovina, North Macedonia and Serbia, both for exports and imports, while it has substantially increased its relative importance for Albania, Kosovo and Montenegro. This can be explained, at least to a certain extent, by the trade liberalization process that started in mid-2001, when the Memorandum of Understanding on Trade Liberalization was signed at the Ministerial level in Brussels. This led to the signing of bilateral free-trade agreements among the countries in Southeast Europe, later transformed into the CEFTA in 2006. Much like the situation in the early 2000s, the regional market has been an important export destination for all the Western Balkan countries, compensating for their insufficient competitiveness on the EU market. As has often happened in the past, in times of crisis and inability to export more to the EU, the regional market has served as a welcome substitute, although considered a “second best” solution (see Uvalic, 2006). In Kosovo and Montenegro, where the Euro has been unilaterally adopted as legal tender, euroization has not facilitated increasing trade with the EU (as may have been expected on the basis of economic theory). On the contrary, these two countries

Economic development of the Western Balkans 45 have sought alternative export markets primarily in the Western Balkan region. Given that the Berlin process and the most recent initiative on a Regional Economic Area aim to further integrate the Western Balkan region, it is highly likely that the regional market will maintain its importance for foreign trade in all the Western Balkan countries. (3) The other most important trading partners of the Western Balkans (nonEU28 and non-WB6) are actually not numerous. In Table 2.1 we have considered only those trading partners that are present in all the six countries, contributing more than 1 percent of either exports or imports of the individual Western Balkan countries in 2016. The countries that have a relatively important role as trading partners in all the six Western Balkan countries are primarily China, Turkey and Russia, and to a far lesser extent the U.S. and Switzerland (see Table 2.1). Among the five most important trading partners for the Western Balkan countries (other than the EU28 and WB6), China is by far the biggest, particularly for imports (which range from 6 to 9 percent of the countries’ imports) and much less so for their exports (only Montenegro exports almost 6 percent of total exports to China). The situation is therefore not dissimilar to that of EU–Chinese trade, given that the EU’s imports today are far larger than its exports to China.3 Turkey is another important trading partner for all the Western Balkan countries, primarily regarding imports, especially for Kosovo, Albania and North Macedonia (imports from Turkey account for 10, 8 and 5 percent of the total, respectively). Russia is not a very important trading partner for the Western Balkans, the main exception being Serbia (over 5 percent of exports and almost 8 percent of imports) and to a much lesser extent Bosnia and Herzegovina and North Macedonia, though only for imports (4 and 2 percent of their imports, respectively). Among the other partners, U.S. trade links with all the Western Balkan countries are less important (usually less than 2 percent of both exports and imports), while Switzerland is only an important export market, primarily for Kosovo (over 5 percent of its exports). The data presented in Table 2.1 show that in 19 cases (or 32  percent), these bilateral trade flows are less than 1 percent; in the majority of cases (29, or 48 percent), they are between 1 and 5 percent, while only in 13 cases (22 percent) are they above 5 percent. Nevertheless, there is no doubt that there is potential for increasing Western Balkan trade with some of these countries, especially with China and Turkey. Since Serbia is the largest economy among the Western Balkan countries, and is also responsible for the highest volume of total WB6 trade, it is of interest to look further into the structure of its trade with its two most important non-EU partners, China and Russia. The structure of Serbia’s trade with China reveals an enormous trade deficit, given that in 2017 the value of Serbian merchandise imports was 28 times the value of its exports.4 Serbia imports a large number of different products from China. The two most important categories are telecommunications equipment (12.2 percent) and machines for the automatic processing of data (5.3 percent), while all other imported products, including polyacetals and polyesters, metal products, heating and cooling equipment, pumps, electrical appliances and

3.06 * 3.67 1 5.87 *

8.77 6.76 9.26 6.23 8.97 8.3

Imports 1.15 4.26 2.47 1.48 1.57 1.81

Exports

Source: Prepared by the authors on the basis of IMF data available online.

7.88 4.26 10.34 5.17 3.37 3.46

Imports

Turkey

Note: * Implies that the share of exports/imports is less than 1 percent.

Albania BiH Kosovo North Macedonia Montenegro Serbia

Exports

China

* 1.16 * 1.02 * 5.35

Exports 1.88 4.4 * 2.12 * 7.82

Imports

Russia

* * * 1.06 * 1.65

Exports

USA

1.88 1.96 2 2.22 1.21 1.71

Imports

1.06 1.75 5.42 * 1.31 *

Exports

* * * * * *

Imports

Switzerland

Table 2.1 Relative shares in total exports and imports of the five most important trading partners for the Western Balkan countries in 2016 (other than the EU and the Western Balkans) (in percent of total)

Economic development of the Western Balkans 47 equipment for the distribution of electricity, each represent less than 2 percent of total Serbian imports from China. Serbian exports to China, on the contrary, are far less diversified, which also explains their relatively very low value. Only two products represent over 62 percent of total Serbian exports to China: unprocessed wood (39.3 percent) and pumps for liquids (23.2 percent).5 The relatively large share of Serbia’s trade with Russia is partly due to the freetrade agreement that FR Yugoslavia signed with Russia in 2001 (transformed into a new agreement after the split between Serbia and Montenegro in 2006). Serbia also has a large trade deficit with Russia (though far lower than with China): in 2017, Serbian exports covered only around 62 percent of its imports.6 In recent years, especially following the EU sanctions against Russia, some European firms have shifted parts of their production to Serbia, thus being able to export to Russia through Serbia (including GEOX, FIAT, Michelin). Regarding imports, Serbia’s high share of imports from Russia is not of recent origin, since it has been traditionally dependent on energy supplies from Russia. In 2017, natural gas represented 28 percent, and petroleum and mineral oils another 26 percent, of total Serbian imports from Russia, followed by products with a far lower share of total imports, such as fertilizers (6.1 percent), aluminium (5 percent) and copper (3.8 percent). The structure of Serbian exports to Russia reveals that in 2017 the dominant product categories were fruit and fruit products (over 23 percent), equipment for textile garments (12  percent), medicine (7.1  percent), car tires (6 percent), paper and cardboard (6 percent), equipment for electricity (3.9 per cent) and pumps for liquids (3.8 percent), while all other products represented less than 3 percent of Serbia’s total exports. Regarding medium-term prospects, the Western Balkan countries will probably become increasingly integrated both with the EU28 and with one another. Faster economic growth, expected in the next few years, should also have a positive impact on their foreign trade, where it is highly likely that most countries – Albania, Bosnia and Herzegovina, North Macedonia and Serbia – will continue to increase their trade primarily with the EU. This trend ought to be additionally sustained by the ongoing process of adoption of the EU acquis, further financial and economic integration with the EU, and the approaching of the possible date of the next EU enlargement. At the same time, it is also to be expected that the Western Balkan countries will maintain (or even increase) their trade with their regional partners, given that the recent promotion of a regional economic area, trying to remove remaining non-tariff barriers, ought to further facilitate regional trade. Overall, the EU28 and their neighbors are presently the most important export and import markets for the WB6, and it is highly unlikely that there will be a major change in their trade orientation over the medium term. Kosovo and Montenegro have not followed the general trend of increasing trade primarily with the EU in recent years. Nevertheless, these two countries are also, directly or indirectly, linked primarily to the EU market. First, Kosovo and Montenegro are strongly dependent on the EU for their imports (as are other Western Balkan countries); and second, although they presently rely more on the regional than on the EU market for their exports, given that all the other Western Balkan

48  Matteo Bonomi and Milica Uvalic countries export primarily to the EU, Kosovo and Montenegro are also indirectly, through their regional partners, strongly tied to the EU. Moreover, both countries are very small economies, contributing marginally to overall Western Balkan– EU28 trade (in 2016, the respective shares for Montenegro were 1 and 4 percent, while for Kosovo 0 and 5 percent, of total WB6–EU28 exports and imports). In the future, the region is likely to serve as a “hub” for Kosovo and Montenegro’s further trade integration with the EU, particularly considering that Serbia is one of their most important trading partners (in 2016, the shares of exports and imports to/from Serbia were 13 and 14 percent for Kosovo, and 25 and 22 percent for Montenegro), while Serbia accounts for by far the largest part of WB6–EU28 trade. In 2016, Serbia represented 51 percent of total WB6 exports and 39 percent of total WB6 imports to/from the EU28.7 In the rank of EU trading partners in 2016 based on the value of total trade, Serbia occupied the highest position (30), followed by Bosnia and Herzegovina (45), North Macedonia (49), Albania (62), Montenegro (107) and Kosovo (113).

Recent diversification of foreign direct investment Due to the high political and economic instability that prevailed after the disintegration of Yugoslavia, the Western Balkan countries attracted very little FDI during the first decade of transition: by 2000, their share (including Croatia) was only 3 percent of the total inward FDI stock in all transition countries in Eastern Europe (Estrin and Uvalic, 2014, p. 286). Foreign investors took an increasing interest in the Western Balkan region primarily after 2001, thanks to the gradual political stabilization in the region after a decade of military conflicts, improved economic performance, and the acceleration of many economic reforms. After 2001, all Western Balkan countries have made substantial progress in liberalizing economic activity, improving the business environment and attracting more FDI, also thanks to new privatization laws and fiscal incentives offered to foreign investors. The EU Stabilization and Association Process, sustaining the ­Western Balkan countries’ transition and integration efforts, has also stimulated the arrival of foreign investors, much like the positive effect EU measures had for the ­Central East European countries in the 1990s; recent empirical evidence based on a g­ ravity model suggests that the “EU effect”, namely the announcement of EU membership prospects for the Western Balkans, has had a positive impact on FDI inflows into the region (Estrin and Uvalic, 2014). Since the early 2000s, enterprises from the EU member states have been responsible for the greater part of inward FDI stock in all the Western Balkan countries. The “Washington Consensus” held that the flow of capital, technology, knowledge and skills across national boundaries via FDI opens opportunities for the host economies, and that these might be greater for economies where the technology gap was larger and the gains from technological diffusion correspondingly greater (Estrin and Uvalic, 2016). A substantial amount of FDI arrived in the Western Balkans thanks to the large-scale privatization of both enterprises and banks, ensuring the transfer of fresh capital, technology, know-how and managerial skills, thus

Economic development of the Western Balkans 49 helping the modernization and restructuring of various sectors of their economies. Foreign investors from EU member states have also played an important role in providing financial resources to the WB6 for sustaining their current account deficits and in helping them mitigate the modest levels of domestic capital formation. The structure of FDI has not been favorable, however, mostly concentrating in non-tradable services (banking, telecommunications, real estate, wholesale and retail trade), thus contributing only indirectly to developing export potential (Estrin and Uvalic, 2014). Not surprisingly, recent empirical evidence suggests that FDI has had limited spillover effects in the Western Balkan manufacturing sector (Estrin and Uvalic, 2016). Foreign investment in the banking sector has resulted in major banks across the Western Balkan region being foreign-owned: in 2011 foreign ownership of banks ranged from 75 to 95 percent, mainly by banks from the EU member states, including Unicredit, Banca Intesa, Raiffeisen, Erste, Hypo Alpe Adria/Addiko and Societé Generale (see EBRD, 2012). The privatization of the banking sector has greatly contributed to the Western Balkans’ strong financial and capital market integration with the EU. Moreover, today a large proportion of domestic liabilities in all Western Balkan countries is denominated in euros. This is because there is a general preference to keep savings in euros, both due to the lack of confidence in national currencies and specific exchange rate regimes or policies. Montenegro and Kosovo have unilaterally adopted the Euro as legal tender, Bosnia and Herzegovina has a currency board which officially ties its currency to the Euro, while the other countries have a variety of more flexible de jure exchange rate regimes  – North Macedonia has a managed floating currency, Serbia has inflation targeting, and Albania a floating regime – but they try to maintain their currencies closely linked to the Euro. These are some of the reasons why the Western Balkans are also financially very strongly integrated with the EU. Between 2009 and 2012, the share of EU member states in overall FDI inward stock represented a stable (in Albania and Montenegro slightly declining) share of the total FDI in five Western Balkan countries (excluding Kosovo, since no data are available for Kosovo in UNCTAD’s database),8 ranging in 2012 from over 50 percent in Montenegro to almost 90 percent in Serbia. More recent data on the origins of FDI stock in the Western Balkans confirm the dominant role played by investors from the EU member states, although there has been some diversification in recent years. In 2014, the share of EU member states in overall FDI inward stock was 81.6 percent in North Macedonia, 77.6 percent in Serbia, 64.5 percent in Albania, 62.3 percent in Montenegro, 60.8 percent in Bosnia and Herzegovina and 33.8 percent in Kosovo; the low level in Kosovo was mainly due to its still undersized market, low level of development and persistence of political risk (see Figure 2.7). The strong effects of the global financial and economic crisis have recently influenced FDI worldwide, including those of the EU member states in the Western Balkans. In the aftermath of the economic crisis, annual FDI inflows into the WB6 region have in just a few years dropped by some 53  percent (from €6,659 million in 2007 to €3,512 million in 2010) and, in 2016, they were still at 62 percent of the pre-crisis (2007) peak annual inflows, amounting to €4,139 million (CEFTA, 2017, p. 77). It is thus not surprising that over the 2010–2015 period

50  Matteo Bonomi and Milica Uvalic 18000 16000 Other countries

14000

United States

12000

Turkey

10000

Switzerland United Arab Emirates

8000

Saudi Arabia

6000

China

4000

Russian Federaon

2000

WB6 EU-28

No

rt

h

M

ac

ed

on

ia

0

Figure 2.7 Inward FDI stock in the Western Balkans, 2014 (million EUR) Source: Prepared by the authors on the basis of data reported in Hunya (2016).

there has been some diversification of FDI inflows to the Western Balkans, with an increasing presence of investors from Russia, Turkey, China, Saudi Arabia and the United Arab Emirates, but also from Switzerland and the United States. Regarding FDI inward stock,9 fully updated statistics for the Western Balkans, by country of origin, are not readily available from an international source (therefore on a comparable basis using the same methodology). However, we do have access to more up-to-date statistics on the general trend of FDI inward stock in the WB6 and on the countries of origin by main groups for the whole CEFTA region.10 If we disregard the years of the worst economic crisis and consider the period after 2010, despite the aforementioned sharp reduction in annual FDI inflows, total FDI inward stock in the WB6 has still increased from €31,159 million in 2010 to €46,309 million in 2015, though clearly at a slower pace than before the crisis (CEFTA, 2017, p. 78). During the same period (2010–2015), FDI inward stock in the seven CEFTA countries originating from the EU has increased by some 144 percent, as compared to an increase in total FDI inward stock in the CEFTA region of 169 percent, confirming the rising presence of non-EU investors (see CEFTA, 2017, p. 27). Therefore, although the EU has maintained a dominant position, its share in total FDI inward stock in the CEFTA region has declined, from 71 percent in 2010 to 61 percent in 2015 (CEFTA, 2017, pp. 27–28). The main EU investing countries in the CEFTA region in 2015, by order of importance of FDI inward stock, were the Netherlands, Austria, Cyprus, Greece and Italy, often by multinationals for reasons of tax optimization (see Table 2.2).

Economic development of the Western Balkans 51 Table 2.2 Inward FDI stock by main partners in CEFTA economies, 2010–2015 (in million EUR and in percent)  

2010 (million EUR)

2015 (million EUR)

2015/2010 (%)

1. Netherlands 2. Austria 3. Cyprus 4. Russia 5. Greece 6. Italy 7. Switzerland 8. Slovenia 9. Germany 10. Luxemburg 11. France 12. UK 13. Turkey 14. USA Other economies Total by partner, of which:  EU28 CEFTA-7

2,617 4,199 745 1,792 2,445 1,841 943 1,040 1,761 466 798 679 403 221 8,848 28,798 20,544 1,568

8,041 6,015 3,723 3,318 2,936 2,466 2,197 2,125 2,081 1,322 1,251 1,172 894 502 10,165 48,719 29,565 1,934

307.2 143.3 499.6 185.2 120.1 134.0 233.0 204.3 118.2 283.8 156.8 172.4 222.0 226.7 114.9 169.2 143.9 123.3

Source: CEFTA (2017), p. 27.

However, in 2015 Russia was ahead of both Greece and Italy, at fourth place in the list of main investors, given that its FDI stock in the CEFTA region increased by 185 percent between 2010 and 2015. Some other countries have also increased their FDI stock in the CEFTA region faster than the EU28. Switzerland has more than doubled its FDI stock in this period, emerging as the seventh most important investor in the CEFTA region. Other important non-EU investors that have also increased their FDI stock faster than the EU28 include Turkey, which in 2015 occupied the thirteenth ranking by its FDI stock in the CEFTA region, followed by the U.S., both countries having more than doubled their FDI stock in the CEFTA region between 2010 and 2015. Between 2010 and 2015, Turkish FDI was concentrated especially in Albania (targeting construction and telecommunications), Bosnia and Herzegovina (finance) and Kosovo (transport, power generation and supply, and finance). Over the same period, Russian FDI was mainly concentrated in Serbia (in the energy, chemicals and, partially, financial sectors), Montenegro (real estate) and Bosnia and Herzegovina (primarily in the energy sector in Republika Srpska). However, some parts of Russian FDI in the region are not included in these statistics since they arrive to the Balkan region indirectly (especially through Cyprus). Chinese FDI in 2015 still represented a marginal part of FDI inward stock, with only North Macedonia and Serbia reporting small shares of Chinese FDI in their national statistics. In the case of Serbia, net FDI inflows from the EU in 2016 represented 69 percent of total FDI inflows, along with an increasing presence of investors

52  Matteo Bonomi and Milica Uvalic from Hong Kong (6 percent), China (4 percent), the United Arab Emirates (4 percent) and Russia (1 percent) (National Bank of Serbia, 2017).11 The origins of the most important privatization-related investments in the Western Balkans by companies from outside the EU28 can be traced through data on transnational companies provided by UNCTAD. Table 2.3 gives an overview of the most important foreign affiliates (usually among the top 10) in the Western Balkan countries (excluding the financial intermediation sector) whose owners are from non-EU and non-WB6 countries (in 2015), ranked by total operating revenue (turnover). How important are these foreign affiliates from various non-EU countries? Among the top 25 foreign affiliates in the whole Western Balkan region (ranked by turnover, 2015), the majority (18) are from various EU countries,12 while among those from non-EU countries, there are 4 from Russia (energy), 1 from China (steel), 1 from Norway (telecommunications) and 1 from the U.S. (non-durable goods). More detailed data for the individual Western Balkan countries show that there are a number of non-EU foreign affiliates that are among the top ten/twenty enterprises with highest revenues – such as the two Gazprom companies ranked first and fifth in Serbia. A  particularly important sector, though not in terms of turnover, is computer programming, data processing and other computer-related services, where we find a number of foreign affiliates from non-EU countries: among the top 20 foreign affiliates (out of a total of 405 in this sector in the Western Balkans), 5 are from the U.S., 2 from China, 2 from Switzerland and 1 from Taiwan (see CEFTA, 2017, p. 94). Although in 2015 China was not yet among the fourteen most important contributors of inward FDI stock in the Western Balkans (see Table 2.2), it has been increasingly present in the region. Between 2010 and 2016 China had an estimated €6 billion worth of contracts in the Western Balkans, including 17 projects in Bosnia and Herzegovina, North Macedonia, Montenegro and Serbia, of which about 60 percent are related to energy and 40 percent to transport construction contracts, while marginal amounts are related to projects in the technology (telecom) and metal (steel) sectors. Interestingly, in the Chinese source reporting the data, only 2 of these 17 projects are labeled as “investments” rather than construction contracts, both located in Serbia – Sinomach’s 2014 investment in the energy sector and Hebei Iron and Steel Group’s 2016 investment in the steel mill Železara Smederevo (see CEFTA, 2017, pp.  17–18). This explains why recent FDI data do not reveal a major Chinese presence among foreign investors in the Western Balkan countries, since they are recorded not as FDI but as loans. China has emerged as a very important developer of infrastructure in the Western Balkans via its Silk Road Initiative (“One Belt, One Road”), which aims to improve transport and energy infrastructure to support the flow of Chinese goods to Central and Southeast Europe. In the Balkans, high-speed railways, highways and power stations are being planned, to be financed and built by Chinese companies. The political framework for these activities is the cooperation between Central and Southeast European economies and China, or the “16 + 1” initiative.13 At a summit in 2016, an investment fund of some €10 billion was announced, to be

Albtelecom

ARMO

5th

10th

Philip Morris BH DOO Sarajevo North Macedonia 9th Sokotab DOOEL Bitola DOOEL Montenegro 4th Telenor 8th Lukoil Montenegro DOO 9th China Road & Bridge Corp. DOO-DIO Stranog Društva Podgorica 10th Trebjesa

6th

Bosnia and Herzegovina 4th Optima Grupa DOO

Philip Morris Albania

Albania 4th

Ranking among Company name top foreign affiliates*

SOKOTAB FRANA SA ZHENEVA TELENOR ASA PUBLIC JSC OIL COMPANY LUKOIL CHINA ROAD AND BRIDGE CORPORATION MOLSON COORS BREWING CO

Communications services Gasoline service stations Heavy construction, exc. highway & street construction Beverages

USA

Norway Russia China

Switzerland

(Continued)

31,468

75,579 33,808 32,699

51,423

152,733

391,706

32,797

Azerbaijan Russia

80,841

84,160

Operating revenue (turnover) (in thousands of US$)

Turkey

USA

Country of owner

PHILIP MORRIS INTERNATIONAL INC. USA

NAFTEGAZINKOR OAO

CETEL TELEKOM ILETISIM SANAYI VE TICARET ANONIM SIRKETI HEANEY ASSETS CORP.

PHILIP MORRIS SA

Name of ultimate owner

Miscel. non-durable goods, wholesale dealing

Metals & minerals (exc. petroleum), wholesale dealing Miscel. non-durable goods, wholesale dealing

Miscel. non-durable goods, wholesale dealing Miscel. special trade contractors Machinery, equipment & supplies, wholesale

Core activity

Table 2.3 Top foreign affiliates in the Western Balkans from non-EU/non-WB countries, by total turnover, 2015

Misc. nondurable goods, wholesale dealing Communication services

Oil and gas field services Pipelines, except natural gas Communications services Steel works, blast furnaces, rolling and finishing Gasoline service stations

NIS AD Novi Sad Yugorosgaz AD Beograd Telenor DOO Beograd Železara Smederevo DOO Lukoil Srbija AD Beograd Philip Morris Operations AD VIP Mobile

Russia

Russia Russia Norway China

Israel

Country of owner

AMÉRICA MÓVIL SAB DE CV

Mexico

PHILIP MORRIS INTERNATIONAL INC. USA

PUBLIC JSC GAZPROM PUBLIC JSC GAZPROM TELENOR ASA NEW-SILKROAD (HONG KONG) HOLDING CO. LIMITED PUBLIC JSC OIL CO. LUKOIL

Misc. amusement & recreation PORTMANTEAU INVESTMENT LTD

Name of ultimate owner

Grand Casino

Core activity

232,948

268,123

285,190

1,914,648 497,368 408,105 401,997

1,696

Operating revenue (turnover) (in thousands of US$)

Source: Compiled by the authors on the basis of data provided in CEFTA (2017, pp. 81–95), based on the UNCTAD database on transnational corporations.

* In all countries the ranking includes the top 10 foreign affiliates, except in Kosovo (top 5) and Serbia (top 20). A foreign affiliate is an enterprise in which an investor who is resident in another economy owns a stake that permits a lasting interest in the management of that enterprise (an equity stake of 10 percent for an incorporated enterprise or its equivalent for an unincorporated enterprise) (see UNCTAD).

19th

15th

13th

Kosovo 5th Serbia 1st 5th 8th 9th

Ranking among Company name top foreign affiliates*

Table 2.3  (Continued)

Economic development of the Western Balkans 55 run by the Sino-CEEF Holding Company set up for this purpose (CEFTA, 2017, pp. 17–18). The fund will focus on developing infrastructure, high-tech manufacturing and mass consumption industries in the region. Current Chinese infrastructure projects in the wider Southeast European region total an estimated €9 billion, and the Chinese government has earmarked about the same amount for financing these projects, mostly through loans by Chinese development banks (see CEFTA, 2017, p. 18). For the Western Balkans these loans represent an additional source of badly needed capital, financing large-scale investment projects that are costly and unlikely to be financed by private investors, and are therefore an important supplement to the rather volatile FDI inflows. Some caution is necessary, however, since they are likely to further increase the Western Balkans’ already high level of foreign debt. Investments in infrastructure, which frequently result from Chinese projects, are particularly important for the future economic development of the Western Balkans. During the 2000s, FDI in the Western Balkans was influenced not only by government policies, such as institutional reforms and tax incentives, but also by exogenous factors such as economic size, level of development, geographical position, economic fragmentation and a lack of economies of scale (Estrin and Uvalic, 2014). Since the fragmentation of the region due to poor infrastructure still represents a serious obstacle for attracting more investments into the Western Balkans, China’s 16 + 1 initiative could substantially contribute to increasing domestic and foreign investments. China’s initiative can also be an important supplement to the Connectivity Agenda of the Berlin process launched by Germany in 2014, which aims to accelerate economic development through greater investment in Western Balkan infrastructure (transport, energy, communications networks). Over the past 12 years the transport sector, mainly road and rail infrastructure, has already received considerable investment, estimated at €12.2 billion (CEFTA, 2017, p. 17). The financial sources, in addition to national budgets, were provided through grants and loans mobilized through the Western Balkan Investment Framework (WBIF), involving the EU, the European Investment Bank, bilateral donors and major international financial institutions (EBRD, the Council of Europe Development Bank, the World Bank). The future SEE Transport Observatory investments in transport infrastructure in the Western Balkans are also expected to amount to some €7.7 billion. All these investments in the Western Balkan infrastructure, including the Chinese 16 + 1 initiative, could potentially have an enormous multiplier effect on growth and economic development. According to recent estimates, it is the landlocked countries that will gain most from these investments, through substantial reductions in transportation costs which are likely to stimulate both international trade and FDI (see CEFTA, 2017, pp. 16–17). There is no doubt that the additional FDI in the Western Balkans coming from the non-EU countries has been important, facilitating the modernization and restructuring of many sectors, bringing sophisticated technology and knowhow and contributing to the construction of the still poor transport and energy infrastructure (where Chinese investments have been particularly important).

56  Matteo Bonomi and Milica Uvalic However, despite the tendency towards FDI diversification in recent years, companies from the EU member states remain the most important investors in the Western Balkans (Kosovo is the only exception). For now, FDI from non-EU countries still represents a relatively small part of overall investments, compared to the FDI from the EU institutions and member states, along with the funding mobilized through the WBIF.

Concluding remarks Since the early 2000s, the EU has played a vital role in facilitating the increasing economic integration of the Western Balkan economies with the EU, directly or indirectly – through the announcement of prospects for EU membership, important trade concessions facilitating major access to the EU internal market, substantial financial aid and technical assistance, which in turn have positively influenced the arrival of foreign investors, the creation of EU–Western Balkan enterprise networks, and the integration of banking systems and capital markets. Although the recent economic crisis has led most Balkan countries to diversify their trade and foreign investment partners, the present degree of EU–Western Balkan economic integration remains high, dominating economic relations with other partners. Particularly considering the Western Balkan states’ current political linkages with the EU – the aspiration of all Western Balkans to become EU member states, with two countries already negotiating accession – the existing economic linkages with the EU will probably strengthen further. The trend towards even stronger economic integration of the Western Balkans with the EU is likely to continue. Geographically, the Western Balkans are currently surrounded by EU member states, thus representing the “soft belly” of the EU, rather than its southern periphery (Bonomi and Reljić, 2017). Given the Western Balkan economies’ strong dependence on the EU, factors that have made them vulnerable to the global economic crisis – including trade openness, economic, financial and banking integration – are precisely the factors that will reinforce growth and further economic integration once the EU economy fully recovers. In the long term, there are many arguments that point to the EU as not only the preferable, but probably the only option for the Western Balkan region – deriving from geography, history, geopolitics, economics and culture. In the short term, this does not mean that being able to increase exports to non-EU markets or having major inflows of foreign capital from other parts of the world is not welcome, since these alternative links can help the region’s developmental efforts. In recent years we have frequently come across assessments claiming that, without a clear EU perspective, the Western Balkans could easily come under the strong influence of Russia, China, Turkey or the Gulf states. During the post-2008 crisis years, most Western Balkan countries have indeed intensified their political and economic relations with a number of non-EU countries, which has also contributed to the diversification of their economic, trade and investment linkages with non-Western partners. Considering the typology of linkages and influence outcomes (see Introduction to this volume), these new economic linkages have created opportunities, rather than constraints, for the Western Balkan countries.

Economic development of the Western Balkans 57 The diversification of the Western Balkans’ economic links with non-EU countries has generated important benefits  – additional inflows of foreign capital, expansion of export markets, opportunities for economic cooperation in various other sectors – while not creating particular costs. Given the importance of the EU as a large and influential political and economic partner for all Western Balkan countries, alternative economic linkages have not diminished the EU’s dominant position. While these new opportunities have undoubtedly been important for the economic development of the Western Balkan countries, the region is primarily linked to the European Union, politically and economically. Particularly in a longer-term perspective, further trade, economic and financial integration with the EU cannot be substituted in any substantial way by other external players.

Notes 1 SAAs with the EU were signed by Former Yugoslav Republic of Macedonia (today North Macedonia) in March 2001, Albania in June 2006, Montenegro in October 2007, Serbia in April 2008, Bosnia and Herzegovina in June 2008 and Kosovo in July 2014. 2 The OECD statistical sources on Official Development Assistance report primarily financial assistance of the 30 current members of the Development Assistance Committee. In recent statistics, some donors such as the United Arab Emirates have also been included, but not countries like China or Russia. 3 By 2016 China had emerged as the second most important trade partner of the EU28, accounting for 20 percent of EU imports and almost 10 percent of EU exports. 4 Despite such a huge trade deficit, in 2017 Serbia somewhat improved its trade balance with China in comparison to the past two years (2015–16), when its imports from China were at a similar level but its exports were much lower. 5 All the reported data are based on official statistics of the Statistical Office of the Republic of Serbia (see Zavod za statistiku Republike Srbije). 6 All the reported data are based on official statistics of the Statistical Office of the Republic of Serbia (see Zavod za statistiku Republike Srbije). 7 Bosnia and Herzegovina and North Macedonia follow, both accounting for 20 percent of total WB6 exports to the EU and for 23  percent (Bosnia and Herzegovina) and 17  percent (North Macedonia) of WB6 imports from the EU. The three remaining countries – Albania, Kosovo, Montenegro – contribute much less to WB–EU trade, which can be explained to a large extent by their lower export/GDP ratios and/or much lower total GDP (Uvalic, 2019). 8 In UNCTAD statistics online, 2012 is the last available year of reported statistics on FDI stock, by country of origin, in the Western Balkan countries (see UNCTAD, FDI Statistics). 9 FDI inward stock represents the sum of annual FDI inflows. 10 The CEFTA region today consists of seven countries: the six Western Balkan countries and Moldova, the signatories of the CEFTA 2006 agreement on free trade. Given Moldova’s small economic size, data on CEFTA are quite representative of the WB6 region. 11 Note that these annual figures on FDI inflows are not comparable with the previously reported figures on FDI stock. 12 On the list of top 25 foreign affiliates (by turnover), the company owners are from the following EU countries: the Netherlands, Slovenia, Hungary, Croatia, Cyprus, Luxembourg, Greece, France and Germany. 13 The 16 + 1 initiative involves the eleven EU new member states from Central Eastern Europe, the five non-EU countries in the Balkans (without Kosovo) and China.

58  Matteo Bonomi and Milica Uvalic

References Bartlett, W., and Prica, I., 2012. The Variable Impact of the Global Economic Crisis in South East Europe. LSEE Papers on South Eastern Europe, London, LSE. Bonomi, M., and Reljić, D., 2017. The EU and the Western Balkans: So Near and Yet So Far. Why the Region Needs Fast-Track Socio-Economic Convergence with the EU. Stiftung Wissenschaft und Politik (SWP), SWP Comment 2017/C 53, December. www. swp-berlin.org/en/publication/the-eu-and-the-western-balkans-so-near-and-yet-so-far/. CEFTA, 2017. CEFTA Investment Report 2017, Brussels, CEFTA Secretariat, Report Prepared by Gabor Hunya (Vienna WIIW). Cvijanović, V., and Uvalic, M., 2018. Towards a Sustainable Economic Growth and Development in the Western Balkans. In: Brandle, M. and Weichert, M. (eds), A New ­Economic Agenda for Southeast Europe. Zagreb: Friedrich Ebert Stiftung, 13–35. Estrin, S., and Uvalic, M., 2014. FDI Into Transition Economies: Are the Balkans Different? The Economics of Transition, 22 (2), 281–312. Estrin, S., and Uvalic, M., 2016. Foreign Direct Investment in the Western Balkans: What Role Has It Played During Transition? Comparative Economic Studies, (June), 1–29. European Bank for Reconstruction and Development, 2012. Banking Survey. London: EBRD. https://ebrd.com. European Commission, 2018. Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions. A Credible Enlargement Perspective for and Enhanced EU Engagement with the Western Balkans. Strasbourg, 6 February, COM (2018) 65 Final. Hunya, Gábor, 2018. FDI in Central, East and Southeast Europe: Slump Despite Global Upturn. WIIW FDI Report 2016. Vienna: The Vienna Institute for International Economic Studies (Wiener Institut für Internationale Wirtschaftsvergleiche – WIIW). International Monetary Fund (IMF), Direction of Trade Statistics. https://data.world/imf/ direction-of-trade-statistics-dots. Kosovo Agency of Statistics, Statistics. http://ask.rks-gov.net/en/kosovo-agency-of-statistics. National Bank of Serbia, 2017. Statistics. www.nbs.rs/. Sanfey, P., and Milatović, J., 2018. The Western Balkans in Transition: Diagnosing the Constraints on the Path to a Sustainable Market Economy. European Bank for Reconstruction and Development, Background Paper for the Western Balkans Investment Summit Hosted by the EBRD, 26 February. Statistical Office of Montenegro (MONSTAT), Statistics. www.monstat.org/eng/. UNCTAD, FDI Statistics. http://unctad.org/en/Pages/statistics.aspx. UNCTAD, Transnational Corporations Statistics. http://unctad.org/en/Pages/DIAE/Trans national-Corporations-Statistics.aspx. Uvalic, M., 2006. Trade in Southeast Europe: Recent Trends and Some Policy Implications. European Journal of Comparative Economics, 3 (2) (December 2006), 171–195. Uvalic, M., 2010. Serbia’s Transition. Towards a Better Future. Basingstoke: Palgrave Macmillan. Uvalic, M., 2013. The Economic Development of the Western Balkans Since Thessaloniki. In: Prifti, E. (ed.), The European Future of the Western Balkans. Thessaloniki@10 (2003–2013). Paris: European Union Institute for Security Studies, pp. 73–82. Uvalic, M., 2019. Economic Integration of the Western Balkans into the European Union: The Role of EU Policies. In: Džankić, J., Keil, S. and Kmezić, M., (eds.), The Europeanisation of the Western Balkans—A Failure of EU Conditionality? Basingstoke: Palgrave Macmillan, 207–235. Zavod za statistiku Republike Srbije (Statistical Office of the Republic of Serbia). http:// data.stat.gov.rs.

Part II

Western Balkan case studies

3 Serbia Looking East, going West? Florent Marciacq

With its population of seven million, a large territory compared to its Western Balkan neighbors and its relatively long diplomatic history, Serbia occupies an important position in the region. This position has led the country to interact with a large spectrum of Western, but also non-Western, actors, in particular Russia, China, Turkey and the United Arab Emirates. Links between Serbia and Russia have spanned over centuries. With the simultaneous breakup of Yugoslavia and dissolution of the Soviet Union, relations between the two countries declined in intensity. Throughout the 1990s, Russia shifted its focus onto its domestic reform agenda, while war raged in the Western Balkans. However, the negotiations over the political status of Kosovo, launched in 2006, gave a new impetus to Russo-Serbian relations (Bechev, 2017, p.  53, Petrović, 2010, pp.  29–30). In today’s more complex geopolitical context, this development has not gone unnoticed: Serbia’s relations with Russia have kept improving despite the deterioration of EU-Russia relations and Serbia’s commitment to EU integration. Serbia’s relationship with China is more recent. The establishment of diplomatic relations between Yugoslavia and China dates back to 1955 and was followed by intense cultural and scientific exchanges. During the war in the 1990s, China expressed its support for the regime of Slobodan Milošević, but SinoSerbian relations gained real momentum after China launched its “16 + 1” initiative in Central and Eastern Europe and the “One Belt, One Road” initiative, in 2012 and 2013 respectively. Both initiatives include Serbia and provide a powerful framework for economic cooperation. Serbia’s relations with Turkey also gained impetus in the early 2000s. The coming to power of Recep Tayyip Erdoğan paved the way for a shift in Turkey’s foreign policy. This shift, advocated by Turkish Foreign Minister Ahmet Davutoğlu, prescribed that Turkey should build on the regional history of the Ottoman Empire to reengage in the Western Balkans, with an emphasis on trade, open diplomacy and soft power (Ağır and Arman, 2016, p. 152). Relations between Serbia and Turkey have accordingly flourished in the past decade. As for the intensification of Serbia’s relations with the UAE, this is even more recent. It started in the mid-2010s and is mainly driven by UAE strategic investments in particular sectors of the Serbian economy.

62  Florent Marciacq Serbia’s interactions with these non-Western actors have flourished in the past 15 years in different domains, from security and foreign policy to economy and society, despite Serbia’s uninterrupted commitment to EU integration. The aim of this chapter is to map out the range of linkages Serbia has established with these non-Western actors; to assess the ability of these actors to project influence in Serbia; and to explore whether such influence today represents a threat to the implementation of the Western/EU liberal reformist agenda. While acknowledging that none of the non-Western powers under consideration has developed a relationship with Serbia that is as comprehensive as that of the EU, both in terms of depth and scope, this chapter argues that non-Western linkages, mostly shaped by instrumental motives, often convey forms of influence which, purposefully or not, may collide with the liberal reformist agenda promoted by Western powers and the EU in particular. These linkages, interestingly, are often used by non-Western powers to act as a source of influence rather than direct leverage, in an attempt to shape policy contexts rather than conduct. The development of Serbia’s relations with non-Western powers is thus all the more interesting as it illustrates the new challenges the EU faces in terms of competition in the projection of “deeper” forms of political influence.

Security and military policy On 26 December 2007, the Parliamentary Assembly of Serbia adopted a Resolution on military neutrality, preventing the country from joining any military alliance, while keeping the door open for cooperation with partners. This declaration, prepared by the main party of the ruling coalition at the time, the DSS, became state policy after being adopted by a majority of deputies, a few months before Kosovo unilaterally declared its independence. The adoption of the Resolution, in this very particular context, was primarily “meant to be a message of friendship to Moscow, from which Belgrade expected support in its legal and diplomatic battle to preserve its virtual sovereignty over Kosovo” (Ejdus, 2014, p. 51). In declaring Serbia a militarily neutral country, Serbian elites did not seek to hinder NATO enlargement – an objective consistently pursued by Russia. Although Serbian President Boris Tadić favored cooperation with NATO, accession was at best unlikely, given the low popular support for NATO membership in the late 2000s and the remembrance of the 1999 NATO bombings. Russia’s influence here was subtler, since the linkages it had established with Serbia through its support against Kosovo independence, rather than dictating Serbia’s conduct, shaped the policy context in which neutrality came to be adopted as state policy. Neutrality, in other words, was at that time more necessary to Serbia’s policy against Kosovo than to Russia’s policy against NATO. After Kosovo’s declaration of independence, the situation in the region became sensitive. A crisis broke out in North Kosovo in July 2011, and Serbia’s relations with the EU experienced turbulences due to Belgrade’s hesitant commitment to normalize its relations with Pristina. In the early 2010s, Serbian domestic politics and foreign policy remained very much dominated by the Kosovo issue, while

Serbia 63 Pristina intensified its diplomatic quest for recognition. It is in this context that Serbia and Russia agreed on the establishment of the Russian-Serbian Humanitarian Center (RSHC). This intergovernmental organization settled in Southern Serbia, in Niš, only 100 kilometers from the borders of Kosovo and Bulgaria (a NATO member). Officially aiming to assist Serbia and other Western Balkan countries in the event of natural disasters and emergency situations, the Centre started operations in April 2012. It provided visible assistance during the 2014 floods in Serbia and the region. But since its creation, this Russian presence in Southern Serbia has sparked much suspicion in the West, arousing fear that it would conceal an intelligence outpost or prepare the ground for the deployment of a full-fledged Russian military base (B92, 2017). Russian President Vladimir Putin’s request that the RSHC and its staff should be granted diplomatic immunity (on an equal footing with NATO) raised further concerns in the West, both exerting pressure on Serbia (not) to give way. In November 2013, military cooperation between Serbia and Russia gained further momentum after the conclusion of a bilateral defense agreement. Increasing linkages in this policy area followed up on the priorities set in the framework of the upgraded strategic partnership, sealed between Serbia and Russia in May 2013. They paved the way for improved military-technical cooperation and joint military exercises. The first military drill associating Serbian and Russian forces took place in November  2014 (SREM-2014). With more than 400 participants, it was the largest military exercise carried out in Serbia in recent decades (Inserbia, 2014). The second military drill, dubbed Slavic Brotherhood, took place in September 2015, in Russia. It associated Russian, Belarussian and Serbian troops in an exercise aimed at crushing a Maidan scenario. A third military drill, Slavic Brotherhood 2016, took pace in October 2016 in Serbia, while NATO, at the same time, staged a civil emergency drill in neighboring Montenegro (with the participation of Serbian forces). A fourth trilateral military drill, Slavic Brotherhood 2017, emphasizing counter-terrorist cooperation, took place in Belarus in June 2017. Since 2015, Serbia and Russia have also carried out yearly flight and tactical exercises called Brotherhood of Aviators of Russia and Serbia (see, e.g., Balkan Insight, 2016a). The EU repeatedly expressed its dissatisfaction with Serbia’s participation in Russian-Belarussian military drills, arguing that it “sends the wrong signal” (Balkan Insight, 2015b). Although militarily neutral, Serbia has established close links with the EU, enabling its participation in several EU crisis management operations (e.g., in the Central African Republic, the Horn of Africa, Somalia and Mali) and the EU’s so-called Balkan Battle Group (HELBROC). Also, Serbia has steadily built up cooperation with NATO (Duro, 2015). The country joined the Partnership for Peace program (PfP) in 2006, is an active participant in the NATO program Peace and Security, and concluded an Individual Partnership Action Plan (IPAP) in 2015. But its engagement in the Western military cooperation architecture, praised by the EU in its yearly reports, has been carried out in parallel with (rather than at the expense of ) enhanced military cooperation with Russia. As stated by the Ministry of Defence of Serbia, “when it comes to activities with

64  Florent Marciacq the Russian Armed Forces [. . .] equal attention [is paid] to all other key partners” (Balkan Insight, 2015a). Serbia, in short, “is doing its best to profit from military co-operation with both the West and Russia” (Bechev, 2017, p. 190). Serbia’s attempt to balance military cooperation is well illustrated by its stance towards Western and Russian-dominated collective defense organizations. The former and current Presidents of Serbia, Tomislav Nikolić and Alexander Vučić, as well as the leaders of the current ruling coalition, have all explicitly ruled out any plan to ever join NATO (B92, 2016c; Keetch, 2016). Serbia’s position has been acknowledged by NATO, which “fully respects Serbia’s policy of military neutrality” (NATO, 2017). But despite its reluctance to engage politically, Serbia nonetheless cooperates with NATO extensively in the framework of the PfP, not least in the process of reforms and the modernization of its defense sector. As underlined by Nič and Cingel (2014, p.  2), selected Serbian armed force units “have already been certified according to NATO’s standards, achieving increased inter-operability for potential deployments in international crisis management operations”. Serbia, likewise, has gained access to several NATO Committees and program and has become eligible for several NATO Funds. Serbia nonetheless paralleled its increased participation in NATO structures with a timely engagement within the Collective Security Treaty Organization (CSTO). In early 2013, it became the only non-CIS country (beside Afghanistan) to enter the CSTO as a permanent observer, and has subsequently been invited to take part, as an observer, in the CSTO joint exercises and to contribute to the subregional anti-drug operation “Channel” (Belarus News, 2017). Serbia’s linkages in this area, however, all in all remain much closer to NATO and the EU than the CSTO and Russia. Military cooperation between Serbia and China, Turkey and the UEA, by contrast, is far less developed than with Russia. A bilateral agreement was signed with China in 2008, Turkey in 2009, and the UAE in 2014, encouraging exchanges in military personnel training and education as well as cooperation in peace operations and disaster relief or informational technologies. But these agreements have only had limited implications so far: China’s recent donation of non-essential military equipment or the promised delivery of sophisticated drone systems; Turkish officers’ participation in military trainings; or Serbia’s joint development with the UAE of a land-based anti-ship cruise missile (Xinhua, 2017; Bartlett et al., 2017, p. 102; B92, 2018).

Foreign policy and diplomacy Strategic partnerships and political relations In their strategic character and structured development, their scope and intensity, EU–Serbia relations unquestionably outperform Serbia’s relations with other actors. At the institutional level, their development is reflected in a series of milestones, each of them signifying the greater entanglement of Serbia’s political and legal order in the EU’s governance structure. In 2005, negotiations were launched

Serbia 65 for a Stabilization and Association Agreement (SAA), concluded in 2008. Serbia then applied for EU membership in 2009, was granted candidate status in 2012, and formally started its membership negotiation process in January 2014. This rapprochement has been carried through at the interpersonal level too, with an unprecedented intensification of contacts between EU and Serbian officials, in all settings and at all levels. However prevalent EU linkages with Serbia are, they have not precluded Belgrade from maintaining and expanding relations with other meaningful actors. Serbia’s relations with Russia regained momentum in the mid-2000s, against the backdrop of the Kosovo status process. Moscow repeatedly backed Belgrade in the United Nations (UN) Security Council, opposing the Ahtisaari Plan (against the U.S. and the EU) and later insisting on placing the EULEX mission in Kosovo under the authority of the UN to guarantee its “status neutrality”. After the unilateral declaration of independence of Kosovo, Russia also backed Serbia by lobbying against Kosovo’s recognition by third states, for example, in the Arab world, or Kosovo’s membership in international organizations, such as in the UN; by submitting statements to the International Court of Justice arguing that Kosovo’s declaration of independence breached international law; or criticizing the International Criminal Tribunal for the former Yugoslavia for its allegedly biased judgements (e.g., Džihić and Hamilton, 2012). This support from Russia came at a very opportune moment in Serbia, given the elites’ claims that the country’s territorial integrity was at stake, and therefore rallied most political parties, including those sharing pro-Western views. More importantly, this support from Russia proved instrumental in shaping a policy context that enabled Serbia to sustain and effectively pursue its policy opposing recognition of Kosovo’s independence, despite external pressures from the West. In terms of policy context formation, this enabling factor has had multifaceted implications: at the domestic level, it has kept the Kosovo status issue high on the agenda of political parties for more than a decade now, setting a favorable stage for political parties appealing to ethnonational sentiments and creating a “lingering sense of international stigma and unfairness, which in turn causes difficulties for those politicians promoting compatibility between Serbia’s political and historical past, and its potential EU future” (Obradović and Howarth, 2018, p. 31). In Serbia’s relations with the EU, this enabling factor has allowed Serbia to increase its negotiating power, since any step towards Kosovo’s de facto recognition is an opportunity for Belgrade to ask for compensation from the EU (see, e.g., Economides and Ker-Lindsay, 2015). This support from Russia, finally, building on a large consensus among political elites and the population, has also affected Serbia’s policy context by allowing the penetration of Russian views in a broader manner. It has paved the way for a more general rapprochement. In 2009 the two countries concluded a “strategic partnership” mainly focused on energy, which they upgraded in May 2013 to encompass political, economic and geostrategic goals. The number of bilateral agreements and protocols concluded has surged accordingly in the past 10 years, from 32 between 1994 and 2006 to 66 from 2007 to 2016 (Ministry of Foreign Affairs

66  Florent Marciacq of the Republic of Serbia, 2018). This rapprochement is also measurable in the high number of official visits paid between 2008 and 2016: no less than 17 visits, including 11 at the level of the President or Prime Minister, compared to only 5 official high-level visits between Croatia and Russia in the same period (Zorić, 2017, p. 35). Linkages between Serbia and Russia have also grown as sources of political influence shaping policy contexts, most notably through the development of Russo-Serbian inter-party ties. Vladimir Putin’s party “United Russia”, for instance, signed cooperation agreements with the Democratic Party of Serbia (DSS) in 2009, with the ruling Serbian Progressive Party (SNS) in September 2011 (SNS, 2019), and, more recently, issued a joint declaration with three pro-Russian political parties in Serbia (DSS, the Dveri Movement, and the Serb People’s Party [SNP]) supporting the establishment of a militarily neutral area in the region (B92, 2016b). Although less deeply rooted and less intense, the development of Serbia’s relations with China has similarly benefited from China’s stance against the unilateral declaration of independence of Kosovo, grounded in Beijing’s One-China policy and opposition to Taiwanese independence and Tibetan irredentism. In 2009, Serbian President Boris Tadić accordingly upgraded Serbia’s “special relationship” with China by concluding a “strategic partnership” reaffirming China’s support for the sovereignty and territorial integrity of Serbia (People’s Daily, 2016). This partnership paved the way for China’s greater engagement in Southeastern Europe, Serbia serving as pivot of its economic diplomacy in the region (next to Greece). In December  2014, the third China-Central and Eastern European Countries (CEEC) Summit was held in Belgrade, and in June 2016 Sino-Serbian relations were again upgraded with the conclusion of a “comprehensive strategic partnership” (People’s Daily, 2016). The number of bilateral agreements and protocols concluded in the past 10 years has surged accordingly from 17 between 1994 and 2006 to 68 from 2007 to 2016 (Ministry of Foreign Affairs of the Republic of Serbia, 2018). Between 2008 and 2016, no less than 15 high-level visits took place, including 8 at the level of the President or Prime Minister. (Ministry of Foreign Affairs of the Republic of Serbia, 2018). Unlike Russia and China, Serbia’s relations with Turkey do not build on a common stance against Kosovo’s recognition, given Ankara’s early and steady support for Kosovo’s independence (Balkan Insight, 2009). Their political relations, in fact, mostly gained impetus in the framework of the trilateral cooperation mechanism, engineered by Ankara in 2009 with the participation of Turkey, Serbia and Bosnia and Herzegovina. The mechanism provides for the organization of trilateral summits at the level of the heads of state (four took place between 2010 and 2018); trilateral consultative meetings at the foreign ministers’ level (13 took place by the end of 2017); and trilateral gatherings of economy and trade ministers (Vračić, 2016). This trilateral cooperation mechanism, a prominent part of ­Turkey’s reengagement strategy in the Western Balkans, aims at bolstering regional cooperation, with notable achievements in terms of influence: first at the political level, with the official recognition by Serbia of the territorial integrity of Bosnia and

Serbia 67 Herzegovina at the 2010 Istanbul summit, or the adoption of a declaration by the Parliament of Serbia condemning the crimes in Srebrenica, also in 2010; and more recently, at the economic level, with the establishment of a joint Serbian– Bosnia and Herzegovinian Trade Office in Istanbul in September 2016 or large infrastructure projects plans involving the three countries (Balkan Insight, 2016b). More recently, this trilateral cooperation mechanism has been supplemented at the bilateral level by the establishment in 2017 of a High-Level Cooperation Council between Serbia and Turkey, aimed at the swift identification of key areas in ­Serbian–Turkish relations, which can boost cooperation (Dailysabah, 2018a). Multilateral diplomacy in the OSCE Russia’s growing significance in Serbia’s foreign policy is particularly visible in multilateral arenas like the OSCE. In this intergovernmental organization, which includes both countries, as well as the EU member states and neighboring countries, states are free to express their views by issuing their own declarations or aligning themselves with those of others. The EU, for instance, routinely offers alignment to a large number of non-EU states (up to 17 in 2011), including Serbia since 2005. Serbia’s alignment with EU declarations, being part of political dialogue, is strongly encouraged by the EU (Marciacq, 2012a). It shall serve the objective of ensuring “increasing convergence of positions on international issues, and in particular on those matters likely to have substantial effects on one or the other party” (Joint declaration on political dialogue between the European Union and Serbia and Montenegro, 2003). It shall in addition support the EU’s claim for regional leadership in European security affairs. Alignment, in short, is considered appropriate behavior for would-be member states. However, over the past 10 years, Serbia’ declaratory behavior in the OSCE has not converged with that of the EU (see Figure 3.1). Unlike North Macedonia, Albania and Montenegro, which align themselves with more than 90percent of EU declarations, Serbia has become more and more reluctant to systematically express its support for EU declarations through alignment. Its alignment frequency fell for the first time from 2007 to 2009 in the context of Kosovo’s unilateral declaration of independence. To reciprocate Russia’s support against it, Serbia refused to align itself with EU declarations criticizing the role of Russia in the 2008 Georgian crisis. Its alignment frequency fell a second time from 2014 to 2017, against the backdrop of the Ukrainian crisis. While recognizing the territorial integrity of Ukraine (and abstaining from acknowledging the annexation of Crimea by Russia), Serbia refrained from adopting sanctions against Russia, despite EU pressures. In 2015, while assuming the OSCE Chairmanship, it conveniently argued that it should not take sides and accordingly refrained from aligning itself with any EU declaration but two (out of 267). In 2017, its alignment frequency was only 33.9  percent, well below Georgia’s (65.5%) or Moldova’s (59.7%)’s alignment records. Disavowing Russia on European sanctions in 2014 would have considerably weakened Serbia’s international capacity to obstruct Kosovo’s independence – an unacceptable perspective for Serbia.

68  Florent Marciacq 100.0% 90.0% 80.0% 70.0% 60.0% 50.0% 40.0%

30.0% 20.0% 10.0% 0.0% 2006

2007 2008 Serbia

2009 2010 Macedonia

2011 2012 2013 Albania Bosnia-H

2014

2015 2016 Montenegro

2017

Figure 3.1 Frequency of alignment with EU declarations in the OSCE Source: Author’s calculations based on the weekly OSCE journals

This readiness to disregard EU approaches in the OSCE and withhold alignment when Russia or Russian interests are targeted has grown in the past few years comparatively to other reasons not to align. It now represents the bulk of Serbia’s non-alignment instances. In 2007, 50 percent of the EU declarations which Serbia refrained from joining dealt with human security in the Western Balkans. In 2017, by contrast, 49 percent of the EU declarations with which Serbia did not align itself focused on the war in Ukraine, and 30percent on the Caucasus, Central Asia, Moldova or Russia (e.g., security issues in Abkhazia, Nagorno-Karabakh, Chechnya or Transnistria; violation of civil liberties or human rights in Kazakhstan and Armenia; breach of personal freedoms or human rights in Russia). In most cases, Serbia’s non-alignment can thus be traced back to Russia or Russia’s interests in its near-abroad. A similar pattern can be observed in Serbia’s voting behavior in the United Nations General Assembly (see Marciacq, 2012b). Serbia, for instance, refrained from following the unanimous voting position of EU member states on a series of important resolutions targeting Russian interests in Crimea or Georgia, by either abstaining from voting (e.g., RES/68/262) or supporting Russia’s voting position against the EU (e.g., GA/10708). When Serbia does not follow the EU, then, as a rule, it votes like Russia (Marciacq and Sanmartín, 2015, p. 108). Serbia, likewise, refrains from joining “any international initiative criticizing China in international forums, neither by voting nor by signing declarations nor attending events whose

Serbia 69 consequence would be a critique of China” (Jeremić, 2011). This includes UNGA resolutions on China’s protégés (Iran, Sudan, Zimbabwe, Myanmar and North Korea).

Economy Trade Serbia’s main trading partner in 2016 was the EU, with a trade share of 64.5 percent, followed far behind by Russia (6.8%), Bosnia and Herzegovina (4.9%), China (4.8%) and Turkey (2.2%) (see Figure 3.2). As for the UAE, they remain a negligible trade partner, with less than €50 million of trade in 2016, according to UN Comtrade (2018). The predominance of the EU as a trading partner is wellanchored in Serbia’s economy. Customs duties for all industrial and almost all agricultural products exported from Serbia into the EU were abolished by the EU in 2000 through the application of Autonomous Trade Measures. Furthermore, in 2008, Serbia signed an SAA and Interim Agreement on Trade and Trade-Related Issues with the EU, opening the door for the gradual abolition of tariffs on most goods imported from the EU. These steps, accompanied by systemic reforms, shall prepare Serbia’s integration into the EU’s Single Market and EU production value chains. Within the EU, Serbia’s main trading partners, Italy and Germany, have outranked Russia, China and Turkey since 2012 (see Figure 3.3). Their bilateral trade with Serbia has doubled in value in the past 10 years, while Serbia’s trade with Russia, after peaking in 2007–2008, declined in the last decade down to less than its 2006-level. As for Serbia’s trade with China and Turkey, it has grown at a dynamic rate in the past 10 years. It has doubled for China and tripled for Turkey between 2006 and 2016, and follows an upwards trend. With an impressive 167 percent year-on-year growth rate, in 2018 Serbia became Europe’s 16.8% 2.2% 4.8% 4.9% 64.5%

6.8%

EU-28

Russia

Bosnia & Herzegovina

Figure 3.2 Serbia’s trade with key partners (2016) Source: European Commission (2018).

China

Turkey

Others

70  Florent Marciacq 6000 5000 4000 3000

2000 1000 0 2006 Italy

2008 Bosnia & Herzegovina

2010

2012 Germany

2014 Russia

China

2016 Turkey

Figure 3.3 Serbia’s total trade with key partners (2006–2016) Source: World Bank

fastest growing destination for Chinese visitors, mainly due to its unique visa-free regime. In 2017, Turkey’s trade with Serbia is expected to reach a new summit at US$1.3 billion, doubling its level compared to 2016. This dynamism has been reinforced by a weak lira, enabling Turkish exports to Serbia to rise by 36 percent in just the first months of 2018. Serbia’s trading relationship with Russia is facilitated by a free-trade agreement signed in 2000. Serbia, interestingly, is the only non-CIS country to have concluded such an agreement. In 2011, Serbia and Russia deepened their trade liberalization regime by signing a Protocol stipulating that goods for which at least 51 percent of the value has been added in the country are considered of Serbian origin and can be exported to Russia customs-free. The agreement, which also applies to Serbian trade with Belarus and Kazakhstan, illustrates Serbia’s interest for Eastern markets. In 2016, Serbia finally started to formally negotiate with the Russian-led Eurasian Economic Union (EEU) on the formation of a free-trade agreement, in the hope to boost its exports. But, regardless of the questions of incompatibility that may follow from Serbia’s obligations towards its SAA, it remains uncertain how much Serbia can gain from such regimes given its integration in the EU’s value chain and weak overall export capacities (Teokarević, 2016). Investments and loans With €1.55  billion in 2016 and a share of net foreign direct investments (FDI) accounting for approximately 81.5 percent of the total of net FDI in the country, the EU is Serbia’s primary investor by far (National Bank of Serbia, 2018). The Netherlands, Luxembourg, Austria and Germany rank among the first investors

Serbia 71 in Serbia, while 10 of the 12 largest deals concluded in the country from 2000 to 2011 came from EU member states (Radenković, 2016, pp. 32–33). Until recently, Russia too was nonetheless a key investor in Serbia’s economy (more specifically, in the energy sector): it was ranked first in 2010 and 2012, ahead of France and Germany. But recent developments in Ukraine and falling oil market prices have tempered Russia’s investing capacities and downgraded Russia to the ninth position. Between 2015 and 2016, Russia’s inward FDI in Serbia has been halved, down to only €41 million. Not far behind, at the eleventh position, is China, with inward FDI (at €69.5 million) for the first time exceeding that of Russia. But although Chinese FDI rose from virtually nothing in 2006 to almost €70 million in 2016, it has not grown as fast as China’s state-driven loans, especially in the infrastructure sector. Likewise, direct investments from Turkey, starting from very low levels, amounted in 2016 to some US$11 million (Central Bank of Turkey, 2018). These have mainly been driven by private companies, unlike UAE investments, clearly driven by strategic interests. Russia’s investments, like in trade, are highly concentrated in the energy sector. In January 2008, Serbia signed a framework agreement on cooperation in energy, which included a package deal informally providing that Russian investors would get access to Serbian assets in the energy sector, in exchange for which the country would be included in the South Stream project. The Russian company Gazprom accordingly acquired a majority share in the Serbian state-owned company Naftna Industrija Srbije (NIS), one of the largest companies in Serbia, accounting for 9 percent of the country’s GDP. This acquisition allowed Russia to take control over Serbia’s oil processing sector and strengthen its position in the distribution network (Szpala, 2014). The NIS privatization deal, Serbia’s all-time second-largest investment, was accompanied by a promised additional investment of €550 million, which eventually took the form of a loan (Bechev, 2017, p. 66). In 2011, Russia, likewise, invested in the construction of an underground gas storage facility in Banatski Dvor, expanded in 2015 through Russian loans. In 2013, it moreover agreed to undertake the modernization of the Novi Sad and Pančevo refineries (Torralba, 2014). Russia’s promise for investments, however, have often proved disappointing. Moscow has not come to the rescue of loss-making state-owned enterprises in Serbia. Nor has it fulfilled its promises, made by Presidents Medvedev and Putin in 2009 and in 2011, to provide Serbia with a billion-euro aid and investment package. In lieu of that, Serbia received a €334 million loan. The privatization of NIS, likewise, has been criticized for, on the one hand, being concluded below the value of the enterprise, and on the other, not being met by the expected compensation – Serbia’s participation in the South Stream project. This project, which was to enable gas delivery to European countries while bypassing traditional transit routes, had raised very high expectations in Serbia: it was asserted that it would provide approximately €2.1 billion FDI, entail the creation of 2,500 jobs during the construction period, and provide sizeable long-term revenues in the form of transit fees, while turning Serbia into a gas transit and storage center for Europe (Nelaeva and Semenov, 2016). Its eventual failure, following EU pressures, left

72  Florent Marciacq a bitter taste in Serbia, even though a replacement project, the Turkish Stream pipeline, is now on the table (with the same concerns expressed by the EU). All in all, Russia’s penetration of the Serbian economy, when not stained by corruption scandals (as in the case of Lukoil’s investment in Beopetrol), was “anything but problem-free” (Bechev, 2017, p. 58). From a Chinese perspective, Serbia is not particularly promising in market terms. But its geopolitical location, between Greece and Hungary, as well as its trade agreements with the EU, Russia and other CIS countries, are nonetheless considered an asset in Beijing. One of China’s goals in the region is to gain access to the European markets by upgrading transport infrastructures; moving production into export markets to circumvent European protectionist policies and helping Chinese contractors to climb the value chain (Levitin et al., 2016; Bastian, 2017; Makocki, 2017). That is China’s Belt and Road Initiative, backed by its 16 + 1 framework. Together with Greece, Serbia stands out as “Beijing’s key partner in the region” (Tonchev, 2017). The country will host one of the key institutions under the 16 + 1 Platform, the 16 + 1 Transportation Infrastructure Cooperation Union, and already signed €5.5 billion worth of engineering contracts with China (Makocki, 2017). But appearances can be deceptive: less than 10 percent of this sum has actually been disbursed by Beijing since 2014 (Levitin et al., 2016), and none of the contracts signed imply “real” private investments (e.g., in the form of public-private partnerships or concessional grants). They are concluded as state-to-state loans and, as such, are much less beneficial to Serbia than other funding instruments (e.g., EU grants), since they have to be repaid. Unlike EU funding tools, Chinese state-to-state loans are not conditioned by good governance principles. They are granted at favorable rates with longer grace periods and under certain conditions: only a part of the projects’ value is usually subcontracted to domestic enterprises, which limits the economic benefit yielded by Serbian enterprises in construction projects. Moreover, these projects follow a state-driven logic of investment, not a market-driven one, where rentability is pivotal to investment decisions. The resulting politicization of investment, subsidy and contract decisions is not only problematic for ensuring the economic sustainability of the projects in question (Makocki, 2017); it also challenges the EU’s model of open and transparent bidding procedures, that is, competition law and good governance principles; fuels local and national patronage networks; potentially undermines the development of more participative models of democracy; and pays little attention to social and environmental concerns. Serbian officials, however, underline that although they would prefer EU grants, China is the only power willing and able to offer such large loans. And indeed, the EU, in the past, mostly offered assistance to Serbia covering institutional capacity building (in the 2005–2014 financing period, only 2 percent of the investments made in Serbia came from EU programs). Only more recently, with the Berlin Process and the new financing period, has the EU planned larger investment capacities to implement its connectivity agenda. However, implementation remains very slow, owing to Serbia’s limited administrative capacities and

Serbia 73 consequent difficulties in adopting the EU’s soft measures; owing to budgetary constraints impeding domestic participation in pipelined investment projects (EU grants, in general, only cover 40 to 50 percent of mature projects’ investments); and owing to the complexity of EU procedures, especially in the case of multisource funding. Chinese state-driven investments are concentrated only in a few sectors. Transport and energy infrastructure projects prevail. In 2014, China completed the construction of the Sino-Serbian Friendship Bridge for a total cost €170 million, provided through a loan from the Exim Bank of China (85%), the rest being covered by the City of Belgrade. In 2017, China and Serbia signed a commercial contract for the construction of the Belgrade-Budapest high-speed railway (HSR). This project, planned to be financed through a soft loan of over €1 billion granted by the Chinese Export-Import Bank, has been pushed by Beijing (regardless of its rentability) to showcase China’s ambitions as an exporter of technology (Pavlićević, 2014). Another project involves the construction of sections of Corridor XI (Timisoara-Belgrade-Bar) with an investment wort €600 million, again supported by China’s Exim Bank. In the energy sector, the leading project has been the modernization and development of the thermal power of Kostolac with an investment of €700 million, 85  percent financed through a soft loan from China’s Exim bank. Once finished, the new modernized power plant is expected to generate 20 percent of Serbia’s energy. Likewise, in 2016, China acquired the Smederevo steel mill for €46 million, which employs no less than 5,000 workers, and promised to invest US$1.46 billion in Serbia’s RTB-Bor copper mining and smelting complex over the next six years (Balkan Insight, 2018b). In the automotive sector, finally, it has been present in Serbia since 2010 through YTO, a state-owned company manufacturing tractors for southern and central European markets (Pavlićević, 2011) and the planned construction of a tire factory in Serbia’s Zrenjanin free trade zone (for an investment of almost US$1 billion) (Balkan Insight, 2018a). Turkish investments in Serbia remain modest, but they mostly come from private companies and therefore do not affect Serbia’s external debt. Around 70 Turkish companies were operating in Serbia in 2015, employing Serbian labor mostly in domestic appliances, the automotive sector, brewery, tourism and wood-processing (Pavlović, 2016, p. 24). Turkish investors are also present in the banking sector, since the Turkish Halkbank became the majority shareholder of Čačanska banka in 2015. Only a few infrastructure projects have been supported by Ankara. Beside the reconstruction of a 66-kilometer road between Novi Pazar and Tutin in the late 2000s, Turkey continues to offer its assistance in building a highway between Belgrade and Sarajevo in the framework of its trilateral cooperation mechanism. This “friendship project” shall, according to Turkish President Recep Tayyip Erdoğan “strengthen commercial and economic relations in the region” and cost around €1.8 billion (Dailysabah, 2018b). But it has barely progressed so far. In the past few years, a new strategic investor, the UAE, has markedly increased its presence in Serbia, mostly in the sectors of aviation, urban construction, military

74  Florent Marciacq technology and agriculture (Bartlett et al., 2017). This engagement has come at a certain price. In 2013, UAE’s flagship carrier Etihad acquired 49  percent of the Serbian national carrier JAT. After restructuration, leading to harder working conditions for the employees, the company, renamed Air Serbia, started to yield very good results, “cementing Belgrade’s position as a regional transport hub” (Ibid., p.  95). Likewise, in 2015, the government of Serbia and the UAE struck a deal worth €3.5 billion to build a business, residential and commercial area along the rundown riverfront of Belgrade. Proponents of this so-called Belgrade Waterfront project claim that it will lead to the creation of 20,000 jobs over 30 years, while independent analysts point to the lack of transparency and public debate behind the project, allegations of corruption and the illegal demolition of buildings (Ibid. 2017). The UAE has also sought to increase its food security by granting low interest loans for the modernization of Serbian agriculture and irrigation systems and investing in bankrupt socialist-era farms to produce a range of crops, meat and dairy products to be exported back to the UAE. The price offered to UAE investors for Serbian land, however, has been criticized as being too low (Middle East Monitor, 2014). In 2013 and 2016, Belgrade finally secured two US$1 billion low-interest loans from the UAE to support Serbian macroeconomic stability (Ejdus, 2017, p. 54) and can now count on the UAE as a major contributor to development assistance. Serbia, all in all, has become more attractive to non-Western economic actors in the past 10 years. But none of its economic relationships with non-Western powers have become as comprehensive as that with the EU. Its influence in that area remains dominant. This is not to say that non-Western engagement is insignificant: Through their trading relationship, investments and loans, non-Western powers understandingly provide welcome support to Serbia’s fragile economy. But their interaction with EU prescriptions in European integration matters may prove problematic, especially when their development is driven by non-­Western (e.g.,  Russian, Chinese or UAE) state interests as opposed to non-Western (e.g., Turkish) private interests.

Society The EU remains an important center of gravity for the Western Balkans. The liberalization of its visa regime, in force with Serbia since December 2009, has been an important milestone in EU–Serbia relations. It has been expected and welcomed by many citizens of Serbia as well as Serbia’s diaspora in the EU. Although it is difficult to measure the extent of Serbian illegal migration and brain drain, it is reasonable to assume that the EU’s attractive power in this area remains considerably stronger than that of Russia, China, Turkey or the UAE, despite similar arrangements abolishing visas (concluded in 2009 with Russia, 2016 with China and 2010 with Turkey). Geographical proximity, but also economic prosperity, good universities and cohort effects in the West, certainly explain why Serbian citizens prefer to travel and move to EU countries. That is not to say that non-Western powers neglect people-to-people relations. China, for instance, has opened two Confucius institutes in Serbia: one in Belgrade

Serbia 75 in 2006 and one in Novi Sad in 2013; it regularly sends business delegations to Serbia (every few months in the past two years); and it organizes annual trade and cultural forums, in which Serbia participates (Bastian, 2017). Turkey, likewise, opened a Yunus Emre Institute in Belgrade in 2015, as well as a Turkish International Cooperation and Development Agency (TIKA) to fund education, health, agriculture, infrastructure and cultural projects. Since its opening in 2010, the TIKA has invested almost €20 million in various projects in Serbia (CorDmagazine, 2017). Moreover, Turkey has been active in fostering exchanges between businesspersons: it co-organizes yearly bilateral and trilateral business forums since 2010 and 2013 respectively. But Chinese and Turkish public diplomacy remains very hesitant in comparison to Russia’s more assertive, more structured and broader engagement towards Serbian society. This engagement is most prominent in the media, where Russia seeks to influence Serbian popular views on its foreign policy, including by resorting to deceptive information. Russia, for instance, opened a Sputnik news agency in Belgrade and sought to get direct control over a TV station by launching a Serbian version of its news channel, RT. Although this plan failed to materialize, in 2015 Russia’s RT succeeded in obtaining a license to broadcast a thrice-daily news program in Serbian on a public radio station. Similarly, Serbian major newspapers, such as Politika, now offer monthly supplements published by the Russian governmental newspaper Rossiyskaya Gazeta as part of its Russia Beyond the Headlines program (Szpala, 2014). On the internet, Russian-friendly news portals have also flourished in the past few years with the support of Russian broadcasting networks. Republished by Serbian outlets on a daily basis, these pieces of information usually promote the Russian view of international crises, such as in Ukraine, while underlining the long-standing ties with Serbia; they readily criticize key organizations dominated by Western powers, such as NATO, but also the EU, for their purportedly negative impact on regional and continental peace and stability; and they repeatedly highlight the many unsolved issues in the region, calling the Serbs to resist injustice. Furthermore, Russia is active in the public sphere through the branch offices of its soft power initiative Russkiy Mir, opened in Belgrade and Novi Sad; through foundations, institutes and agencies operating in Serbia (e.g.,  Strategic Culture Foundation, Cultural Centre Russian House); through the sponsorship of Serbian sportsmen by Lukoil (handball) or Gazprom (Red Star Belgrade), as well as close links with the Serbian Orthodox Church. Warning against “Russian information warfare” in Serbia, a pro-Western think tank found that no less than 110 registered non-governmental organizations, associations and media outlets operating in the country were directly linked to Russia (B92, 2016d). The declining popularity of the EU in Serbia, linked to the rising unpredictability underpinning the EU’s enlargement policy in the past 10 years, offers a fertile ground to non-Western public diplomacy (Marciacq, 2017). Opinion polls show that Serbs find the EU less and less attractive. According to Serbian authorities, in 2003 72 percent of Serbs declared that they would vote in favor of EU accession, against 47 percent in 2016 (Figure 3.4). According to the Regional Cooperation

76  Florent Marciacq 80% 70% 60% 50% 40% 30% 20% 10% 0% 2003

2006

2007

2008

2009

2010 Yes

2011

2012

2013

2014

2015

2016

No

Figure 3.4 Opinion polls: if there was a referendum tomorrow with the question: “do you support the accession of our country to the European Union?”, what would you vote for? Source: Ministry of European Integration of the Republic of Serbia (2017)

Council’s Balkan Barometer (2017), this decline is even stronger: in 2017, only 26 percent of Serbs declared that EU accession would be a “good thing” (21% in 2016), whereas 30 percent said that it would be a “bad thing” (31% in 2016). At the same time, Russia has steadily improved its image in Serbia. In 2005, a study showed that 34 percent of Serbs believed that their country’s foreign policy should rely more on Russia, and in 2007, 59 percent declared that Serbia should develop closer ties with Russia (Konitzer, 2010, pp. 18–19). By contrast, in 2016, 72 percent of Serbs held a positive view of Russia (compared to 25% of the EU) (B92, 2016a). As a matter of fact, 47 percent of them believed that Russia was the largest supplier of development aid to Serbia, whereas its contribution, in reality, is dwarfed by far by the EU, the U.S. and even Japan. In the same vein, in 2017, according to another study, 54 percent of Serbs declared that they approved of Russia’s leadership (against 51% in 2012), while the EU was only granted a 28-percent approval rate (Gallup, 2017). The image of China in Serbia, to conclude, has similarly improved in the past few years. In 2005, only 3 percent of Serbs believed that their country should rely more on China (Konitzer, 2010, p.  18), whereas in 2012, 47  percent approved of Chinese leadership (Gallup, 2012 cited in Pavlićević, 2016). Furthermore, in 2014, an opinion poll conducted in the aftermath of China’s 16 + 1 Summit in Belgrade showed that most Serbs (84%) paid attention to the intergovernmental meeting; 58 percent believed that holding this meeting in Belgrade represented a “great success for the Serbian government”; 65 percent thought that it had

Serbia 77 “significant economic and political importance”, and 85 percent that it provided “incentives for the economy” (Pavlićević, 2016).

Conclusion Twenty years of European integration have led to the establishment of linkages between Serbia and the EU that are more comprehensive, both in terms of depth and scope, than those more recently built or revitalized with Russia, China, Turkey and the UAE. These linkages, fostered throughout Serbia’s process of EU accession, are used by the EU to convey influence in a series of strategic areas, from security to economy, from foreign policy to society. They shape Serbian policy contexts by affecting what is deemed appropriate, and also influence Serbia’s policy decisions more directly through the use of conditionality. The influence of the EU may have been overestimated if one considers the mixed results yielded by the EU’s approach in Serbia, for example, in terms of democracy consolidation, economic convergence and public diplomacy (Marciacq, 2017). But it remains overall more effective than non-Western powers’ multifaceted engagement. This engagement has markedly grown in the past 10 years, however, against the backdrop of Serbia’s domestic, European and international context: the Kosovo status issue, which retains a high priority in Serbian politics, has granted Russia a strategic role in Serbian foreign policy; the enlargement fatigue, experienced by the EU since the 2000s, has undermined the credibility of the EU’s offer and put Serbia’s commitment to reforms to the test; and the international economic crisis, which has hit Serbia through Western investors, has increased Serbia’s need for economic development. The (re)engagement of Russia, China, Turkey and the UAE in Serbia came along with different opportunities, which Serbia, more often than not, has seized out of instrumental need rather than normative choice. The development of linkages between Serbia and non-Western powers has not been without implications in EU–Serbia relations and has accidently (more than purposefully) even tended to collide with the liberal reformist agenda promoted by Western powers. Serbia does not directly suffer from the exertion of direct influence by non-Western powers, as it would if these demanded straightforward compliance with EU rules and prescriptions. Such an influence, if it were to materialize, would bring no instrumental gain to Serbia, given its fruitful relationship with the EU. It is therefore likely that Serbia will remain reluctant to respond to such forms of influence directly targeting its conduct. But it has opened up to forms of influence affecting its exposure to non-Western powers, mainly through the development of asymmetrical interdependences (linkages as sources of influence to shape the conduct of others) or the development of trade relationships (linkages as sources of influence to shape the policy context of others) (see the introduction of this volume). With Russia, these linkages have mostly developed in the field of military and security cooperation, foreign policy and multilateral diplomacy, and have enabled Russia to affect Serbian policy conduct and contexts and exert influence in various ways. Serbia’s declaratory behavior in the OSCE, which increasingly

78  Florent Marciacq diverges from the EU, is a good illustration of the difficulty faced by Belgrade to both demonstrate its commitment to EU integration and reciprocate Russia’s support against Kosovo’s international recognition. With China, these linkages have primarily grown in the economy as part of the Belt and Road Initiative. They are underpinned by strong asymmetries, limiting Belgrade’s capacity to negotiate the conditions of China’s economic engagement, and have aroused keen expectations. China’s economic diplomacy, however, does not serve the purpose of an international development policy or community of interests. The conditions offered to Serbia, although relatively soft, entail significant costs and do not necessarily support socio-economic reforms and good governance principles. With Turkey, these linkages mostly developed in foreign policy, trade and investment, with an agenda closer to the liberal reform agenda promoted by Western powers, and a focus on regional cooperation and business facilitation. Turkey’s influence in Serbia is in this respect less problematic than that of Russia, China and the UAE. With the UAE, Serbia’s relationship has developed on the basis of economic interests and has been driven by good personal relations and possibly “corruption and political intrigue” (Bartlett et al., 2017, p. 107). As with China or Russia, such linkages enable Serbia to increase its somehow modest negotiating power vis-à-vis the EU in the framework of its accession process by suggesting that Serbia is coveted by powers ready to commit diplomatic or economic resources and that the EU might “lose” it if it does not upgrade its level of engagement or integration offer. This seemingly fence-sitting strategy may seem perfectly rational. Instead of pleading in Brussels for greater engagement and faster integration (a call that would not be heard in most EU capitals) or systematically opposing the reform agenda promoted by the EU for want of better incentives, Serbia tends to build tactical cooperation with non-Western powers, based on a series of issues which the EU may consider of strategic importance. In so doing, it allows its linkages with non-Western powers to act as a source of influence (rather than medium of influence) shaping Serbia’s policy contexts (rather than conduct). However, by following this strategy, which recalls the “time-tested Titoist policy of balancing between the West and the East” (Bechev, 2017, p. 53), Serbia may find it hard to avoid important pitfalls. The intensification of Serbian relations with non-Western powers rests on the acceptance of multiple asymmetries, whether political or economic. Serbia, after all, is only a part of ex-Yugoslavia. That makes Serbia’s policy contexts more amenable to be shaped simultaneously by multiple, not necessarily mutually supportive, foreign policy actors (both Western and non-Western), and possibly weakens Serbia’s capacity to steer its position strategically among competing approaches. In the absence of a consistent strategy going beyond the tactical offsetting of one asymmetrical relationship with another, Serbia runs the risk of being trapped by the imperative of accommodating inconsistent expressions of influence rather than actually balancing them. More asymmetrical relationships, in other words, are no guarantee for better fence-sitting. Moreover, Serbia’s linkages with non-Western powers, when driven by material incentives, offer new opportunities for Serbian actors opposed to the EU’s

Serbia 79 liberal reform agenda to consolidate their informal structures. Russia’s support on the issue of Kosovo’s international recognition, for instance, has enabled the main political parties to keep their voters’ attention on this issue for many years. Likewise, China and the UAE’s planned or actual investments in Serbia, with their specific lack of transparency, have been a gift for private and political interest networks seeking rents, influence or state capture. There is no guarantee that the tactical approach followed by Serbia in the development of its linkages with non-Western powers can actually contribute to persuading the EU to speed up its accession process, especially if it strengthens the perception in the EU that Serbia is falling short in carrying out reforms. In the end, the risk for Serbia could be that it loses the upper hand over the non-Western influences that flourish in the country in response to tactical purposes or economic necessity, thereby compromising its capacity to reach its strategic objective of EU integration.

References Ağır, B. S., and Arman, M. N., 2016. Turkish Foreign Policy Towards the Western Balkans in the Post-Cold War Era: Political and Security Dimensions. In: Demir, S. (ed.), Turkey’s Foreign Policy and Security Perspectives in the 21st Century: Prospects and Challenges. Boca Raton: Brown Walker Press. B92, 2016a. Serbians ‘increasingly pro-Russian; would rather live in EU’, 12 January. www.b92.net/eng/news/society.php?yyyy=2016&mm=01&dd=12&nav_id=96676 [Accessed 29 May 2018]. B92, 2016b. Serbian Parties Sign Declaration with United Russia, 29 June. www.b92. net/eng/news/politics.php?yyyy=2016&mm=06&dd=29&nav_id=98469 [Accessed 29 May 2018]. B92, 2016c. Serbian President Says His Country ‘will never join NATO’, 17 October. www. b92.net/eng/news/politics.php?yyyy=2016&mm=10&dd=17&nav_id=99412 [Accessed 29 May 2018]. B92, 2016d. Russian Media Influence Risks Making Serbia Moscow Bureau, 24 October. www.b92.net/eng/insight/opinions.php?yyyy=2016&mm=10&dd=24&nav_id=99494 [Accessed 29 May 2018]. B92, 2017. US General: Russian Center in Serbia Is Not Humanitarian, 16 November. www.b92.net/eng/news/politics.php?yyyy=2017&mm=11&dd=16&nav_id=102822 [Accessed 29 May 2018]. B92, 2018. Serbia to Acquire Sophisticated Chinese Drone Systems, 18 September. www.b92.net/eng/news/politics.php?yyyy=2018&mm=09&dd=18&nav_id=105090 [Accessed 25 September 2018]. Balkan Insight, 2009. Turkey Pledges to Lobby for Kosovo Recognition, 7 July. www.bal kaninsight.com/en/article/turkey-pledges-to-lobby-for-kosovo-recognition [Accessed 29 May 2018]. Balkan Insight, 2015a. Serbian Military Drill with Russia Annoys EU, 19 August. www. balkaninsight.com/en/article/eu-opposes-to-serbia-s-military-drills-with-russia-0818-2015-1 [Accessed 29 May 2018]. Balkan Insight, 2015b. Serbia Goes Ahead with Military Drill with Russia, 2 September. www.balkaninsight.com/en/article/serbia-launches-military-drill-with-russia-09-02-2015 [Accessed 29 May 2018].

80  Florent Marciacq Balkan Insight, 2016a. Serbia to Host Two Military Drills with Russia, 18 August. www. balkaninsight.com/en/article/serbia-s-hosting-two-joint-military-exercises-with-rus sia-08-17-2016 [Accessed 29 May 2018]. Balkan Insight, 2016b. Bosnia Open Joint Trade Office in Turkey, 27 October. www.bal kaninsight.com/en/article/serbia-and-bosnia-open-trade-office-in-turkey-10-26-2016 [Accessed 29 May 2018]. Balkan Insight, 2018a. Chinese Company Plans $1bn Serbian Tyre Factory Report, 21 August. www.balkaninsight.com/en/article/tyre-company-plans-billion-dollar-invest ment-in-serbia-media-08-21-2018 [Accessed 25 September 2018]. Balkan Insight, 2018b. $3bn Economic Agreements Boost China’s Role in Serbia. https:// balkaninsight.com/2018/09/18/new-agreements-boost-china-role-in-serbia-09-18-2018/ [Accessed 25 September 2018]. Bartlett, W., Ker-Lindsay, J., Alexander, K., and Prelec, T., 2017. The UAE as an Emerging Actor in the Western Balkans: The Case of Strategic Investment in Serbia. Journal of Arabian Studies, 7 (1), 94–112. Bastian, J., 2017. The Potential for Growth Through Chinese Infrastructure Investments in Central and South-Eastern Europe Along the ‘Balkan Silk Road’. Athens and London: EBRD. Bechev, D., 2017. Rival Power: Russia’s Influence in Southeast Europe. Cornwall: Yale University Press. Belarus News, 2017. CSTO, Serbian Ministry of Defence to Expand Counter-Terrorism, Anti-Drug Cooperation, 13 February. http://eng.belta.by/politics/view/csto-serbianministry-of-defense-to-expand-counter-terrorism-anti-drug-cooperation-98707–2017 [Accessed 29 May 2018]. Central Bank of Turkey, 2018. EVDS Database. https://evds2.tcmb.gov.tr/index.php?/ evds/serieMarket [Accessed 29 May 2018]. CorDmagazine, 2017. Interview: H. E. Tanju Bilgic, Anbassador of the Republic of Turkey to Serbia, Migrant Crisis Not Over Yet. https://cordmagazine.com/interviews/interviewh-e-tanju-biglic-ambassador-of-the-republic-of-turkey-to-serbia-migrant-crisis-notover-yet/ [Accessed 29 May 2018]. Dailysabah, 2018a. Turkey, Serbia Cooperation May Capitalize on Tourism Opportunities, 7 May. www.dailysabah.com/tourism/2018/05/08/turkey-serbia-cooperation-maycapitalize-on-tourism-opportunities [Accessed 29 May 2018]. Dailysabah, 2018b. Turkey, Serbia Aim $5B in Trade Volume, Erdoğan Says, 7 May. www. dailysabah.com/economy/2018/05/07/turkey-serbia-aim-5b-in-trade-volume-erdogansays [Accessed 29 May 2018]. Duro, F., 2015. Serbia  – NATO: Defence Cooperation. Belgrade: Belgrade Centre for Security Policy and the Institute for Democracy and Mediation. Džihić, V., and Hamilton, D., 2012. Unfinished Business: The Western Balkans and the International Community. Washington, DC: Brookings Institution Press. Economides, S., and Ker-Lindsay, J., 2015. ‘Pre-Accession Europeanization’: The Case of Serbia and Kosovo. Journal of Common Market Studies, 53 (5), 1027–1044. Ejdus, F., 2014. Serbia’s Military Neutrality: Origins, Effects and Challenges. Croatian International Relations Review, 20 (71), 43–71. Ejdus, F., 2017. The Impact of Turkey and the Gulf States. In: Lange, S., Nechev, Z., and Trauner, F. (eds.), Resilience in the Western Balkans. Paris: EUISS, EUISS Reports, p. 36. European Commission, 2018. European Union, Trade in Goods with Serbia. http://trade. ec.europa.eu/doclib/docs/2008/august/tradoc_140028.pdf [Accessed 29 May 2018]. Gallup, 2017. Many in Western Balkans See Benefit in Joining EU, 12 July. http://news.gal lup.com/poll/213899/western-balkans-benefit-joining.aspx?g_source=COUNTRY_SRB&g_ medium=topic&g_campaign=tiles [Accessed 29 May 2018].

Serbia 81 Inserbia Today, 2014. Srem 2014 Completed Successfully, 14 November. https://inserbia. info/today/2014/11/srem-2014-completed-successfully/ [Accessed 29 May 2018]. Jeremić, V., 2011. TV Interview, RTS, 6 January. www.youtube.com/watch?v=4L1uUN AvT_g [Accessed 29 May 2018]. Joint Declaration on Political Dialogue Between the European Union and Serbia and Montenegro, 2003. Brussels, 29 September. Keetch, P., 2016. Choosing Sides in Serbia: Neutral or NATO? Harvard International Review, 24 March. http://hir.harvard.edu/article/?a=12990 [Accessed 29 May 2018]. Konitzer, A., 2010. Serbia Between East and West: Bratstvo Balancing, and Business on Europe’s Frontier. Washington, DC: NCEEER, NCEEER Working Paper, 6 July. Levitin, O., Milatovic, J., and Sanfey, P., 2016. China and South-Eastern Europe: Infrastructure, Trade and Investment Links. London: EBRD. Lisovolik, Y., 2017. Serbia’s FTA with the Eurasian Union: A Window of Opportunity. Analytical Media ‘Eurasian Studies’, 14 August. http://greater-europe.org/archives/3212 [Accessed 29 May 2018]. Makocki, M., 2017. China in the Balkans: The Battle of Principles. ECFR Commentary, 6 July. www.ecfr.eu/article/commentary_china_in_the_balkans_the_battle_of_principles_ 7210 [Accessed 29 May 2018]. Marciacq, F., 2012a. The Western Balkans and the EU in Multilateral Organisations: Foreign Policy Coordination and Declaratory Alignment in the OSCE. Journal of Regional Security, 7 (2), 119–138. Marciacq, F., 2012b. Europeanisation at Work in the Western Balkans and the Black Sea Region: Is There an All-European Way of Voting in the United Nations General Assembly? Perspectives on European Politics and Society, 13 (2), 169–186. Marciacq, F., 2017. The EU and the Western Balkans After the Berlin Process Reflecting on the EU Enlargement in Times of Uncertainty. Sarajevo: FES Dialogue Southeast Europe. Marciacq, F., and Sanmartín, J. N., 2015. When the European Union Speaks on Behalf of Non-European Union States: A Critical Appraisal of the European Union’s Alignment Mechanism in Multilateral Fora. European Security, 24 (2), 203–220. Middle East Monitor, 2014. UAE Investments in Serbia Promise Much, But Can They Deliver? 29 March. www.middleeastmonitor.com/20140329-uae-investments-in-serbiapromise-much-but-can-they-deliver/ [Accessed 29 May 2018]. Ministry of European Integration of the Republic of Serbia, 2017. European Orientation of Serbian Citizens. Public Opinion Poll. www.mei.gov.rs/eng/news/357/193/463/ details/47-of-citizens-support-serbian-membership-to-the-eu/ [Accessed 29 May 2018]. Ministry of Foreign Affairs of the Republic of Serbia, 2018. Bilateralni odnosi sa stranim državama. http://mfa.gov.rs/sr/index.php/spoljna-politika/bilateralni-odnosi/117?lang= lat&start=40 [Accessed 29 May 2018]. National Bank of Serbia, 2018. Serbia’s Balance of Payments. www.nbs.rs/internet/ english/80/platni_bilans.html [Accessed 29 May 2018]. NATO, 2017. Relations with Serbia. https://www.nato.int/cps/en/natohq/topics_50100.htm [Accessed 5 April 2019]. Nelaeva, G., and Semenov, A., 2016. EU-Russia Rivalry in the Balkans: Linkage, Leverage and Competition. Romanian Journal of International Affairs, 16 (3). Nič, M., and Cingel, J., 2014. Serbia’s Relations with NATO: The Other (quieter) Game in Town. Bratislava: Central European Policy Institute. Obradović, S., and Howarth, C., 2018. The Power of Politics: How Political Leaders in Serbia Discursively Manage Identity Continuity and Political Change to Shape the Future of the Nation. European Journal of Social Psychology, 48 (1), 25–35.

82  Florent Marciacq Pavlićević, D., 2011. The Sino-Serbian Strategic Partnership in a Sino-EU Relationship Context. University of Nottingham, Briefing Series, 68. Pavlićević, D., 2014. China’s Railway Diplomacy in the Balkans. Jamestown Foundation, China Brief, 14 (20). Pavlićević, D., 2016. The Key Influencers on the Serbia’s Relationship with China: Beyond China-centric Explanations. In: Huang P. and Liu, Z. (eds.), Stakeholders in ChinaCEEC Cooperation. Beijing: China Social Sciences Press. Pavlović, Đ., 2016. The Future of the Trilateral Cooperation among Bosnia and Herzegovina, Turkey, and Serbia. Ankara: SAM Centre for Strategic Research. People’s Daily, 2016. China, Serbia Stress Sovereignty and Territorial Integrity, 19 June. http://en.people.cn/n3/2016/0619/c90000-9074410.html [Accessed 29 May 2018]. Petrović, Ž., 2010. Russian  – Serbian Strategic Partnership: Scope and Content. In: Petrović, Ž. (ed.), Russia-Serbia Relations at the Beginning of the 21st Century. Belgrade: ISAC Fund. Radenković, I., 2016. Foreign Direct Investments in Serbia. Belgrade: Rosa Luxemburg Stiftung Southeast Europe. Regional Cooperation Council, 2017. Public Opinion Survey Balkan Barometer. Sarajevo: Regional Cooperation Council Secretariat. SNS, 2019. Вести. https://www.sns.org.rs/en/novosti/vesti/agreement-cooperation-serbianprogressive-party-and-all-russian-political-party-united. [Accessed 5 April 2019]. Szpala, M., 2014. Russia in Serbia – Soft Power and Hard Interests. OSW Commentary, 29 October. www.osw.waw.pl/en/publikacje/osw-commentary/2014-10-29/russia-serbiasoft-power-and-hard-interests [Accessed 29 May 2018]. Teokarević, J., 2016. Serbia: Perspectives on Eurasian integration. Brussels: European Council on Foreign Relations. Tonchev, P., 2017. China’s Road into the Western Balkans. Paris: EUISS, February. Torralba, R. M., 2014. Belgrade at the Crossroads: Serbian-Russian Relations in Light of the Ukraine Crisis. Royal Institute Elcano, ARI 63/2014. UN Comtrade, 2018. https://comtrade.un.org/data [Accessed 29 May 2018]. Vračić, A., 2016. Turkey’s Role in the Western Balkans. Berlin: Stiftung Wissenschaft und Politik. Worldbank, 2018. WITS. https://wits.worldbank.org/CountryProfile/en/Country/SER/ Year/2006/TradeFlow/EXPIMP [Accessed 29 May 2018]. Xinhua, 2017. China Donates Military Equipment to Serbian Army, 21 June. http://eng. mod.gov.cn/news/2017-06/21/content_4783395.htm [Accessed 29 May 2018]. Zorić, B., 2017. Assessing Russian Impact on the Western Balkan Countries EU Accession: Cases of Croatia and Serbia. Master Thesis. University of Tartu.

4 Bosnia and Herzegovina Abandoned by the West, embraced by the East? Adnan Huskić

For most of its post-1995 history, Bosnia and Herzegovina (BiH) was seen as falling firmly ideationally and geo-strategically into the Western (U.S.–EU–NATO dominated) sphere of influence. Most processes were driven and steered by these agents with methods that varied over time. With the U.S.’ demotion of the Western Balkans to a lower priority following the shift that occurred after 9/11, the EU willingly, though unprepared, assumed the leading role in the region. The EU’s approach, based on conditionality, very soon resulted in the stalling of reform processes, and Bosnia’s apparent resistance to conditionality prompted the EU to amend its approach to the region by assuming a more proactive role. A series of negative developments in the EU and globally, starting with the economic crisis of 2008, severely curtailed the EU’s ability to remain engaged in the region. On the domestic side in BiH, democratic regression, widespread corruption, and administrative complexity creating numerous entry points and where rent-seeking is the norm, has helped forge closer relations between particular political elites and the new set of external actors whose way of doing business for the most part does not conform to Western standards of transparency and openness. The external actors in question, though very different in many respects, do have at least some things in common. They are all geographically positioned on the Asian continent, although though Turkey and Russia stretch into the European continent, and they are either autocracies like China and the UAE, or competitive autocracies like Turkey and Russia. Currently, only Turkey and Russia wield some form of identifiable political influence in Bosnia and Herzegovina, whereas China and the UAE are becoming increasingly involved in the economic sphere. Finally, Turkey, the UAE and Russia can make use of a broader identity-based connection (be it broader or more culturally specific Islamic or Slavic) in order to serve their interests, while China cannot. The following sections will look into each of these countries’ relations with Bosnia by analyzing them with reference to political, economic, cultural and military factors.

Turkey Turkey’s relationship with Bosnia cannot be analyzed out of historical context. While modern Kemalist Turkey tried to put distance between its imperial past and

84  Adnan Huskić its pro-Western orientation, the new Turkish foreign policy adopted by the AKP seeks to build upon this past. Turkey is a former imperial power whose dominion included Bosnia and much of Balkans for nearly five centuries. During the Ottoman period, Bosnia underwent a process of Islamicization that was unusually widespread, giving rise to many controversial (and) mythical interpretations about the origins of Bosnian Muslims and their religion prior to the arrival of Ottomans. The Ottoman Empire undoubtedly left a lasting mark in Bosnia, which contributes to the image today’s Turkey enjoys. Turkey’s hesitation to engage more actively in Bosnia until recently had its roots in the Kemalist rejection of religion, and consequently Turkey’s desire not be seen as merely another Muslim country, as well as its declarative strategic orientation towards the EU and NATO, that is, the West. Fundamental changes in Turkish foreign policy behavior coincided with the rise to power of the AKP and Recep Tayyip Erdoğan. The first phase of more active involvement follows the adoption of a foreign policy vision for the new Turkey in the new world order laid out by Ahmet Davutoğlu, where the Balkans in general and Bosnia in particular played a relatively significant role, and in its more recent phase through the rather inconsistent and erratic foreign policy actions of Erdoğan himself. A proactive Turkish role in Bosnia was naturally not seen favorably by all domestic actors, given the prevalence of identity politics in Bosnia’s political discourse. Politicians from Republika Srpska, along with their Serbian peers, intellectuals and journalists, almost instantly identified the Turkish activism in the Balkans as neo-Ottomanism. For both Davutoğlu and Erdoğan, the Ottoman period and the “Ottoman cultural circle” were to be used as a basis for modern Turkey’s re-engagement in the Balkans and therefore embraced, rather than rejected as before. However, they denied that the new policy could and should be seen as neo-Ottomanism (Kadiouglu, 2012, p. 69). Those who questioned Turkey’s ability to implement such an ambitious foreign policy agenda were not surprised when the pressures on the domestic front diminished Turkish activism in the Balkans. Turkey gradually abandoned its role as a relatively successful broker in bi- and multi-lateral disputes between Bosnia, Serbia and Croatia, opting for the advancement of bilateral relations with each of these countries. As Erdoğan consolidated his power in Turkey, he established stronger ties with the Bosniak political elite, or rather a part of it, the SDA, led by Bakir Izetbegović. This approach drew criticism of Turkey’s role in Balkans by other predominantly Bosniak political parties, as well as civic-minded intellectuals and journalists. Furthermore, Turkey was portrayed as paying lip service to Bosnia and Bosniaks, whereas Turkish investments and preferential trade deals went to other countries, most notably Serbia (Karabeg, 2017). Changing nature of relations As Erdoğan rose to an unchallenged position of power, the Turkish foreign policy goals of the Davutoğlu era gave way to a less predictable and much less regionoriented foreign policy. As if to mark this change, the information on the website of the Turkish MFA concerning relations with Bosnia was last updated in 2014.

Bosnia and Herzegovina 85 Bosnia–Turkey relations began to morph into almost entirely interpersonal – Erdoğan and Izetbegović – and interparty – SDA and AKP – relations. Naturally, this personalization of linkages received significant criticism in Bosnia, where many observers began to question Turkey’s friendship and motivation, particularly the SDA opponents in the Bosniak camp and an array of civic-minded parties and intellectuals. Around the same time, Turkey began to focus on changing the public’s perception by investing in media. A Turkish businessman close to Erdoğan financed the establishment of a web portal, www.faktor.ba, and the daily Stav. Both media are owned and operated by Simurg Media, a company whose owner, Burcu Uygur, is described by some media as a man who represents Erdoğan’s interests in media and other fields (Janusz, 2015). These news outlets promote in a rather direct way the interests of the current Turkish government while domestically favoring and promoting the interests and positions of the SDA, or rather its leader. These are believed to be both investments in the media field as well as an attempt to increase Turkish political influence in accordance with the declared goals of Turkish foreign policy, where these ambitions seem to run parallel to the ambitions of the SDA (Halilović, 2015). In August 2017, the Turkish Embassy in Sarajevo organized a press conference announcing the intention of Turkish state television TRT and production company Sancak Medya to make a TV series about the life of Alija Izetbegović, the late first president of BiH, prominent Bosniak political leader and one of the founders of the SDA. The popularity of Alija Izetbegović in Turkey apparently surpasses his popularity in Bosnia, where his political legacy is subject to controversy. At the press conference, both Bakir Izetbegović and his sister Sabina Berberović described the general tone of script for the series as “too idealized”, while Bakir Izetbegović described the nickname King of Wisdom that Turks gave to his father as a “bit pretentious”. The Sarajevo-based columnist Senad Avdić argues that the series was made for Turkish domestic purposes and as a testament to the “sinlessness, wisdom and the vision of the Bosniak leader” who left Bosnia at his deathbed in his Turkish brother Erdoğan’s custody (Avdić, 2017). The failed coup of July  2016 transformed the conflict between Erdoğan and Fetulah Gülen and his Hizmet movement, which had been brewing since 2012, into open hostility that quickly spilled into the international arena and engulfed Bosnia too. To no surprise, the SDA and its officials became instrumental in this conflict. For as long as Erdoğan and Gülen were politically aligned, the spread of Gülen’s influence in Bosnia ran without inhibitions, parallel to that of the Turkish official line. Hizmet affiliates had been present in BiH since 1997 under the name Bosna Sema, which operates some 15 educational institutions in Sarajevo, Bihać, Zenica, Tuzla and Mostar. In addition to schools and universities, the Gülen movement established a foundation, Izvor nade (Source of Hope), and issued the now defunct newspaper Novo vrijeme (New Age). The Turkish government purges that occurred as a result of the failed coup reached Bosnia through diplomatic networks and private channels. Turkish authorities signaled to the Bosnian government, or more specifically to SDA officials in government structures, that they expected them to act to annul the presence and influence of what Turkish authorities now

86  Adnan Huskić labeled as FETO (Fethullahist Terror Organization). Diyanet, according to news reports, even gathered intelligence via imams from 38 countries, including Bosnia, on suspected Gülen followers (Erdem, 2016). A negative public campaign against Hizmet by prominent SDA members previously close to this organization was carried out dominantly by media close to the SDA, particularly those financed by Turkish money such as Stav and Faktor. The vilification campaign portrayed Hizmet in an extremely negative light as an organization that corrupts youth and as an unnecessary and foreign element. Even non-Bosniak officials from state institutions responded to Turkish demands by increasing their monitoring of Bosna Sema institutions and by advising parents not to enroll their children there (AA, 2016). The culmination of the Bosnian part of the purge occurred when the SDA-controlled Sarajevo City Council rescinded an award to Ali Lafcioglu, a Bosna Sema teacher, prompting a rather negative reaction from the public and among opposition parties in Sarajevo City Council, criticizing the SDA for its subservient attitude towards Turkey. An opposition politician from Sarajevo City Council, Vibor Hadžić, argued that “friendly relations (with Turkey) are not the same as colonial subservience” (Stanković Luković, 2016). In a rather vague statement, the mayor’s office argued that the decision to rescind the award was made “keeping in mind the interests of the city and the necessity to continue cooperation with the legal institutions of the Republic of Turkey” (Stanković Luković, 2016). Despite strong pressures from Turkey, the whole process of trying to subdue Hizmet did not run so smoothly, resulting in relatively serious frictions in relations between Izetbegović and Erdoğan. Seeking to alleviate (or put off ) the pressure, Bosna Sema offered to transfer its ownership to the Islamic Community of BiH, but the deal never materialized, apparently because of Bosna Sema’s outstanding debt, which simply could not have been accommodated within the existing rules of the Islamic Community’s sharia law. Finally, in October 2016 Bosna Sema was taken over by U.S.-based Global Investment LLC and renamed Global Education, which the news outlet Faktor, close to Turkish government, dubbed “Gülen selling, Gülen buying”1 a deal, detailing apparent connections of the U.S. academic who was in charge of the ownership transfer to Hizmet in the U.S. FDI, trade and development aid Bosnia and Bosniaks have been frequently mentioned in Erdoğan’s passionate speeches. Addressing the crowd after winning the elections in 2011, Erdoğan said that “Sarajevo won today as much as Istanbul” (BBC World News, 2011). In his famous “balcony speech” after the election on 30 March 2014, Erdoğan expressed gratitude to his “brothers in the Balkans, in Bosnia, in Macedonia, in Kosovo and in all cities in Europe who celebrate our victory with the same joy we have here” (Huriyet Daily News, 2014). Yet Turkey’s apparent championing of Bosniaks does not seem congruent with figures concerning Turkish investments in Bosnia or the balance of trade between the two countries. Turkish FDIs rose from only 27.5 million KM in 2003 to a

Bosnia and Herzegovina 87 modest 389.5 million KM in 2016 (Figure 4.1), which amounted to only 1.11 percent of total FDIs in Bosnia in 2003 (27.5 million KM out of 2.418 billion KM), rising to 3  percent in 2016 (389.5  million KM out of 12.964  billion KM) (see Figure 4.1). In terms of trade relations, Bosnia runs a permanent trade deficit with Turkey (Figure 4.2). Following a sharp drop in Turkish exports to Bosnia in 2008, which probably occurred due to the onset of the global economic crisis, Turkey’s exports rebounded, as did imports from Bosnia. Despite having signed a free-trade agreement with Turkey in 2003, Bosnian exports to Turkey have only gradually taken off following an increase in Turkish imports after 2009. During his visit to Serbia in October 2017, the Turkish minister of economy, Nihat Zeybekci, announced 75.0 56.0771

56.3

47.7102

46.4344

37.5

31.5709

18.8 11.5556

18.0158

16.7919

17.6391

-0.5715 2004

30.1067

5.8081

0.0

-18.8

31.0529

2005

2006

2007

-5.3626 2008

2009

2010

2011

2012

2013

2014

2015

2016

Figure 4.1 Flow of Turkish FDI to Bosnia and Herzegovina per year (million KM) Source: CBBiH

1,125.0 900.0

806.0025

863.0675

675.0 366.8177 379.0832

450.0 225.0 -

25.0717

20.5243

51.8531

81.6618

2007

2008

2009

2010

450.1098 449.381

493.2018

644.6978

354.6295 150.0537 182.8735 174.6249

2011

Export to Turkey

2012

687.3486

401.0474

234.3917

2013

Import from Turkey

Figure 4.2 Trade between Bosnia and Turkey (million KM) Source: CBBiH

582.2034

2014

2015

2016

88  Adnan Huskić the signing of a new free-trade agreement with Bosnia that would include the public procurement segment, which could have stronger beneficial effects for Bosnia. BiH’s relatively potent arms industry exports in 2017 amounted to €98.5 million, with Turkey being one of the top four countries where Bosnian arms and ammunition are exported (Hambo, 2017). Turkey prides itself on being the “most generous donor country in 2015” in its humanitarian aid to GNA ratio out of all OECD countries (Turkish Coooperation and Coordination Agency, 2015, p.  8). Indeed, Turkey’s erratic and sometimes irrational behavior in foreign policy is largely offset by the generous development aid it provides. Similarly to the UAE, the development aid here seems instrumental in building a new image that signifies the successful character of the state, especially since Turkey transformed from net beneficiary to net donor of international development aid (SDARC, 2011, p. 3). In this segment, too, Bosnia (and Kosovo) figure  very prominently among the recipient countries. From 2011 to 2015,2 Bosnia received almost US$127 million in development aid from Turkey. Turkey’s aid to Bosnia peaked in 2014 as a result of devastating floods that hit the country in May that year, resulting in loss of life and significant material damages. Turkey was involved both in housing reconstruction and immediate aid. Within the framework of the Turkish development aid system, two state-owned entities operate  – TIKA (Turkish International Development Agency) and the Diyanet Foundation (Turkey’s Presidency of Religious Affairs) – along with private foundations such as the Dost Eli Charity, the Solidarity Foundation and the Yardımeli Foundation. TIKA and other organizations seem to focus more on the regions where Bosniaks are a majority, and in terms of the reconstruction of cultural heritage monuments, on those from the Ottoman period. Most notably, in Republika Srpska (RS), TIKA financed the reconstruction of a historic landmark from the Turkish period, the famous Mehmed–Paša Sokolović ćuprija (bridge) in

50. 43.46 37.5 26. 25.

22.28 17.15

17.94

2011

2012

12.5

0.

2013

2014

Figure 4.3 Turkish development aid to Bosnia and Herzegovina (million USD) Source: TIKA Development Aid Reports 2011–2015

2015

Bosnia and Herzegovina 89 Višegrad on the Drina river, built in 1577. The construction job was awarded to the Turkish construction company ER-BU. Diyanet, among other things, provided €300,000 of immediate aid relief during the 2014 floods, but their activities and those of Dost Eli and Yardımeli are mainly in providing charity and support to religious activities in close cooperation with the Islamic Community in BiH. More recently, TIKA financed the construction of a Haematology Clinic at the Clinical Centre of the University of Sarajevo. While not in itself an unusual activity for TIKA, it was the timing and the choice of clinical center, of which there are five in Bosnia, that points to a political background for this undertaking. Subject to numerous controversies is the issue of the meteoric rise of Sebija Izetbegović, wife of Bakir Izetbegović, President of the largest Bosniak party SDA and a close friend of Erdoğan, to the position of General Manager of the biggest public hospital in BIH. That Mrs.  Izetbegović’s heavily criticized appointment coincided with a large donation from TIKA could be interpreted as a tell-tale sign and a materialization of the good personal relations between Izetbegović and Erdoğan. Cultural and military cooperation The Turkish cultural center Yunus Emre Institute (Yunus Emre Enstitüsü [YEE]) operates in three locations in Bosnia – in Sarajevo, Mostar and Fojnica. According to their website, only Bosnia and Kosovo have three such national centers. YEE centers were established in 2007 by a decree by Recep Tayyip Erdoğan and represent a mechanism of Turkish soft power. They took over the Turkology project from TIKA, running since 1999 (Cihan, 2011). Under the broad aim of promoting Turkish culture and language, YEE actively supports the teaching of Turkish language in schools. The project started with only 10 teachers in 2011, rising to 70 in 2017, providing some 8,200 students in 150 schools with Turkish language lessons (Yunus Emre Enstitüsü, 2017). YEE also marked the anniversary of the failed coup of 15 July with a commemorative race in Sarajevo, dubbed the “Race in Honour of Democracy”.3 The anniversary was also commemorated with a photo exhibition in the historical Sarajevo landmark Vijećnica.4 As an important NATO member, Turkey was always rather supportive of Bosnia’s bid to join the Alliance. Turkey lobbied heavily for Bosnia to receive a Membership Action Plan in 2010 (Linden and Irepoglu, 2013, p. 245). Turkey maintains regular and ordinary contacts with the Bosnian Ministry of Defense, providing among other things training and courses in Turkish language. Within the peacebuilding segment of its development aid, Bosnia and Kosovo are listed as the biggest recipients of Turkish aid in the Balkans, with 8.5 and 8.3 million KM respectively (RCUDSD, 2012, p. 63). Altogether, the moderate rise in Bosnian exports to Turkey and Turkish investments in BiH, as well as the level of development aid spent in Bosnia, certainly represent positive trends. The same can be said for Turkey’s consistent support for Bosnia’s NATO and EU membership bids. At the same time, Erdoğan continues to favor the identity card by emphasizing his supposed strong attachment to Bosniaks, to the benefit of both sides. This was particularly visible at the pre-election

90  Adnan Huskić rally for the Turkish diaspora held in Sarajevo on 20 May 2018. Similar rallies were banned in several EU countries, and by holding a rally for the Turkish diaspora, Erdoğan stood to greatly benefit. His legitimacy rests on a narrow electoral majority in Turkey and votes from abroad have certainly played a role. At the same time, having Erdoğan in Sarajevo was used for the promotion of Bakir Izetbegović and his family. While Erdoğan’s wife cut the ribbon for the newly built hematology department, together with Izetbegović’s wife, Izetbegović himself held a passionate speech at the rally praising Erdoğan’s leadership of Turkey. Despite staying almost entirely out of domestic political bickering in BiH, simply by maintaining and cherishing this identity linkage, Turkey in effect increases the polarization not just between ethnic communities in BiH, but also among Bosniaks themselves.

Russia Russia’s involvement in Bosnia runs along three different and sometimes overlapping dimensions. First is the identity-based bond of Slavic and Orthodox brotherhood that serves to provide pretext for Russian interest in the region and its explicit support to Bosnian Serbs ever since Bosnian War. The second dimension of Russian foreign policy toward Bosnia is part of regional/global multiparty relations, disagreements and conflicts between Russia and the West, namely the U.S., EU and NATO. Russia’s interests in the region are said to rest primarily along this axis, whereas the identity linkage serves as a valuable pretext and ethical rationale. The third dimension is explicit economic and energy interests. These dimensions, though approached as distinct, are intertwined and mutually reinforcing. Russia’s relatively marginal role during the Yugoslav crisis was only partly offset by a number of Russian volunteers that took part in the armed struggle in support of their Slavic Orthodox kin in Bosnia. Over time, Russia supported both the political demands of the Bosnian Serbs and eventually positioned itself as their trusted ally. Countering Western dominance, Russia provided peacekeeping troops in Bosnia that were mainly positioned in Serb-dominated areas and served as a guarantee that Serb political demands would be met after the hostilities stopped. After the war, Russia provided troops for the NATO-led Stabilization Forces (SFOR). Still, the relative weakness of Russia during this time made its influence rather limited, and as a result, Russia was largely sidelined during U.S.led negotiations on the permanent settlement of conflict and the future setup of the country. In the immediate post-war period Russia took part in the Peace Implementation Council (PIC), supportive of the general course adopted by the West concerning Bosnia, which even included support for NATO membership as late as 2002. With Putin’s rise to power, Russian policies in Bosnia underwent significant transformation. The third, and by that time largely absent dimension of Russia’s relations to Bosnia, namely the economic and energy interests, have started to emerge and coalesce with the previous two dimensions of identity-based politics

Bosnia and Herzegovina 91 and regional/global geopolitics. When Russia began to diverge with the West over its course of action in PIC, it started pouring money into RS. It is hardly a coincidence that the then rather constructive and moderate politician and champion of the West in the RS, Milorad Dodik, began his transformation into a radical nationalist at that time. Echo of a global shift – politico-economic relations between Russia and BiH (RS) The tipping point was the failed police reform that ran aground amidst the process of wider constitutional reforms pursued by the West with the aim to ensure the transfer of ownership to local political elites, thereby allowing for a gradual phase-out of the heavy international presence in Bosnia. Dodik’s direct confrontation with the international community over the High Representative’s decision to change the procedures of the adoption of decisions by the Council of Ministers and the Parliamentary Assembly of BiH caused a visible rift between the West and Russia, with the first ever dissenting opinion by Russia in PIC conclusions (PIC Steering Board Political Directors, 2007). Payment for Russia’s political support came in the form of the obscure privatization of the RS oil sector by Russian company NeftegazInKor (НефтегазИнКор)5 in 2007. The RS oil sector, which consisted of an oil refinery in Brod, a Motor Oil Refinery in Modriča and petrol distribution stations, was sold for €121 million (less than 225 million KM). Dodik’s government decided to privatize the oil industry under special conditions by first amending the Law on Privatization6 to introduce a direct agreement model7 which in effect meant that the government took the process away from the Directorate for Privatization, thereby circumventing the transparency requirements of public procurement procedures. The privatization contract was never publicly disclosed despite repeated demands by the opposition parties in the RS to do so, and parts of the deal that were ultimately disclosed show just how disastrous the deal was for the RS. An analysis of the deal by Transparency International showed that “no positive privatization effects exist, while its negative balance will have to be covered by the citizens and the Budget of RS”. The same report further states that “the direct costs come close to a billion KM, while the public revenues and investment total less than half that amount”, concluding that “[t]he NIRS was given away as a gift in an operation resembling serious money laundering” (Transparency International BiH, 2009, p. 2). The same report points to the fact that the payment for the deal was made by Vnesheconombank (Внешэкономбанк), which is a Russian government-owned development bank. Other analyses point to the fact that RS was obliged to cover the outstanding debts of the oil industry, ranging between 219 and 239 million KM, meaning that RS in the best case profited by a meager 6  million KM (about €3  million), or more likely lost around 15 million KM (€7.5 million) (Božić, 2011). In addition to this, through the process of privatization serious damages were incurred by some 15,000 individual shareholders whose share values dropped, losing nearly 15 million KM in the process. The privatization deal damaging to the interests

92  Adnan Huskić of RS indicated just the beginning of the disastrous period for the oil refinery in Brod which, according to the KPMG auditing report, had accumulated more than 591 million KM debt by 2017 (Čigoja, 2017). Over time, the political support for Dodik from Moscow became more apparent and direct resulting (or coinciding with) a convergence of attitudes between Russia and RS, particularly concerning the role of the international community in BiH. Dodik began openly challenging the authority of international bodies in BiH, most notably the OHR, and accusing Western embassies in Bosnia of meddling in domestic affairs, all while maintaining permanent and regular contacts with Russia. Around the same time, Russia began first shyly and later more openly to contest Bosnia’s orientation towards NATO and even the EU. An overview of diplomatic activities relating to Bosnia from publicly available Russian MFA records illustrate this change. Until 2004, there was no mention of official meetings of Russian officials with RS authorities. The first such event was a meeting between the Russian Minister of Foreign Affairs Igor Ivanov and then-President of RS Dragan Čavić during the latter’s visit to Moscow at the invitation of the Mayor of Moscow. The first official meeting with Milorad Dodik took place in January 2007 in Moscow, shortly before the deal on the privatization of the RS oil industry was concluded. During this time Russian officials maintained permanent contacts with state-level authorities and High Representatives in BiH. In 2009, Sergey Lavrov visited Bosnia and held meetings in Sarajevo and, for the first time, in Banja Luka with the RS authorities. During his visit to Bosnia in 2010, the Deputy Minister of Foreign Affairs Vladimir Titov also paid a visit to RS in addition to Sarajevo. In 2014, Dodik visited Moscow to receive an award from the International Public Fund of the Unity of Orthodox People and met with Lavrov. In 2015, Dodik visited Moscow again to meet with Lavrov to discuss the UK’s proposed Srebrenica Resolution, which Russia eventually vetoed, citing its supposed anti-Serb bias. In terms of topics during such meetings, official records consistently mention the necessity of closing down or transforming the OHR, and economic cooperation in energy and other fields, echoing especially at later stages Dodik’s political positions and even wording. Not just semantic but substantial differences are easily discernible if we compare two official statements from the Russian MFA, one from early 2003 and another from 2017. From “commitment to a line on consolidating Bosnia’s statehood” in 2003, Russia’s official positions switched to “principles of equality of the two entities – the Republika Srpska and the Federation of Bosnia and Herzegovina – and the three state-forming peoples – Bosnians, Serbs and Croats”. The former was made during a meeting with Paddy Ashdown in 2003, while the latter was made on 18 January 2017 in a statement concerning the introduction of sanctions against President Milorad Dodik by the U.S. Department of the Treasury. Politico-economic alignment Looking at economic linkages, especially the seedy oil industry deal, it is hard to escape the impression that Russian political sponsorship and support comes

Bosnia and Herzegovina 93 at a price. Russian investments in BiH are mostly found in the RS, and they reached their peak in 2007 and 2008 when NeftegazInKor acquired the oil industry of RS, which remains to this day the largest Russian investment in BiH (see ­Figure 4.4). Russia invests mainly in the energy sector, whereas the acquisition of Volksbank by the Russian Sberbank covers the whole region and not just Bosnia, allowing for its entry in the banking sector as well. In the process, Sberbank in BiH acquired 30 branch offices, more than 100,000 individual clients and 420 employees. Russia’s exports to BiH saw a significant increase from 2008 until 2011. After 2011, exports from Russia to Bosnia have been steadily decreasing, whereas 375.0

332.8

339.4

250.0

195.8 129.2

125.0

0.0

-125.0

140.3

147.5

89.1 0.0

0.0

28.5

0.0

-50.9

-82.8 2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Figure 4.4 Flow of Russian FDI to Bosnia and Herzegovina (million KM) Source: CBBiH

1,800.0

1635.0911

1,350.0

-

1292.4668

1189.1052

910.0725

865.6842

900.0

450.0

1493.8853 1505.9948

729.4266

277.9025

344.0056

7.5781

14.9698

25.6495

37.8986

53.1839

56.0316

57.1641

79.58

97.98

109.8291

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Exports to Russia

Imports from Russia

Figure 4.5 Trade between Bosnia and Russia (million KM) Source: CBBiH

94  Adnan Huskić Bosnia’s export to Russia remain relatively low and exhibit slow gradual growth which partly corresponds to the onset of sanctions by the West to Russia for the annexation of Crimea. Bosnia did not join the sanctions and managed to increase its exports to Russia during this period largely thanks to the efforts of the agile state minister in charge of foreign trade and economic relations, Mirko Šarović. Over the course of several years, Bosnia increased its exports to Russia, mainly fruits and vegetables: in the first 10 months of 2016, Bosnia exported 16,000 tons of fruits and vegetables to Russia, which represent a 40 percent increase compared to the previous year (klix.ba, 2016). The positive trend continued in 2017, when Bosnia was expected to export fruits and vegetables to the tune of 50 million KM (Anadolu Agency, 2017). Despite all this, Bosnia continues to run a significant deficit in its trade with Russia. Cultural and military cooperation The previously mentioned changes in Russia’s position towards the West led to a gradual shift in terms of its “support” for Bosnia’s bid to join NATO and latterly also the EU. Today, Russia no longer shies away from vocally opposing Bosnia’s NATO membership and openly advocates “alternatives” to EU membership that could come in the form of stronger cooperation with Russia, Turkey and China (Vijesti.ba, 2014). At the same time, Russia maintains regular contacts with the Bosnian Ministry of Defense (MoD) under the Vienna Agreement of 1999 and regular diplomatic visits and cooperation. It cooperates with the Bosnian MoD primarily by catering to the religious needs of MoD/BiH Army members and organizing visits to Orthodox places of worship in Russia. Since 2012, the Banja Luka National and University Library hosts the Russian cultural center Russian World (Русский мир). In much the same way as the Turkish cultural center, the Foundation Russian World was established by President Putin in 2007 with the aim to promote Russian culture and language in the world. On the other hand, Russian media are not present directly in BiH, and their presence in Serbia, primarily in the form of Sputnik, while largely focusing on Serbia covers BiH and perpetuates Russian interests from there (Vele, 2017). Politically, Russia supports the current government in RS (the same government that sold the RS oil industry to Russians) especially in its longstanding dispute with Western embassies and the OHR. The RS government, on the other hand, effectively blocks the activation of the Membership Action Plan for NATO, which is undoubtedly in Moscow’s interest. The apparent alignment of interests between the current RS government and Moscow serves both sides for the time being. At the same time, Russia continues to maintain relatively solid relations with BiH at the state level.

United Arab Emirates The United Arab Emirates (UAE), as a relative newcomer to the region, established relations with BiH during the 1992–1995 war mostly within the framework

Bosnia and Herzegovina 95 of Organization of Islamic Cooperation (OIC). During the war, the OIC dedicated to Bosnia one permanent working group, convened three emergency Conferences of Foreign Ministers and thirty coordination meetings, issued thirty-five resolutions, organized forty-five visits by the Secretary-General’s special envoys and dispatched ten special delegations to Bosnia. (Ihsanoglu, 2010, p. 118) The OIC served as a platform for amplifying the voice of the Bosnian government in multilateral bodies such as the UN General Assembly (UNGA) and the UN Security Council (UNSC) as well as the Non-Aligned Movement (NAM) (Karčić, 2013, pp. 321–340). In terms of direction, the OIC sought to frame the Bosnian war as an aggression by neighboring states, most notably Serbia, to deny rump Yugoslavia’s right to be recognized as a successor state of SFRY, which would allow it to use the vast diplomatic network and potential of the former Yugoslavia, and to lift the arms embargo that seriously undermined the Bosnian government’s capability to wage a war. It was during this time that the UAE pushed for an international force to be dispatched to Bosnia, in which the UAE would participate, however the creation of such a force happened eventually under the aegis of NATO, leaving the UAE out. Also, the UAE provided numerous airlifts for wounded Bosnian Muslims (Salman, 2017). Formally, the UAE recognized Bosnia on 8 April 1992 and established diplomatic relations in August 1993. The UAE does not have an embassy in Sarajevo and its non-resident ambassador to Bosnia sits in Vienna. Bosnia, on the other hand, has an embassy in Abu Dhabi whose outdated online presence was recently described as a scandal for the whole country (Novi.ba, 2017) and probably a tell-tale sign of the importance Bosnian authorities place on relations between two countries. With political changes in the UAE that came with the passing of Shaikh Zayed bin Sultan Al Nahyan in 2004 and the ascension to the throne of his eldest son Shaikh Khalifa bin Zayed Al Nahyan, the UAE began eyeing the region of the Western Balkans, which had so far mainly been a recipient of their development aid, as a potential place to invest within their general diversification policy, that is, shifting away from the sole reliance on oil revenues. A stronger emphasis on foreign development aid is seen not just as a display of the country’s economic wellbeing, but also as a facilitation mechanism for its investment opportunities worldwide. A major UAE organization tasked with providing foreign aid is the Abu Dhabi Fund for Development, which according to its stated mission “provides soft loans that are closer to grants according to the highest international standards” (ADFD, n.d.). In the Western Balkans it funds projects in Albania, North Macedonia, Serbia and Montenegro, but not in Bosnia. The conspicuous absence of projects in Bosnia could partly be explained by the country’s unfavorable business environment,8 but also by the aforementioned poor performance of Bosnia’s economic diplomacy with regard to the UAE.

96  Adnan Huskić 91.875 65.9933 61.25

24.088

30.625

0.

0.

0.

9.8208 11.6059

6.6095

3.4551 3.5984 5.9365

17.1061

-6.1148 -30.625

-61.25

-31.1384 2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Figure 4.6 Flow of UAE FDI to Bosnia and Herzegovina (million KM) Source: CBBiH

UAE FDIs were relatively low until they recently peaked as the interest in realestate development in Bosnia gained momentum. Controversy surrounding tourism and real-estate A sudden influx of tourists from the Gulf and a sharp increase in real-estate purchases, mainly in Bosniak areas, quickly captured the attention of the media and public, both domestic and international. In 2010 only 65 guests from the UAE visited Bosnia, whereas in 2015 the number rose to 7,265. In 2016 and 2017 visitors from UAE were the fifth numerous, along with Slovenia, according to the BiH Agency of Statistics, surpassed only by Croatia, Serbia, Turkey and Italy (BHAS, 2018). The Bosnian public was sharply divided between fully endorsing the sudden commercial interest of Gulf Arabs in BiH and labeling it as Arab “occupation”9 and “invasion”, which could produce lasting repercussions and fuel secessionist tendencies in the country (Duraković, 2016). While the increasing number of tourists did raise some eyebrows, the information about extensive purchases of real-estate property by Arabs turned into a full-fledged scandal. According to BiH laws, that is, the list regularly published and maintained by the Ministry of Justice of Federation of BiH,10 owning a property in BiH is subject to reciprocity, and since the UAE does not allow citizens of BiH to own property there, the same rules apply to UAE citizens in BiH. This rule is effectively circumvented by a legal loophole which allows UAE citizens to register a company in BiH which then acts as a buyer of property. Such a company will also be a legal owner of said property. Bosnian law agencies probed domestic companies whose owners are foreigners (only 12 owners from the UAE and 71 from Kuwait) for illegal practices and possible money laundry, which involved collusion with several public notaries from BiH. This particular scandal was covered in a documentary

Bosnia and Herzegovina 97 movie by the anti-corruption portal Žurnal.info under the title “Arab Summer in a Golden Valley” (2017). Most prominent, and probably most controversial, are the announced constructions of a series of gated communities with villas and numerous other facilities exclusively for Arab customers, the largest and by far the most ambitious of which is Buroj Ozone by Buroj Property Development, likened by some to the controversial Belgrade Waterfront. An investment of some 4.5 billion KM (approximately €2.25 billion) envisaged the construction of a whole city in the municipality of Trnovo near Sarajevo. At the time of writing, construction of Buroj Ozone has not yet began, prompting comments in the media and public that it might be a stillborn project after all (Akta.ba, 2017). Bosniak politicians who rushed to a cornerstone laying ceremony and a photo-op now remain silent or distance themselves from the whole thing, placing blame and responsibility squarely on the investor. A satirical portal Šatro.info awarded Buroj Ozone with the Fairy-tale of the Year Award (šatro.info, 2017). Despite Bosnia’s obvious unattractiveness when it comes to investments, among the relative success stories is the company Emirates d.o.o. that built an amusement park, SunnyLand, on the slopes of the mountain Trebevic, overlooking Sarajevo in the territory of the municipality of East Sarajevo in RS. The owner, Sheik Mohammed bin Saqr al Qasimi, while talking very favorably about the country and the people, reiterated in several interviews the palpable animosity and suspicion concerning investments coming from Arab countries (Berberović, 2016). Regardless of some obvious failures, such as the Buroj Ozone, there is a significant potential for tourism from the UAE and the Gulf in BiH. Driven partly by an ever-increasing incidence of asthma, citizens from the Gulf have been looking to Bosnia’s forest-covered mountain slopes and relative abundance of fresh water as a perfect holiday environment, ever since direct flights to Sarajevo Airport were introduced. Three companies now operate frequent flights to Gulf countries – Fly Dubai operates flights five days a week, including two flights between Sarajevo and Podgorica, Qatar Airways four days a week, and Kuwaiti Wataniya Airways two days a week11 for roughly €450 for a return flight.12 Its Bosniak-Muslim population has obviously been an added value in these tourists’ considerations (Martens, 2017, p. 3) as well as the relatively cheap prices. Trade relations between Bosnia and the UAE remain at a relatively low level, with some positive growth trends until 2015, when both exports and imports dipped. Important to note is that, of the four countries that are the subject of this analysis, Bosnia runs a trade surplus only with the UAE since 2011 (see Figure 4.7). Overall, Bosnia appears chronically unable to tap into the economic potential that is the UAE, despite the apparent openness and readiness on their part. Even the Bosnian military industry, which has seen a significant growth over the past few years, has only recently been presented at a fair in Abu Dhabi and aims to increase its share in the Gulf countries’ high demand for weapons. A recent positive development in relations between the two countries is Bosnia’s decision to abolish visas for citizens of the UAE in January 2015 (News Agency Patria, 2015), yet

98  Adnan Huskić 37.5 29.1331 28.1

18.8

9.4

2005

25.2853

22.9694

13.8428 10.8193 9.1266 8.9012 6.052 5.7181 6.7498 4.8928 4.1156 4.0695 2.4133 3.0039 3.1831 1.4488 1.9854 0.8371 1.1759 0.7059 -1.2374 -1.8889 -2.6668 -4.0666 0.1312 2008 2010 2013

16.3985 12.7346 12.8147 12.4706

2015

2018

(9.4) Exports to UAE Trade balance

Imports from UAE

Figure 4.7 Trade between UAE and Bosnia and Herzegovina Source: CBBiH

the absence of any systemic approach to attracting more significant and serious investments from the UAE is complemented by underdeveloped and undefined foreign policy on the state level. What is more surprising is an apparent absence of any serious interest in capitalizing on the UAE’s interest in Bosnia on the part of the Bosniak political elite. Of all external actors covered in this volume, the Emirates leave by all observed criteria the smallest footprint in BiH. Despite many controversies surrounding the alleged real-estate boom or an increasing number of tourists from the Gulf, their presence and impact remain very limited.

China The final section of this chapter will focus on China, an economic superpower with significant political ambition in the region, as of recently. Speaking at an event co-organized by the Chinese Embassy in Sarajevo and the Bosnian-Chinese Friendship Association on 4 November 2017, the former prime minister and foreign minister Zlatko Lagumdžija in his speech13 praised the fact that China thinks and perceives of the world today as open and interconnected. As an outwardlooking example of a global power that understands contemporary problems the world faces, it seeks to address these problems in a multilateral and collaborative fashion. This vision and foreign policy actions represent quite a radical departure from the China of some two decades ago. During the Bosnian war, China was largely disinterested in the regional politics in Western Balkans outside of its narrowly defined foreign policy interests. An anecdote from a visit of a Bosnian delegation

Bosnia and Herzegovina 99 under the leadership of then-Prime Minister Haris Silajdžić testifies to this lack of interest of China in the region. During the Bosnian government official delegation’s visit to China in early 1995, which went there seeking recognition of the war-torn country by a permanent member of the UNSC, a member of the delegation told the author that the delegation that spent a few days in China was received by an official from the China Institute of International Studies, a think-tank close to the Ministry of Foreign Affairs (Sabrihazović, 2017) that was tasked with recommending a timeline for recognition. During talks, Chinese officials were hospitable yet remained unpersuaded of the need for a quick recognition of Bosnia. Responding to Silajdžić’s proposal that China recognizes Bosnia “over the period of the next ten days”, the then Director of the Institute replied, smiling, that “for China even ten years’ time is not a long period”. In the Chinese view, there was obviously no sense of urgency in the matter. As talks continued, Silajdžić told his hosts that there are many similarities between Chinese and Bosnian people. When asked by his slightly surprised hosts to name one, Silajdžić said that people in Bosnia treat their elders with utmost respect, that their opinions are valued and appreciated, and that they spent their senior years with their families and not in homes for elderly citizens. The Chinese officials were genuinely touched by this, admitting to the same sentiment with their elders. This single conversation thus thawed the overall atmosphere and changed the fate of the interstate visit and the bid for recognition. A mere two weeks later, on 3 April 1995, China recognized Bosnia and established diplomatic relations (Sabrihazović, 2017). As a permanent member of the UNSC, China participates in the work of PIC and, unlike Russia, or more recently Turkey, the Chinese do not deviate from the general course in the PIC and constructively support international efforts in Bosnia. It is worth noting that China is not a member of the Steering Board of the PIC, which acts as an executive arm of the High Representative. In terms of visible political influence, China’s influence is limited to soft power and cannot be likened to that of Russia or Turkey, wielded via their proxies, but as of recently, the Chinese presence in Bosnia seems to have gained in visibility. The establishment of a Chinese-Bosnian Friendship Association and the news portal Kina danas (China today),14 along with the arrival of Chinese cultural Confucius centers, are all signs of an increased interest in Bosnia. The Belt and Road Initiative (BRI),15 involving China and the Central and Eastern European countries (CEEC),16 is now mentioned frequently in media as providing opportunities for Bosnia, even though the shape and the form of these benefits remains rather elusive at the stage. China is aggressively competing for major infrastructural and energy projects in BiH. The Chinese company Sinohydro was considered for the motorway between Banja Luka and Split in Croatia. The RS motorway authorities planned to obtain €600 million from the Exim Bank of China for a 93-km-long section of a 186-kmlong motorway (Levitin et al., 2016, p. 9). Even though there is no official cancellation, this project appears to have been put on hold indefinitely. According to Minister Mirko Šarović, Sinohydro and China Power are now being considered for the construction of the Glamočani – Mlinište motorway in RS (AA, 2017).

100  Adnan Huskić China’s Dongfang Electric Corporation was selected to build a 300-MW thermal power plant near the coal mine in RS. The total cost of the project was estimated at €550 million, with the China Development Bank providing a €350 million loan to construct the facility (Levitin et  al., 2016, p.  9). The Stanari thermal power plant was officially opened in September 2016 and the same company expressed an interest in the Upper Horizons Project in BiH and Croatia (AA, 2017). In the Federation of Bosnia and Herzegovina (FBiH), two large energy projects are currently being negotiated. The FBiH government first signed a Memorandum of Understanding with a consortium led by China’s Gezhouba Group in December 2014 for the construction of Unit 7 of Tuzla thermal power plant, worth €722 million. The Chinese consortium offered to build the project with 15 percent of the financing coming from Elektroprivreda BiH and the remaining 85 percent from loans from the state-owned China Eximbank. Another project that China is eyeing is the construction of the thermal power plant in Banovići. The project should be financed by a loan from the Industrial and Commercial Bank of China (ICBC) (Levitin et al., 2016, p. 9). Both Tuzla and Banovići are subject to numerous controversies. Alternating governments in the Federation favored different models of financing and different bidders, and in the process, which stretched for over a decade, most European companies and the Japanese Hitachi eventually withdrew. In an interview in 2014, the Japanese ambassador in BiH mentioned political instability in the country as the main reason for Hitachi’s withdrawal17 (Imamović, 2017). Meanwhile, China’s companies and banks stepped in and took initiative by trying to close deals on both projects in FBiH. In addition to their obvious interest in large infrastructure project, trade relations between China and Bosnia are tilted strongly in favor of China, while Bosnia runs a permanent trade deficit with China with a gradually increasing volume of trade (see Figure 4.8).

Trade relations between China and BiH (in millions of KM) 2,100.0 1,400.0 700.0 -

1359.5482 1091.6699 1091.9663

914.0822 774.8815816.3769 748.6146 597.93 557.1057655.5389 0.663

2005

(700.0)

8.513 10.4301 13.5509 28.2585 26.0134

2.2622 4.1328 7.4367 8.0809

2008 -597.267

-552.973 2010 -766.8006

-746.3524

-648.1022

2013 -903.652

-807.8639

(1,400.0) (2,100.0) Exports to China Trade balance

Imports from China

Figure 4.8 Trade relations between Bosnia and China Source: CBBiH

2015

-1063.4114 -1345.9973 -1065.9529

2018

Bosnia and Herzegovina 101 In November 2017 Bosnia abolished visas for Chinese citizens, joining Serbia and Montenegro, which represents an additional sign of improving relations (Čavčić, 2017). China introduced a reciprocal measure for Bosnian citizens who can now travel visa-free to China and the Agreement entered into force of 1 May 2018. Negotiations are underway with Chinese Hainan Airlines, which opened a direct flight to Belgrade in September  2017 after 17  years, to extend their line to Sarajevo, as numbers of Chinese tourists are on the rise too. During 2017 more than 31,776 Chinese tourists visited Bosnia, which is more than double compared to 13,305 in 2016 (BHAS, 2018). In the political sense, China has been very cautious not to take sides or take part in any conflict on Bosnia’s turbulent domestic political scene. China is largely seen as a neutral actor with clear economic interest in sight, and unlike Russia or Turkey, and to some extent UAE, China favors neither of the two entities, nor is it politically aligned with any particular ethnic political elite. Regardless of an increased interest and presence, the overall character of the Chinese approach to Bosnia has not fundamentally changed. China ultimately sees and approaches Bosnia as part of the region and is driven by clear and easily identifiable economic interests. Those interests at this stage do not seem to run contrary to the country’s path towards the EU or NATO.

Conclusion Since the mid-2000s, the international involvement that marked the first post-war decade began to wane. As the U.S. turned its strategic focus away from Bosnia, the EU assumed the role of the major international (and normative) player on the ground. The transition process did not go so smoothly, resulting in severe pressures on an unconsolidated and fragile Bosnian democracy and institutions. The onset of deep political crisis, which coincided with the reduced international presence, resulted in a vacuum that was soon filled by a number of emerging international and regional actors. Political elites in Bosnia maintain EU membership as their strategic orientation, whereas membership in NATO, once considered an integral part of Bosnia’s overall strategic orientation, is increasingly brought into question and openly contested. Open contestation comes as a result of larger global (and consequently regional) tectonic realignments between Russia and the West, where Bosnia (or rather a part of the Serb political elite in Bosnia) forged stronger bonds with Russia, acting increasingly as its proxy. Part of the Bosniak political elite also established stronger linkages with the current Turkish government under Recep Tayyip Erdoğan, who as of recently has been leading Turkey away from the EU, both politically and normatively. Turkey’s commitment to NATO, despite some frictions, remains its strategic orientation. In socio-economic terms, Bosnia’s complex administrative setup, with a largely dysfunctional public administration, poses a series of challenges for private sector development and acts as an inhibitor to investments from abroad, and this fact alone should be enough to deter any serious investments. However, coupled with

102  Adnan Huskić a high level of state-capture and widespread corruption, this leads to an increased incidence of controversial investments and obscure privatization deals. Discussion on FDI trends must consider the fact that Bosnia objectively18 is not an attractive country for investment. Structural and political problems inherent in Bosnia’s complex administrative system, an underdeveloped rule of law, and widespread corruption act as a major deterrent to foreign investments in general, unless these arrive with strong political backing. FDI figures for the four actors covered by this analysis are ultimately dwarfed by the EU28, and overall trade figures only confirm the EU’s supremacy. However, some positive trends can be observed in both domains in the case of the four countries observed (Figure 4.9). On the political level, only in the most severe instances of political crises that have plagued the Bosnian political landscape over the past decade or so have political elites brought into question Bosnia’s commitment to membership in the EU. Membership in NATO, at least in RS, has gone from an uneasy acceptance to outright rejection, opting instead for the elusive Russia-backed military neutrality. On 18 October 2017, the RS National Assembly, whose majority is controlled entirely by Dodik, adopted a Resolution on Military Neutrality, even though this domain constitutionally rests exclusively with the state and not entities. Seen by the opposition in the RS as a smokescreen behind which the government hides its underperformance and governance failure, resulting in declining socio-economic trends, this resolution does fall in line with the 2016 resolution of pro-Russian and anti-NATO parties from the Balkans (Serbia, Montenegro, BiH, North Macedonia and Bulgaria) calling for “a militarily neutral territory in the Balkans”, which was signed during the 15th congress of Putin’s United Russia party in Moscow. Needless to say, Dodik’s SNSD is a party to the Resolution (BIRN Team, 2016). The opposition in the RS, while criticizing the governing parties for corruption and 12,500.0 10,000.0 7,500.0 5,000.0 2,500.0 0.0

2003

2004

2005

2006

2007 China Turkey

2008

2009

2010

2011

2012

2013

2014

Russia United Arab Emirates

Figure 4.9 Bosnia and Herzegovina: cumulative FDI per year (million KM) Source: CBBiH

2015

2016

Bosnia and Herzegovina 103 the worsening socio-economic situation, supports RS’s alignment with Serbia’s position on the issue (Govedarica, 2016). After a period of almost complete foreign policy alignment with the West, which culminated with Bosnia holding a non-permanent seat in the UNSC 2010– 2011 and which was described as a “rare and positive story that deserves to be told” (Foreign Policy Initiative BiH, 2011, p. 1), in recent years Bosnia began to diverge with the West. The most visible case is Bosnia’s (and Serbia’s) absence during voting in the UNGA over the Resolution 68/262, “Territorial integrity of Ukraine”, which was adopted on 27 March 2014 in response to the Russian annexation of Crimea (UNGA, 2017). Instrumental in assuming such a position on behalf of Bosnia were political representatives from the RS. Any possible future course of action will likely depend on Serbia’s strategic orientation. A quite plausible scenario is that Russia might use the RS leverage to put additional pressure on the Serbian government to maintain its vague strategic orientation. Despite the obvious shrinking of their presence, the EU and the U.S. still play a major role in BiH. On the other hand, the absence of a stronger normative direction set by the EU, which still struggles with the aftermath of the 2008 economic crisis, Brexit, and the rise of Euroscepticism, creates an entry point that many emerging actors readily exploit. In their endeavors they are more inclined to exploit the social and political fragmentation in Bosnia, relying on informal and personal links to perpetuate their interests, which in turn further diminishes the already weak Bosnian institutions. Since a majority of Western actors rely on formal institutional linkages, strengthening the informal and extra-institutional levels of communication and influence is likely to further reduce both the scope and the intensity of Western influence. Bosnia’s political elites, whose genuine commitment to the country’s accession to the EU and adoption of Western-type standards of liberal democracy is now widely perceived as an illusion, are more inclined to illiberal alternatives as these fit more closely to their desired model of doing things. The rule of law, transparency, good governance, accountability and political responsibility as concepts have not been endorsed by Bosnian political elites. The Bosnian public, on the other hand, disillusioned by the lack of any progress and improvement of the dire socio-economic situation, is rather susceptible to massmedia and the social network instrumentalization which new and emerging actors make heavy use of. While data supporting such a claim are hard to obtain, anecdotal evidence suggests that the general public seems to sway in terms of support towards new and alternative actors, which seems to be the part of a global trend. From the start, the EU relied heavily on relatively high levels of public support for the EU integration of BiH to pressure political elites into undertaking necessary reforms. This process was never entirely successful, but the fact that an overwhelming majority of BiH citizens supported their country’s membership in the EU remained a strong and valid argument. For quite some time now, support for the EU in BiH is in decline. With these trends continuing, there is an increasing likelihood that the lure of an “alternative”, be it aligning with Turkey in shifting away from the EU, or aligning with Russia in their conflict against the West, or dismantling the already underdeveloped elements of democracy even further,

104  Adnan Huskić might in the end lead to a strategic shift away from the West with unforeseeable consequences for Bosnia as the state and the region as a whole.

Notes 1 www.faktor.ba/vijest/obrazovne-institucije-bosna-sema-Gülen-prodao-Gülenkupio-222406 2 At the time of writing, data for 2016 were not yet published. 3 Trka u čast demokratije. 4 Originally the seat of the first Bosnian government and parliament under AustriaHungary, Vijećnica (Town Hall) became a library after 1945 that was destroyed during the Bosnian War after being shelled with incendiary grenades from the RS Army positions on the hills overlooking Sarajevo. It was finally reconstructed in 2015. 5 The owners of NeftegazInKor are the Russian state company Gazprom, with 40 percent, and three companies with 20 percent of ownership each. The names of the owners of these three companies have not been released to the public to this day. 6 Law of Privatization of State-owned Capital in Enterprises. 7 Official Gazette of RS 51/06. 8 According to the World Bank’s 2018 Doing Business report, Bosnia is positioned at 86/190 with DTF 64.90, which is the worst performance in the region (Albania 65/190 and DTF 68.70, North Macedonia 11/190 and DTF 81.18, Montenegro 42/190 and DTF 73.18, Kosovo 40/190 and DTF 73.49, and Serbia 43/190 and DTF 73.13). 9 www.turistickisvet.com 10 Same rules and regulations apply to Republika Srpska. 11 Sarajevo International Airport Time Table. 12 Fly Dubai, Qatar Airways and Watanyia Airways online purchase. 13 Author was present at the event. 14 Run by the same people who established the Bosnia-China Friendship Association. 15 Also known as One Belt One Road initiative (OBOR). 16 Also known as the 16 + 1 initiative. 17 “Hitachi Company was interested in this project but they had to give up in the end due to political instability in the country. Political stability is a precondition for investments by Japanese companies. Like I said a couple months back, in Hungary and in Croatia there are several hundred Japanese companies. In BiH there are but a few and all employees are Bosnians”. 18 According to World Bank’s Doing Business 2017 report Bosnia ranks as 86th globally, behind Albania, which with is ranked as 65th, and is the second worst among the Western Balkans countries.

References AA, 2016. Turkey Cautions Bosnia Over FETÖ Activities [Online]. www.dailysabah.com/ war-on-terror/2016/11/11/turkey-cautions-bosnia-over-feto-activities. AA, 2017. Nezavisne Novine [Online]. www.nezavisne.com/ekonomija/privreda/SarovicNa-stolu-su-dvije-milijarde-evra-kineskih-investicija-u-BiH/425988. ADFD, n.d. Abu Dhabi Fund for Development [Online]. www.adfd.ae/english/ABOUT ADFD/FAQ/Pages/FAQ-HOME.aspx [Accessed 16 June 2018]. Akta.ba, 2017. Projekt pod lupom revizora: Ko je koga prevario, Berilo Buroja ili . . .? [Online]. www.akta.ba/vijesti/projekt-pod-lupom-revizora-ko-je-koga-prevario-beriloburoja-ili-/82264 [Accessed 16 June 2018].

Bosnia and Herzegovina 105 Anadolu Agency, 2017. Fokus.ba [Online]. www.fokus.ba/vijesti/bih/sarovic-ove-godineocekuje-se-rekordan-izvoz-voca-i-povrca-iz-bih-u-rusiju/874118/ [Accessed 11 December 2017]. Arab Spring in the Golden Valley, 2017. [Film]. Directed by Amarildo Gutić. Bosnia and Herzegovina: CRMA. Avdić, S., 2017. Senad Ante-Portal; Alija Izetbegović I  Mate Parlov: ‘Kralj mudrosti’ i Gospodar ‘carstva snova’. Slobodna Bosna, 15 August, p. 1. BBC World News, 2011. Turkey Elections: Victorious Erdogan Pledges ‘consensus’ [Online]. www.bbc.co.uk/news/mobile/world-europe-13744972 [Accessed 13 June 2018]. Berberović, E., 2016. Intervju: Šeik Mohammed al Qasimi, vlasnik Sunnylanda: Nemate razloga plašiti se arapskih investitora [Online]. www.klix.ba/biznis/investicije/seikmohammed-al-qasimi-vlasnik-sunnylanda-nemate-razloga-plasiti-se-arapskih-investit ora/161126062 [Accessed 16 June 2018]. BHAS, 2018. Statistika turizma – Kumulativni podaci, januar-decembar 2017. Sarajevo: BH Agency for Statistics. BIRN Team, 2016. BalkanInsight [Online]. www.balkaninsight.com/en/article/putin-sparty-signs-military-neutrality-agreements-with-balkan-parties-06-29–2016 [Accessed 30 October 2018]. Božić, S., 2011. Analiza privatizacije Naftne industrije RS [Online]. http://slobodanvaskovic. blogspot.com/2011/11/analiza-privatizacije-naftne-industrije.html [Accessed 16 June 2018]. Čavčić, I., 2017. Državljani BiH i Kine od 1. januara 2018. godine u bezviznom režimu [Online]. www.klix.ba/vijesti/bih/drzavljani-bih-i-kine-od-1-januara-2018-godine-ubezviznom-rezimu/171112077 [Accessed 16 June 2018]. Čigoja, M., 2017. Rafinerija nafte Brod tone pod gubicima i smanjuje preradu! [Online]. www.capital.ba/rafinerija-nafte-brod-tone-pod-gubicima-i-smanjuje-preradu/ [Accessed 16 June 2018]. Cihan, 2011. Yunus Emre Institute Takes Over Turkology Project from TİKA [Online]. www.worldbulletin.net/haber/79261/yunus-emre-institute-takes-over-turkology-pro ject-from-tika [Accessed 3 December 2017]. Duraković, E., 2016. Nije to fobija prema Arapima, ali nisu ni investicije: To je PROJEKAT od kojeg treba strahovati! [Online]. http://nap.ba/new/vijest.php?id=27793 [Accessed 16 June 2018]. Erdem, U., 2016. Diyanet Gathers Intelligence on Suspected Gülenists Via Imams in 38 Countries [Online]. Foreign Policy Initative BiH, 2011. Non-Permanent Membership of Bosnia and Herzegovina in the United Nations Security Council 2010–2011: Challenges of the January 2011 Presidency. Sarajevo: Foreign Policy Initative BiH. Govedarica, V., 2016. Vukota Govedarica, President of Serb Democratic Party for Al Jazeera [Interview], 18 October. Halilović, M., 2015. Turska medijska invazija [Interview], 7 April. Hambo, S., 2017. www.klix.ba [Online]. www.klix.ba/biznis/privreda/bih-izvozi-oruzje-ivojnu-opremu-u-45-zemalja-medju-njima-su-burundi-peru-novi-zeland-sad/170707137 [Accessed 3 December 2017]. Huriyet Daily News, 2014. FULL TEXT: Turkish PM Erdoğan’s Post-Election ‘balcony speech’ [Online]. www.hurriyetdailynews.com/full-text-turkish-pm-erdogans-post-elec tion-balcony-speech-64341 [Accessed 13 June 2018]. Ihsanoglu, E., 2010. The Islamic World in the New Century: The Organisation of the Islamic Conference 1969–2009. London: Hurst.

106  Adnan Huskić Imamović, A., 2017. Investicije u BiH: Kinezi polako preuzimaju primat [Online]. http:// ba.n1info.com/a224787/Vijesti/Vijesti/Investicije-u-BiH-Kinezi-polako-preuzimajuprimat.html. Janusz, P., 2015. Turska medijska invazija [Online]. www.media.ba/bs/mediametar/turskamedijska-invazija [Accessed 11 December 2017]. Kadiouglu, A., 2012. Limits of Conservative Change: Reform Choreography of the Justice. In: Another Empire a Decade of Turkey’s Foreign Policy Under the Justice and Development Party. Istanbul: Istanbul Bilgi University Press, pp. 33–60. Karabeg, O., 2017. Zašto Turska više ulaže u Srbiju nego u Bosnu i Hercegovinu? [Online]. www.slobodnaevropa.org/a/most-turska-bih-erdogan-izetbegovic/28698411. html [Accessed 9 December 2017]. Karčić, H., 2013. In Support of a Non-Member State: The Organisation of Islamic Conference † and the War in Bosnia, 1992–1995. Journal of Muslim Minority Affairs, 33 (3), 321–340. klix.ba, 2016. Blic Online [Online]. www.blic.rs/vesti/republika-srpska/sarovic-za-10meseci-bih-je-od-izvoza-voca-u-rusiju-zaradila-23-miliona-km/g3vwd7d [Accessed 11 December 2017]. Levitin, O., Milatovic, J., and Sanfey, P., 2016. China and South-Eastern Europe: Infrastructure, Trade and Investment Links [Online]. www.ebrd.com/documents/comms-andbis/see-china-investments.pdf. Linden, R. H., and Irepoglu, Y., 2013. Turkey and the Balkans: New Forms of Political Community? Turkish Studies, 14 (2), 229–255. Martens, M., 2017. Die Araber kommen Bosnien-Hercegovina hat arabische Touristen als neue Einnahmequelle entdeckt – das freut nicht alle. F.A.Z. Frankfurter Allgemeine Zeitung, 29 May, p. 3. News Agency Patria, 2015. Od danas i građani Ujedinjenih Arapskih Emirata mogu bez viza u BiH [Online]. http://nap.ba/new/vijest.php?id=7645 [Accessed 4 December 2017]. Novi.ba, 2017. Ambasada BiH u Abu Dabiju je sramota za državu [Online]. http://novi.ba/ clanak/143922/ambasada-bih-u-abu-dhabiju-je-sramota-za-drzavu [Accessed 4 December 2017]. PIC Steering Board Political Directors, 2007. Office of the High Representative [Online]. www.ohr.int/?p=38269 [Accessed 11 December 2017]. RCUDSD, 2012. Development Assistance Report 2012. Ankara: Turkish Cooperation and Coordination Agency. Sabrihazović, D., 2017. [Interview], 10 September 2017. Salman, S., 2017. Priming UAE’s Military into a Force to Reckon with [Online]. http:// gulfnews.com/news/uae/government/priming-uae-s-military-into-a-force-to-reckonwith-1.1435587. šatro.info, 2017. Za “Trnovo i pet milijardi” Buroj Ozone nagrađen za bajku godine [Online]. https://satro.info/najnovije/za-trnovo-i-pet-milijardi-buroj-ozone-nagradenza-bajku-godine/ [Accessed 16 June 2018]. SDARC, 2011. Development Assistance Report 2011. Ankara: Directorate of Turkish Cooperation and Coordination Agency. Stanković Luković, M., 2016. UČAJ LAFCIOGLU: Zašto su sarajevske vlasti uglednog profesora preko noći proglasile teroristom [Online]. www.zurnal.info/novost/20154/ zasto-su-sarajevske-vlasti-uglednog-profesora-preko-noci-proglasile-teroristom. Transparency International BiH, 2009. Analiza ugovora o privatizacija Naftne industraije Republike Srpske. Banja Luka: Transparency International BiH.

Bosnia and Herzegovina 107 Turkish Cooperation and Coordination Agency, 2015. Turkish Development Assistance Report 2015. Ankara: TIKA. UNGA, 2017. UN Meetings [Online]. https://papersmart.unmeetings.org/media2/2498292/ voting-record.pdf [Accessed 17 June 2018]. Vele, F., 2017. Bosnian News Service [Online]. http://ins.ba/bs/article/2585/kako-moskvafinansira-brutalnu-propagandu-protiv-drzave-bih [Accessed 4 December 2017]. Vijesti.ba, 2014. Ne pristupajte EU, razmislite o BiH sa Rusijom, Turskom i Kinom [Online]. http://vijesti.ba//clanak/250592/ne-pristupajte-eu-razmislite-o-bih-sa-rusijomturskom-i-kinom [Accessed 11 December 2017]. Yunus Emre Enstitüsü, 2017. Teacher’s Day Celebrated in Sarajevo [Online]. http://saray bosna.yee.org.tr/tr/faaliyethaberleri/ogretmenler-gunu-saraybosna-da-kutlandi_20223 [Accessed 3 December 2017].

5 Kosovo Between Western and non-Western states Gëzim Visoka

Introduction This chapter offers an overview of Kosovo’s relationship with Western and nonWestern states. It argues that Kosovo’s external linkages are predominantly determined by the historical context of state formation which has forced Kosovo to pursue an inward-looking, pragmatic, and situational approach to foreign affairs. Kosovo’s journey to statehood required pragmatic navigation towards external actors, permitting an unprecedented level of external intervention in shaping and influencing its policies in exchange for political and economic support. This process inevitably resulted in creating multiple dependencies and entanglements with external actors (Visoka, 2018). During the 1990s the need to internationalize the self-determination crisis set the contemporary context of fundamental dependency towards Western states (Weller, 2009). After NATO’s intervention and during the UN’s administration of Kosovo, Kosovo’s political elite permitted an unprecedented level of international engagement in micro-managing the entire post-conflict recovery, institution-building and policy-making in the country for almost a decade. After 2008, Kosovo relied on external support for completing supervised independence, consolidating internal and external sovereignty, and integrating into regional and international bodies. This struggle for state formation and recognition has formed the context within which Kosovo’s external linkages are pursued, with unprecedented levels of influence over the conduct of Kosovo’s foreign policy. Kosovo has an inward-looking foreign policy focused on diplomatic recognition and membership in international organizations, cultivation of a special relationship with the United States and major Euro–Atlantic states, enhancing political and economic development though integration in the EU and NATO, and defending the country’s citizens and their interests abroad. The position of other states towards Kosovo’s statehood, namely their support for recognition of Kosovo, its membership in international bodies, and political and economic assistance in the state-building process, has been a major factor shaping Kosovo’s external linkages. In certain instances, the political leadership’s pragmatic entanglement with external states has also played an important role in shaping Kosovo’s foreign affairs. In accounting for Kosovo’s external relations, the discussion will focus on

Kosovo 109 examining its interactions with a handful of influential Western and non-Western states which have played and continue to play a major role in shaping domestic politics in Kosovo and its international standing. This chapter shows that, while Western states’ relationship with Kosovo is predominantly driven by their desire to stabilize the country and the region, promote the liberal democratic order, and expand Euro–Atlantic alliances, values, and interests, for a group of non-Western states, such as Russia, Kosovo represents a battlefield to challenge Western interventionism. For other countries, such as Turkey and the Gulf states, it represents an opportunity to advance geopolitical interests. The scope for renewed great power rivalry in the Western Balkans is large as the region remains partially outside the Euro–Atlantic structures, internally divided, and regionally fragmented. Kosovo’s own preoccupation with its contested statehood and deep dependency on other states for retaining domestic sovereignty, obtaining diplomatic recognition, and securing membership of international bodies has prohibited the country from developing a genuine foreign policy and taking a stance on regional and global matters (Visoka, 2018). Moreover, state capture by ethno-nationalist parties risks undermining Kosovo’s standing as an independent and effective country in a region still affected by ethnic division, outstanding disputes, and an attraction for interference by external actors. Therefore, external dependency and internal instability leave Kosovo without a clear foreign policy identity and subject it to external interference and strategic balancing between Western and non-Western states to maintain regime security. Yet this vulnerable status has forced Kosovo to base its ontological existence on multiple linkages with Western and non-Western states that not only influence Kosovo’s foreign policy but also interfere in domestic governance. This chapter is organized as follows. The first section examines Kosovo’s strategic entanglement with Western states, to demonstrate how the foreign policy of recognition and thrust for state-building have become the contextual bedrock for aligning eagerly with the Euro–Atlantic community of states, organizations, and political agendas. The second section explores Kosovo’s relations with nonWestern states to illustrate how history, religion, and geography play a role in determining the nascent state’s relations with the rest of the word. The third and final section offers an overview of the prospects for Kosovo’s future entanglement with Western and non-Western states.

Strategic linkages with Western states Kosovo is one of the most pro-American and pro-European integration countries in the Western Balkans (KCSS, 2016, p. 8). A 2018 public opinion survey shows that 93.6 percent of Kosovars support membership of the EU (KCSS, 2018, p. 29). The government has made EU integration a national policy priority, despite chronic and systematic failure in undertaking the required reforms. Kosovo’s alignment with Western states can be best explained by its past relations, present dependencies, and future aspirations. First and foremost, Kosovo’s strong linkage with the Western states springs from their support in ending the ethnic

110  Gëzim Visoka conflict during the 1990s, supporting the state-building process, and, most importantly, recognizing Kosovo’s independence in 2008 and subsequently assisting the nascent state in its path towards consolidating domestic sovereignty and international integration (Visoka, 2018). The extensive role of Western states in shaping Kosovo’s state-building process and its path to independent statehood not only served as a platform for shaping Kosovo’s domestic and foreign policy but also had a direct role in governing Kosovo’s political, economic, legal, and foreign affairs. Kosovo had to share sovereignty with Western states to construct its own sovereign statehood (see Phillips, 2012; Musliu and Orbie, 2016; Visoka, 2017). Kosovo’s dependency on Western states is also related to the fact that the country remains outside the United Nations, which is a key obstacle to independent foreign policy and socio-economic development at home. Independence from Serbia resulted in new forms of dependence for Kosovo citizens – dependence on the EU and the wider international community as well as dependence on the patronage politics of ethno-nationalist elites who contributed to the struggle for freedom and statehood, but later became the main impediments to peace and democracy in the country. This context has forced Kosovo to prioritize strategic dependency on Western states as a bilateral diplomatic route to surviving as an independent state and seeking backdoor entry into the international system through Euro–Atlantic integration (Newman and Visoka, 2018). Kosovo’s close ties with European powers and the United States are also linked to its aspiration to join Euro–Atlantic structures. The Government of Kosovo (2015b, p.  43) considers membership of the European Union to be “a national priority for the social, economic and political development and transformation of Kosovo” which will “enable the country to strengthen the international subjectivity, and to contribute to security, stability, and prosperity in this part of Europe, based on democratic principles and values”. In 2015 Kosovo signed the Stabilization and Association Agreement (SAA) with the EU, and since its entrance into force in April 2016, the country has shown little progress in undertaking the comprehensive political, economic, and legal reforms necessary for eventual membership in the EU. In addition, Kosovo’s prospects for joining the EU in the near future are grim due to the extensive reforms required and the fact that some of the members of these organizations have not yet recognized Kosovo. Small and weak states usually seek to compensate for their security vulnerabilities by aligning with a bigger state and benefiting from membership in military alliances. Kosovo depends entirely on Western states for national security. Although the country has its own law enforcement institutions, NATO peacekeepers continue to provide overall security and the European police as part of the EU Rule of Law Mission in Kosovo (EULEX) provides security to ethnically tense areas. NATO’s presence in Kosovo initially had a force of 50,000 troops, however by 2017 this had been reduced to around 4,000. Kosovo’s own Security Forces have legal restrictions on their military functions, and current efforts to create a proper army are facing international hesitation and opposition by the Serb minority. In the long run, Kosovo aspires to join NATO to ensure its national security. However, Kosovo’s perspective of joining NATO remains distant as significant

Kosovo 111 domestic and international blockages are forestalling membership of this important security alliance. Despite these challenges, Kosovo managed in 2014 to become an observer state at NATO’s Parliamentary Assembly, has enhanced interaction with NATO, and has actively participated on the U.S.–Adriatic Charter (A5) meetings. The U.S. has openly supported “Kosovo’s eventual membership in NATO and had encouraged the government of Kosovo to adopt the necessary reforms to meet NATO’s standards” (Yee, 2015, p. 4). The UK has also provided training and technical assistance to the Kosovo Security Forces in preparation for their eventual transformation into a proper army compatible with NATO military standards (House of Lords, 2018). Kosovo’s alignment with Western states also derives from its foreign aid dependency. Kosovo is one of the most impoverished regions of Europe. In 2016, its estimated GDP per capita was US$9,600, and unemployment remains around 30 percent despite maintaining a growth rate of 3–5 percent in the past decade. Western states have been the main supporters of Kosovo’s post-conflict recovery. The EU is the main donor to Kosovo, with around €60–70 million annually; followed by Germany, which has contributed over €43 million; the U.S., with around €30 million; and Switzerland, with €13.5 million. Through the Instrument for Pre-Accession Assistance II, the EU has committed over €645.6 million for the period 2014–2020 (MEI, 2016). Since the end of the conflict, Western states have also provided and managed around US$400 million in a wide array of ­sectors, such as energy, education, public sector reform, agriculture, financial sector, and social inclusion, through the World Bank (2015, p. 11) programs. This assistance has been used to improve governance, education, agriculture, the rule of law, the economy, the environment, public finances, and transport in Kosovo (MEI, 2016). Although the U.S. had invested about US$2 billion in Kosovo since 1999, this assistance has dropped over the years, from US$147.15 million in 2008 to US$34.47  million planned for 2018 (USAID, 2018). According to the Department of State (2018), “the primary goal of U.S. assistance in Kosovo is to support Euro–Atlantic integration by building transparent and responsive government institutions, encouraging economic growth, and establishing security institutions under democratic control”. Since 2016 Kosovo has benefitted from the U.S. foreign aid program, the Millennium Challenge Corporation, offering Kosovo an initial grant of US$49 million to tackle poverty and support social development (MCC, 2017). So far, Kosovo’s pro-Western orientation hasn’t translated into profitable trading relations for the poorest country in Europe. Kosovo exports around €100 million to the countries of the region, while it imports almost €1 billion. Kosovo’s main trading partners come from the Western Balkans, a selected number of EU member states, and Turkey. Kosovo also has a very high negative international trade balance, amounting to close to 40  percent (USAID, 2014). Figures from 2016 show that in that year Kosovo imported €2.7 billion of goods, whereas it only exported €309  million of goods (KAS, 2016, p.  66). Kosovo’s exports to EU member states amount to €70 million, which is very low compared to the imports from the EU member states, which amount to over €1 billion annually.

112  Gëzim Visoka Figures from 2016 show that, although German exports to Kosovo were worth €184.08 million in 2016, German imports from Kosovo were around €15.02 million (German Federal Foreign Office, 2017). According to the Central Bank of Kosovo, foreign direct investment in Kosovo averaged €50 million from 2007 to 2017 (Trading Economics, 2018). German investments in Kosovo are under €200 million, focusing on production, construction, and the banking sector. Despite expectations, privatization has not contributed to economic development in Kosovo. On the contrary, it has left “around 75,000 workers jobless and without pensions or social assistance” (Knudsen, 2013, p. 300). In fact, large companies coming from Western states have profited most from the marketization and privatization of socially owned enterprises in Kosovo and the opening of the economy to foreign direct investments. The banking sector in Kosovo is owned by German and Austrian companies. The highway and energy sector are operated by American and Turkish companies. Kosovo’s public international airport was privatized and sold to a Turkish company. The telecoms sector is controlled by French and Slovenian companies. Although Kosovo has demonstratively fulfilled the core criteria for modern statehood, it has been forced to invest extensive diplomatic efforts to further substantiate its statehood by securing international sovereignty and membership of international organizations (Visoka, 2018). The failure of the UN Security Council to endorse the Secretary General’s comprehensive status settlement proposal forced Kosovo to declare its independence in 2008 in coordination with Western powers and subsequently pursue individual recognition. The U.S. envoy for Kosovo’s final status, Ambassador Frank G. Wisner (2008, p. 194), maintains that “Kosovo would not be independent today without strong American involvement”, considering it the right choice to commit their national prestige and diplomacy to the achievement of independence. Kosovo’s foreign affairs leadership has openly admitted that “American support in our external and internal affairs has been one of the basic preconditions for a successful state-building process” (Hoxhaj, 2016, p. 266). In its first decade as an independent state, Kosovo has secured recognition from 115 states, established diplomatic relations with over 80 states, opened 25 embassies, and became a member of over 60 international and regional organizations. For the Government of Kosovo (2015b, p.  42), diplomatic recognition represents the final challenge before being admitted to the club of sovereign states and is a pre-condition for functioning normally in the global system. Over the years, Kosovo has benefited from strategic dependency and entanglement with the U.S. and major European powers, who have played a crucial role in securing its recognition and membership in international bodies. The U.S. and leading European powers coordinated their efforts in support of Kosovo’s recognition through actions ranging from sending diplomatic démarches to facilitating Kosovo’s participation in international events and using their bilateral diplomacy and multilateral influence to press other states to recognize Kosovo’s statehood. The early recognition of Kosovo by the U.S. and most European powers set it on a positive trajectory, which influenced the decision of other states to also recognize Kosovo. During the International Court of Justice

Kosovo 113 (ICJ) proceedings on the legal validity of Kosovo’s declaration of independence, Western states have been a credible voice in support of Kosovo’s case for independence, considering it unique in nature, legitimate, and congruent with international law. Although Kosovo has been recognized by most powerful states in the world, they have been unable to impose on many states the decision to recognize Kosovo’s independence. After 2011, Western support for Kosovo’s recognition reduced significantly due to changing global circumstances and a shift of foreign policy priorities, leaving it to Kosovo’s own diplomatic abilities and skills to further advance its recognition campaign. Five EU member states, namely Cyprus, Greece, Romania, Slovakia, and Spain, have withheld recognition of Kosovo’s independence due to their own domestic or regional issues: some fear it will set a precedent for their own internal domestic problems with minorities and breakaway regions, while others are demonstrating solidarity with other states affected by secessionism. However, most recently, Germany also committed to help Kosovo secure recognition by the five EU member states that have not yet done so. Kosovo’s foreign-policy alignment with the Western states played a positive role in most cases, however, it also antagonized many countries who oppose Western foreign policy. Some states viewed Kosovo as a vassal state of the U.S., which undermined its prospects for recognition. Although Kosovo was willing to establish ties with many countries, it maintained a distance from the major adversaries of the U.S., such as Russia, China, Brazil, and Iran. While the U.S. has been Kosovo’s global ally, Germany remains its major European partner. Germany was one of the first countries to recognize Kosovo’s independence and has been a solid supporter of the country’s domestic state-building and economic reconstruction, European integration, and membership of international and regional bodies. Germany has been one of the major donors and leaders of international civilian and military missions in Kosovo, including the UN Interim Administration Mission in Kosovo (UNMIK), NATO’s Peacekeeping Force (KFOR), and the EU’s Rule of Law Mission in Kosovo (EULEX). It is estimated that German assistance for social and economic development cooperation in Kosovo between 1999 and 2018 exceeds €551 million (German Federal Government, 2017). Among all Western states, Germany has been the strongest supporter of regional peace and stability, including the EU-facilitated dialogue for the normalization of relations between Serbia and Kosovo. After independence, Serbia continued to run its parallel institutions in Serb enclaves, which openly defy UNestablished institutions in Kosovo such as customs and law enforcement services, public administration, and central government, as well as openly undermining the authority of EULEX and KFOR. Since 2011, Germany has been instrumental in pressing Serbia to dissolve most of its parallel structures in Kosovo and allow for Serbs’ integration into Kosovo society. Germany has been instrumental in setting the condition that “the advancement of Serbia’s EU accession negotiations will be . . . measured in particular against Serbia’s continued engagement towards a visible and sustainable improvement in relations with Kosovo” (European Union, 2015, p. 2). During a visit to Belgrade on 14 February 2018, ­German Foreign Minister Sigmar Gabriel openly stated that “if Serbia wants to move toward the European

114  Gëzim Visoka Union, the building of the rule of law is a primary condition, but naturally also the acceptance of Kosovo’s independence” (Radio Free Europe, 2018). This has provided Kosovo with strong reassurance that the EU-facilitated dialogue is worth pursuing, with the possibility of resolving the historical conflict with a treaty that provides sustainable peace, full normalization, mutual recognition, and a seat at the UN. In 2014, when the European integration perspective for Western Balkan countries faded away, Germany took a leading role in initiating what has come to be known as the “Berlin Process”: a series of high-level summits seeking to promote regional cooperation, strengthen good governance, and increase prosperity via sustainable economic growth (Kmezić and Bieber, 2017). Kosovo has benefited from this German-led process by remaining part of regional initiatives and benefiting from the economic cooperation and societal reconciliation initiatives. Although Kosovo’s foreign policy engagement has been predominantly inward-looking – seeking legitimation for its statehood – on a number of occasions it has come forward in support of foreign policy actions by Western states. For the Government of Kosovo (2015b, p.  49), “the United States of America remains the most important strategic partner”. As a gesture of the special relationship with the U.S., Kosovo diplomacy has issued condemnation statements in line with the U.S.’s position on the North Korean nuclear dispute, Russia’s annexation of Crimea, the civil war in Syria, and the rise of ISIS. Kosovo also joined the U.S. and the EU in imposing sanctions on Russia. Since the beginning of violent conflict in Syria and the recurrence of violence in Iraq in 2011, around 300 Kosovars went to these crisis zones and joined different warring faction as mercenaries and foreign fighters. In response to these events, the U.S. played a major role in shaping Kosovo’s political, institutional, and technical capacity to prosecute terrorism cases and the prohibition of joining armed conflicts outside Kosovo. While the threat of violent extremism has not spared Kosovo, the authorities have taken strong domestic measures and have supported the U.S.’s regional and global efforts as a symbolic gesture to demonstrate loyalty towards the U.S. and the Euro–Atlantic alliance and the capacity for operating as a responsible state (Government of Kosovo, 2015a). Participation in this coalition was also intended to channel the message that Kosovo is a secular state and that the global phenomenon of foreign fighters and violent extremism was a transnational threat seeking to derail the Euro–­Atlantic integration of the Western Balkans. In a symbolic gesture, Kosovo donated US$100,000 to support the destruction of conventional weapons in Syria, which was hailed by the U.S. as a demonstration of Kosovo’s strong support to the global coalition to defeat ISIS (RTK, 2017). The extensive Western support for Kosovo has been driven by the logic of risk management, as the country has been and continues to be a potential source of regional instability and ethnic troubles. Western states’ rationale for supporting Kosovo is pragmatic, aiming to mitigate threats to democracy promotion, expand neoliberal economy and solidify geopolitical interests. Kosovo’s geographical location played an important entangling role whereby most European states and their immediate neighbors have supported state-building and the recognition of Kosovo in the hope that such a move would promote regional peace and stability

Kosovo 115 and end a decade-long wave of violent conflicts in the Western Balkans (see Weller, 2009). Through international missions, such as UNMIK, EULEX, and the International Civilian Office (ICO), Western states pushed Kosovo to undertake reforms in public administration, the rule of law, and the fight against corruption, organized crime, and war crimes, to promote minority protection, reform the economy, and resolve bilateral issues with other neighboring states. Through the instruments offered by the enlargement policy, crisis management, preventive diplomacy, development aid, and state-building support, the EU has tried to build a resilient Kosovo to prevent potential sources of insecurity at the point of origin rather than deal reactively with the problems of organized crime, illegal migration, trafficking of narcotics and humans, the arms trade, and other illicit ­activities (see Visoka and Doyle, 2016). Another important area of Kosovo’s strategic alignment with Western states is their supportive role in resolving the sovereignty dispute with Serbia. In 2011 the EU initiated a complex process of technical and political dialogue between Kosovo and Serbia in an attempt to resolve sensitive outstanding political issues regarding the status of the Serb minority in the north of Kosovo, remove Serbian interference in Kosovo’s domestic affairs, and unblock the region’s prospects for European integration (Visoka and Doyle, 2016). However, despite progress in certain areas, the normalization of relations between the two countries has stalled in the past three years due to the asymmetric positions of parties, institutional and political resistance by domestic constituencies, and a lack of robust diplomatic commitment on the EU’s side (Visoka, 2017). The interest of Western states for supporting Kosovo’s recognition and membership of international bodies is not per se to strengthen Kosovo’s sovereignty, but to realize their foreign policy interests through this process. Defending Kosovo’s independence and strengthening its international standing also protected the legacy of NATO’s military intervention in 1999 and its subsequent peacekeeping presence. The U.S. support for Kosovo is directly linked to its foreign policy interests of expanding Euro–Atlantic structures in the Balkans, tackling external threats posed by Russian meddling in the region through covert or semi-covert support for peace spoilers and ethno-nationalist factions, as well as mitigating risks from transnational terrorism and violent extremism. The U.S. openly admits that, by having supported Kosovo’s independence, they defended European and American unity against Russian pressure, and “gave Europe and America a chance to redefine our common purpose and put it to work” (Wisner, 2008, pp. 195–196). As stated by Deputy Assistant Secretary Hoyt Yee (2017, p. 4), “a stable, prosperous Western Balkans that is integrated into Europe and a strong partner on counter-terrorism will help make America more safe, provide opportunities for U.S. businesses, and ensure peace in the region”. Moreover, the majority of international agreements that Kosovo has signed so far tend to address political, security, and economic concerns and the interests of Western states. Most of these agreements tend to address mutual legal assistance on criminal matters and the readmission of persons residing without authorization (KCSS, 2016). Despite extensive investment by Western states, Kosovo is currently in a state of stagnation, and both local elites and international stakeholders have jointly

116  Gëzim Visoka failed to realize their promises on Kosovo. Failure to build a functioning state and effective institutions that respect the rule of law, pursue peace and reconciliation, and the unresolved issue of Kosovo’s international recognition have become major problems for Kosovo’s political establishment and the Western states. In particular, Western interventionism in all aspects of Kosovo society, extensive conditionality on European integration, the isolation of Kosovo society, and pressure for peace-making with Serbia are increasingly weakening the influence of Western states in Kosovo. This not only holds the country back and undermines the investment of the Western states, but also opens possibilities for non-Western states to exploit this embedded crisis for their geopolitical interests.

Strategic linkages with non-Western states Kosovo’s political orientation is undoubtedly attuned towards the Euro–­Atlantic community, partially as a reflection of its elite’s ideological orientation but mostly as strategic entanglement to ensure the external legitimization of independence. However, because of religious and historical ties with the Near and Middle East, Kosovo is inevitably expected to have relations with non-Western states. In another context, Kosovo’s non-recognition by major non-Western states, such as Russia and China, serves as a pressing point for Kosovo to find ways for building relations with the rest of the non-Western world. Among non-Western states, Turkey is one of the most significant foreign actors in Kosovo. The Government of Kosovo perceives Turkey as a strong regional ally whose influence in Europe, Asia, the Middle East, and Africa could be leveraged to advance its foreign policy. At the societal level, 75 percent of Kosovars consider Turkey as a friendly state (KCSS, 2018). Over the years, Kosovo’s institutions have been cautious to maintain a strategic balance between the Western powers and Turkey, the former being Kosovo’s geo-politically more significant partners but enmeshed with neverending conditionality, while the latter offers Kosovo free travel arrangements and lucrative investments. Turkey has contributed to all international missions in Kosovo, including NATO’s peacekeeping force, the UN’s transitional administration, the ICO, and EULEX. Turkey has been one of the major NATO member states to support the transformation of the Kosovo Security Force (KSF). In 2012, a military cooperation agreement was signed between Kosovo and ­Turkey to supply weapons, military equipment, and training for the KSF (President of Kosovo, 2013). Since 2008, Kosovo and Turkey have signed over 30 bilateral agreements on political, economic, social, and cultural cooperation. On the international stage, Turkey has played an important role in assisting Kosovo’s diplomatic efforts to expand recognition in the Muslim-populated countries; it has backed Kosovo’s regional participation and representation, and it has played a positive role in advancing Kosovo’s aspirations for admission into multilateral bodies (Visoka, 2018). Turkey considers Kosovo and the wider Balkans as a strategic region due to its political, economic, and geographical proximity as well as its historical, ­cultural, and religious ties. Ina Merdjanova (2013, p. 76) maintains that Turkey’s

Kosovo 117 “geographic proximity, historical links, and religious and cultural affinities with the local Muslims allowed it to exert strong impact” on Kosovo and the wider Western Balkans. Turkey’s economic investments in Kosovo focus on the construction, banking, communication, retail, and mining sectors. Between 2004 and 2014, Turkey invested over €360 million in Kosovo (Vračić, 2016, p. 22). As part of the privatization process, Turkish investors have acquired Kosovo’s electricity distribution, built major highways, and taken control of the international airport. Turkey’s presence in these international missions has offered direct access to Kosovo’s politics as well as strong leverage to indirectly shape domestic politics and promote its national interests, especially among the Turkish minority community in southern Kosovo (Tabak, 2017). The Turkish community in Kosovo, which is around 1 percent of the population (18,738), has benefited from the multi-ethnic character of Kosovo institutions by regularly holding a ministerial post, reserved seats in parliament, and local self-governance. Turkey has opened cultural centers in Kosovo to promote its language and culture as well as offering educational opportunities to Kosovo students (Demirtaş, 2017). However, there are voices which raise concerns that “due to the significant economic and cultural influence, Turkey may become one of the potential sources of external support for . . . anti-Western political projects” (USAID, 2017, p. 41). Following the July 2016 attempted coup in Turkey, Kosovo authorities were put under significant pressure to side with the Erdoğan regime and discipline journalists and civil society activists in Kosovo who were sympathetic to regime change in Turkey. In March 2018, Kosovo security agencies arrested six Turkish residents in Kosovo and deported them to Turkey for alleged involvement with the Gülenist movement. Prime minister of Kosovo Ramush Haradinaj immediately dismissed the minister of internal affairs and the director of the Kosovo Intelligence Agency for failing to inform him about this secret and controversial operation. In turn, Turkish president Erdoğan criticized Kosovo’s handling of the case, reminding him that Turkey was Kosovo’s regional ally (Euronews, 2018). This event, along with Turkey’s geopolitical approximation with Russia and Serbia, has slightly weakened the traditional relationship between Turkey and Kosovo. Beyond Turkey, Kosovo also has diplomatic relations with the Gulf states (Saudi Arabia, the United Arab Emirates, and Qatar), partially driven by pragmatic considerations and partially motivated by post-war aid dependency (see Mandaci, 2018). The post-war period in Kosovo provided fertile ground for local and foreign religious groups to expand their institutional and social influence in Kosovo, incentivized though humanitarian relief and material attraction. While Western states have channeled their interests through institutional routes and open support for pro-Western civil society groups, the Gulf states have used alternative approaches by supporting rural impoverished Muslim communities in Kosovo and leveraging humanitarian relief in exchange for attending their religious schools and embodying their code of dressing and conduct in the public sphere. For instance, Saudi influence in Kosovo was channeled through the Saudi Joint Committee for the Relief of Kosovo and Chechnya (SJCRKC), which targeted impoverished and rural communities of Kosovo and intended to promote a

118  Gëzim Visoka conservative and aggressive form of Islam that seeks to “control the population’s spiritual life, to politicize Islam and to encourage intolerance towards secularism and religious plurality in Kosovo” (KIPRED, 2016, p. 40). The SJCR program in Kosovo was closed by UNMIK in 2003 following the 9/11 attack on the grounds that this Saudi body was running covert operations in Kosovo (Alice, 2007, p.  192). While Kosovo’s general population was sympathetic towards the U.S. and the European countries, isolation and insufficient socio-economic investment, along with insufficient educational opportunities, have pushed the young people of Kosovo to look eastwards by attending Turkish and Saudi schools and return to Kosovo with a mission of spreading radical Islam (KCSS, 2017a). As Western states are reducing development aid for Kosovo, the country is increasingly seeking support from the Gulf states and encouraging their investment in the country. In 2013, Kosovo signed an agreement with the Saudi-based Islamic Development Bank which committed to invest over US$40 million “in various developmental activities in accordance with the principles of Shari’ah (the Islamic Law)” ­(Ministry of Foreign Affairs of Kosovo, 2013). However, there are growing concerns that aid from different groups from the Gulf states has resulted in introducing radical religious ideas and practices to local Muslim communities. The Government of Kosovo (2015a, p. 10) admitted that “the spread of the phenomenon of violent extremism and radicalism in the Republic of Kosovo was done by some NGO, local and foreign organizations and individuals that have embraced the radical views”. Similarly, the U.S. 2016 Country Report on Terrorism considers that “the threat of violent Islamist extremism has been growing in Kosovo, assisted in part by funding from foreign organizations that preach extremist ideologies and violent extremist groups actively using social media to spread propaganda and recruit followers” (U.S. Department of State, 2017, p.  135). It is reported that, between 2012 and 2017, “around 315 Kosovo citizens are reported to have travelled to conflict zones in Syria and Iraq. Of these, more than a third have already returned to Kosovo” (KCSS, 2017a, p. 8). Recent studies show that Kosovars who have been recruited as foreign fighters in the conflicts in Syria and Iraq come from disadvantageous backgrounds and impoverished regions of Kosovo (KCSS, 2017b). In turn, violent extremism and radicalization being major threats to global security have undermined Kosovo’s international standing and reputation among the Western states. Among the non-Western powers, Russia remains a significant player shaping Kosovo’s prospects for admission to the UN and peace-making with Serbia. Russia’s foreign policy in the Balkans is focused on challenging the expansion of the EU and NATO and undermining the democratization of the region, along with its own geo-economic interests of expanding its gas and oil supplies network to European countries. Since the inception of the Kosovo crisis in the early 1990s, Russia has constantly backed Serbia’s aggressive policy over Kosovo, including its obstructive role in blocking the UN’s Special Envoy proposal for supervised independence in 2007 (Bechev, 2017). NATO’s intervention in Kosovo in 1999 and the subsequent U.S. support for its independence in 2008 have been one of the major issues which have deteriorated the relationship between Russia and

Kosovo 119 the United States (Gates, 2014, p. 182). Russia continues to criticize NATO for intervening in Kosovo without the consent of the UN Security Council and uses it as an alibi for justifying its policy of aggression towards neighbors and preserving frozen conflicts as a protective belt against Western expansionism (KIPRED, 2016, p.  4). Russia is also keen to challenge NATO’s enlargement in the Balkans by undermining the democratic state-building and peace-building processes, which are key conditions for membership in Euro–Atlantic institutions (Bugajski, 2008, pp. 3–4). In this regard, Kosovo represents a battlefield for Russia to challenge the entire foreign policy orientation of the Western powers (Kallaba, 2017, p. 7). Moreover, Kosovo represents a suitable confrontation point with the West to justify its interventions in Georgia (Abkhazia and South Ossetia) and Ukraine (Crimea) and the exploitation of frozen conflicts to protect Russia from the further enlargement of NATO and the EU into eastern Europe (Bugajski, 2017, p. 3). Although Russia does not recognize Kosovo, it has a Liaison Diplomatic Office in Kosovo accredited during the period of UN administration of the territory. Attitudes towards Russia differ among the Albanians and Serbs of Kosovo: 85 percent of Kosovo Albanians consider Russia’s attitude towards Kosovo as very hostile, largely due to their support for Serbia and blockage of Kosovo’s international integration (KCSS, 2018, p. 21), while 65 percent of Serbs believe that Russia is “the most important partner when it comes to lobbying for the protection of interests of Serbs in Kosovo” (Jović et al., 2017, p. 4). Currently, Russia’s business interests in Kosovo are not significant, though efforts to create a region-wide market for Russian gas are ever-present, including tendencies to create energy dependency. A major security threat for Kosovo is the Russian-Serbian Humanitarian Center in the city of Niš, which is suspected to become a secret military base and spy outpost in the future targeting Western interests in Kosovo and other neighboring countries (Voice of America, 2017). The recurrence of ethno-nationalism in the region and Russia’s renewed interference in Kosovo represent major concerns for Kosovo, as it is feared that Russia would utilize its covert parapolitical networks in the north of Kosovo to fuel recursive secession, spark ethnic tensions, and damage Kosovo’s pro-Western stance. For example, over the years Russia has increased its covert presence in Serb-populated regions of Kosovo, mainly in the northwest, through infiltrating its proxy agents within non-government groups that provide humanitarian relief to the Serbian community as well as strengthening pro-Russian sentiments at the expense of the EU, NATO, and Western powers (Bugajski, 2017). Russian media have increased their presence and coverage of events in Kosovo, which are often biased towards Serbia and the Serb community and intentionally try to portray Kosovo as a failed state, blaming the Western powers for failing to establish peace, order, and security in Kosovo. In response to Russia’s aggressive stance, Kosovo’s institutions have joined the EU to unilaterally impose sanctions on Russia following the aggression against Ukraine and annexation of Crimea. However, weak institutional coordination has resulted in only partially implementing sanctions by customs services and banking authorities in Kosovo. As a gesture of strategic alignment with the Western states, Kosovo diplomats used the periodical session at the UN Security Council to

120  Gëzim Visoka accuse Russia of aggression in Ukraine and intervention in Syria. On August 2014, Kosovo’s Foreign Minister Enver Hoxhaj stated “Russia has lost most of the international credibility and legitimacy that would allow it to preach about international peace, justice and stability. Russia is currently becoming the main threat to international peace and stability” (UN Security Council, 2014, p. 25). Beyond Turkey, the Gulf states and Russia, a slim majority of non-Western states continue to withhold recognition of Kosovo’s independence (Visoka, 2018). China has not recognized it, part of a consistent policy of non-interference and disengagement on the Kosovo issue. This is related to China’s objection to U.S. global dominance, but also to avoid setting a precedent for Taiwan, Tibet, and the Uighur region. This said, China has a liaison office in Kosovo as well as a pragmatic stance on economic cooperation, such as offering business visas for Kosovo-passport holders to travel to China. Aware of China’s veto power in the UN Security Council and its growing global influence, Kosovo has been careful not to antagonize China by engaging with Taiwan, despite calls from the latter to deepen political and economic cooperation.

The future of Kosovo’s external linkages This chapter has examined Kosovo’s strategic relations with Western and nonWestern states to shed light on the function and influence of these linkages. Many in Kosovo now feel that the West has left the country in limbo by failing to fulfill its promise to help Kosovo gain its rightful place within the international democratic community (see GLPS, 2018; Visoka, 2018). One decade since its declaration of independence, Kosovo has not managed to secure recognition from all UN member states, despite the fact that the country fulfills the basic requirements for admission to the UN and has repeatedly demonstrated that it possesses the core attributes of modern statehood and is ready to accept the UN Charter and act as a peace-loving state. In contemporary world politics, UN membership amounts to the collective recognition of new states. Evidently, Kosovo’s admission to the UN remains unrealistic due to the considerable number of states that have not yet recognized Kosovo, as well as the anticipated resistance and refusal by Serbia, Russia, and China, among other states. Kosovo’s statehood and its viability as an independent and sovereign state currently remains hostage to the support of both Western and non-Western states. The increased rivalry between Kosovo’s allies and its opponents has entangled the emerging state into complex processes, which can further stagnate the process of diplomatic recognition and membership of international bodies, also risking to reverse Kosovo’s achievements during its first decade of independent statehood. Kosovo has received wide recognition from most states belonging to the Euro– Atlantic community, while no recognition has been received from other emerging powers and those who are positioned behind Russia on the question of Kosovo’s independence. Recognition of Kosovo’s independence by one political bloc of states has significantly politicized and complicated the recognition process in a broader perspective. Gëzim Krasniqi (2014, p. 216) rightly argues that “Kosovo’s

Kosovo 121 dependence on the U.S. and the EU, and its subsequent compliance in the field of foreign policy, risks the forging of a negative image – that of a ‘satellite’ or ‘client’ state – for Kosovo in international relations”. Kosovo’s international partners have lately tried to encourage Kosovo’s leadership to take a more pro-active role in the process of obtaining new diplomatic recognition and securing membership of international organizations. This discourse conferring diplomatic ownership on Kosovo is not a symptom of Kosovo’s diplomatic maturity, but rather it reflects a strategic withdrawal of Kosovo’s Western states from their commitment and promise to integrate Kosovo fully in the international community of sovereign and independent states. Although Kosovo might increase the number of recognitions beyond twothirds of the UN membership, further diplomatic breakthroughs will depend on the attitude of Russia, China, and other regional powers who continue to withhold recognition of Kosovo for their own geopolitical interests. The emerging multipolar order and the fading global power of the U.S. under President Trump has facilitated the rise of Russia and other regional powers, who have seized on Kosovo’s international standing among several battlefields on which to undermine the U.S.’s global position. Short of admission to the UN, Kosovo is limited to pursuing its struggle for bilateral recognition and membership of international organizations through lengthy diplomatic battles supported by major international powers. In addition, among the remaining 80 UN member states who have not recognized Kosovo, most have internal problems with secessionism, while others regard Kosovo’s key international supporters with suspicion. This entrapment remains impassable for the foreseeable future, unless Kosovo joins the UN, which would be equivalent to collective recognition and ultimately mark the end of the saga for bilateral recognition. Western states have been co-producers of Kosovo’s independent statehood through military intervention, state-building assistance, and supervision of independence. Without full integration into the international system, especially in Euro–Atlantic structures, Kosovo risks backsliding and again becoming an ungovernable zone, with far-reaching consequences for Western states. The EU enlargement process remains the most effective instrument of peace-making in the Western Balkans, which provides the main incentives for Serbia and Kosovo to fully normalize relations. A potential way out for Kosovo’s contested statehood would be to reach an agreement with Serbia as part of the journey undertaken by both countries to join the EU, which could require granting Kosovo’s Serbian minority wider autonomy within the context of a complex arrangement in return for Serbia to implicitly recognize Kosovo’s independence and consent to its admission to the UN. This would end Kosovo’s decade-long quest for bilateral recognition, but could expose the country to the potential recursive secession of the Serbian community. However, the possibility should not be ruled out that Russia may instigate ethno-national tensions to divert and delay the region’s full alignment with the Western community of states, including full normalization between Kosovo and Serbia, which would unlock the region’s collective integration into the EU (Bechev, 2017).

122  Gëzim Visoka Beyond global entanglements, the success of Kosovo’s foreign policy is also influenced by domestic stability and the political priority given to the external consolidation of its sovereignty. Obviously, state capture by ethno-political elites is a major reason why the Western states are gradually losing faith on Kosovo, while hoping that the externally imposed limbo status and the isolation of Kosovo society might bring about internal regime change. Political polarization and frequent elections have significantly damaged Kosovo’s relations with Western powers, which has ramifications for Kosovo’s domestic developments and integration in the international system. Kosovo’s most recent attempts to retract its commitment from ratifying the agreement for the demarcation of the border with Montenegro and the efforts for revising the specialist chambers on war crimes have antagonized Western powers. Because of its vulnerable situation and dependency on the Western states, Kosovo has been discriminated by the EU, thus denying the country visa-free travel as well as imposing much heavier conditionality in the EU integration path. This situation risks increasing antiEuropean sentiments in Kosovo and pushing the country further towards the non-Western sphere. If Kosovo’s Euro–Atlantic perspective is not advanced as with the rest of the region, it can be expected that non-Western actors, such as Turkey, will be appealing for Kosovo’s strongmen who are fed up with unilateral normative conditionality and disciplinary systems imposed by Western powers with regard to corruption and the rule of law, institutional reforms, and political concessions. Therefore, it can be expected that the more Kosovo is ignored and isolated by Western powers, the more it is likely to seek temporary strategic alliances between its ethno-populist leadership and authoritarian regimes in the Near and Middle East. Finally, if Kosovo is not offered the possibility to become an equal member of the international community, then one possible future scenario which should not be entirely ruled out is Kosovo’s functional (re)unification with Albania. Currently, Kosovo and Albania enjoy a special relationship including free cross-border travel, extensive trade and cultural exchanges, periodic joint meetings between governments, joint consular services, and close cooperation on foreign, security, and regional affairs. The option of Kosovo unifying with Albania is unlikely at present because it could derail Albania’s own aspiration to join the EU, but it could be invoked as a strategic threat to overcome Kosovo’s current limbo status. Therefore, as long as Kosovo is not integrated into the Euro–Atlantic structures, Kosovo will continue to struggle for balancing between Western and non-Western states.

References Alice, L. C., 2007. No Respect: Forging Democracy in Bosnia and Kosovo. In: Akbarzadeh, S. H., and Mansouri, F. (ed.), Islam and Political Violence: Muslim Diaspora and Radicalism in the West. London: I.B. Tauris, pp. 179–196. Bechev, D., 2017. Rival Power: Russia in Southeast Europe. New Haven: Yale University Press.

Kosovo 123 Bugajski, J., 2008. Kosova: The Next Phase. U.S. Senate Foreign Relations Committee, 4 March. www.foreign.senate.gov/imo/media/doc/BugajskiTestimony080304a.pdf [Accessed 12 July 2017]. Bugajski, J., 2017. Russia’s Malign Influences in Europe: Moscow’s Strategy to Dismantle the West. Testimony for the U.S. Senate Armed Services Committee, 13 July. www. armed-services.senate.gov/imo/media/doc/Bugajski_07-13-17.pdf [Accessed 3 February 2018]. Demirtaş, B., 2017. Reconsidering Turkey’s Balkan Ties: Opportunities and Limitations. In: Ercan, P. G. (ed.), Turkish Foreign Policy: International Relations, Legacy and Global Reach. Basingstoke: Palgrave Macmillan, pp. 129–149. Euronews, 2018. Erdogan Slams Kosovo PM Over Sackings After Gulen-Linked Deportations, 31 March. www.euronews.com/2018/03/31/erdogan-attacks-kosovo-primeminister-for-sacking-officials-who-sanctioned-teacher-kidnap [Accessed 14 May 2018]. European Union, 2015. European Union Common Position: Chapter 35: Other Issues/Item 1: Normalisation of Relations Between Serbia and Kosovo, EU Doc. AD 12/15. Brussels, 30 November. http://data.consilium.europa.eu/doc/document/AD-12-2015-INIT/ en/pdf [Accessed 21 February 2018]. Gates, R. M., 2014. Duty: Memoirs of a Secretary at War. New York: Alfred A. Kopf. German Federal Foreign Office, 2017. Bilateral Relations with Kosovo. www.auswaertigesamt.de/en/aussenpolitik/laenderinformationen/kosovo-node/kosovo/228088#content_0 [Accessed 8 March 2018]. German Federal Government, 2017. Fewer Troops in Kosovo, 10 May. www.bundes regierung.de/Content/EN/Artikel/2017/05_en/2017-05-09-kfor-einsatz-bundeswehr_ en.html [Accessed 14 February 2018]. Government of Kosovo, 2015a. Strategy on Prevention of Violent Extremism and Radicalization Leading to Terrorism (2015–2020). www.kryeministri-ks.net/repository/docs/ STRATEGY_parandalim_-_ENG.pdf [Accessed 14 February 2018]. Government of Kosovo, 2015b. The Programme of the Government of the Republic of Kosovo (2015–2018). www.kryeministri-ks.net/repository/docs/Government_Programme_ 2015-2018_eng_10_mars.pdf [Accessed 23 February 2018]. Group for Legal and Political Studies (GLPS), 2018. Ten Years of Statehood: What Are 10 Successes and 10 Failures That Marked the First Decade of Independence, Policy Analysis No. 03/2018. www.legalpoliticalstudies.org/wp-content/uploads/2018/04/ GLPS-Ten-Years-of-Statehood-10vs10.pdf [Accessed 15 May 2018]. House of Lords, 2018. The UK and the Future of the Western Balkans, HL Paper No. 53, 10 January. https://publications.parliament.uk/pa/ld201719/ldselect/ldintrel/53/53.pdf [Accessed 23 February 2018]. Hoxhaj, E., 2016. Ngritja e Një Shteti: Politika e Jashtme e Kosovës. Tirana: Dudaj. Jović, N., Andrić, M., and Marinković, M., 2017. Trend Analysis: Citizen Opinion Survey in North Kosovo, Mitrovica North: NGO Aktiv. www.ngoaktiv.org/uploads/files/ Trend%20Analysis%202017.pdf [Accessed 13 February 2018]. Kallaba, P., 2017. Russian Interference in Kosovo: How and Why? Pristina: Kosovar Center for Security Studies. www.qkss.org/repository/docs/Russian_interference_in_ Kosovo_finale_2_735070.pdf [Accessed 15 February 2018]. KAS (Kosovo Agency of Statistics), 2016. Kosovo in Figures 2016. http://ask.rks-gov.net/ media/3672/kos-in-figures-2016.pdf [Accessed 17 February 2018]. KCSS (Kosovar Center for Security Studies), 2016. State of Play of Kosovo’s International Legal Cooperation. Pristina: Kosovar Center for Security Studies. www.qkss.org/reposi tory/docs/Publication1_(2)_876336.pdf [Accessed 15 February 2018].

124  Gëzim Visoka KCSS, 2017a. Kosovo Risk Assessment Report Since Independence (2008–2017), Policy Report No. 11/2017. www.qkss.org/repository/docs/KS-RiskAssessment-eng_201377. pdf [Accessed 15 February 2018]. KCSS, 2017b. The Islamic State Narrative in Kosovo: Deconstructed om Story at a Time. Policy Report 08/2017. www.qkss.org/repository/docs/ISNinKosovo-eng_794656.pdf [Accessed 15 February 2018]. KCSS, 2018. Kosovo Security Barometer: Kosovo’s Foreign Policy and Dialogue with Serbia. www.qkss.org/repository/docs/KSB-2017-ForeignPolicy_364397.pdf [Accessed 15 February 2018]. KIPRED (Kosovar Institute for Policy Research and Development), 2016. What Happened to Kosovo Albanians: The Impact of Religion on the Ethnic Identity in the State building Period, Policy Paper No. 1/16. http://www.kipred.org/repository/docs/What_happened_ to_Kosovo_Albanians_740443.pdf [Accessed 15 February 2018]. Kmezić, M., and Bieber, F., 2017. Western Balkans and the EU Fresh Wind in the Sails of Enlargement. Balkans in Europe Policy Advisory Group. http://wb-csf.eu/wp-content/ uploads/2017/11/Western-Balkans-and-the-EU.-Fresh-Wind-in-the-Sails-of-Enlarge ment-%E2%80%93-BiEPAG.pdf [Accessed 20 February 2018]. Knudsen, R. A., 2013. Privatization in Kosovo: ‘Liberal Peace’ in Practice. Journal of Intervention and Statebuilding, 7 (3), 287–307. Krasniqi, G., 2014. Foreign Policy as a Constitutive Element of Statehood and Statehood Prerogative: The Case of Kosovo. In: Keil, S., and Stahl, B. (eds.), The Foreign Policies of Post-Yugoslav States: From Yugoslavia to Europe. Basingstoke: Palgrave Macmillan, pp. 198–220. Mandaci, N., 2018. Western Balkans and the Gulf: Interregionalism in the Making. Mediterranean Politics, 23 (3), 340–363. MEI (Ministry of European Integration), 2016. Annual Report of Donor Activities (2015). Pristina: Ministry of European Integration. www.mei-ks.net/repository/docs/anual report_english_3.pdf [Accessed 20 February 2018]. Merdjanova, I., 2013. Rediscovering the Umma: Muslims in the Balkans Between Nationalism and Transnationalism. Oxford: Oxford University Press. Millenium Challenge Corporation (MCC), 2017. MCC Chief Operating Officer to Visit Kosovo to Launch New $49 Million Program, 20 November. www.mcc.gov/news-andevents/release/advisory-111717-nash-kosovo [Accessed 14 May 2018]. Ministry of Foreign Affairs of Kosovo, 2013. The Framework Agreement Between the Republic of Kosovo and the Islamic Development on the Status and Cooperation Related to the Operation of Islamic Development Bank in Republic of Kosovo. www.mfa-ks. net/repository/docs/Marrveshje_KS-Banka_Islamike___DMN-012-2013_(Anglisht). pdf [Accessed 8 March 2018]. Musliu, V., and Orbie, J., 2016. MetaKosovo: Local and International Narratives. The British Journal of Politics and International Relations, 18 (1), 179–195. Newman, E., and Visoka, G., 2018. The Foreign Policy of State Recognition: Kosovo’s Diplomatic Strategy to Join International Society. Foreign Policy Analysis, 14 (3), 367–387. Phillips, D. L., 2012. Liberating Kosovo: Coercive Diplomacy and U.S. Intervention. Cambridge, MA: The MIT Press. President of Kosovo, 2013. Decree for the Ratification of the Agreement on Military Financial Cooperation Between the Government of the Republic of Kosovo and the Government of the Republic of Turkey, Decree No. DMN-010–2013, Pristina, 20 May.

Kosovo 125 Radio Free Europe, 2018. Serbia Silent About Recognition of Kosovo, 15 February. www. rferl.org/a/serbia-must-recognize-kosovo-to-join-eu-german-foreign-minister-gabrielsays/29040748.html [Accessed 20 February 2018]. RTK (Radio Television of Kosovo), 2017. Kosovo Supports the Global Coalition to Defeat-ISIS, 28 December. www.rtklive.com/en/news-single.php?ID=10337 [Accessed 12 May 2018]. Tabak, H., 2017. The Kosovar Turks and Post-Kemalist Turkey: Foreign Policy, Socialisation and Resistance. London: I.B. Tauris. Trading Economics, 2018. Kosovo Foreign Direct Investment. https://tradingeconomics. com/kosovo/foreign-direct-investment [Accessed 8 March 2018]. UN Security Council, 2014. Provisional Verbatim of the 7257th Meeting, UN Doc. S/PV. 7257, 29 August. U.S. Department of State, 2017. Country Report on Terrorism 2016. Washington, DC: U.S. Department of State. USAID, 2014. Kosovo: 2014–2018 – Country Development Cooperation Strategy. www. usaid.gov/sites/default/files/documents/1863/CDCS_Kosovo.pdf [Accessed 23 February 2018]. USAID, 2017. Kosovo Political Economy Analysis: Final Report. http://pdf.usaid.gov/ pdf_docs/PA00N87P.pdf [Accessed 23 February 2018]. USAID, 2018. Foreign Assistance in Kosovo. www.foreignassistance.gov/explore/coun try/Kosovo [Accessed 8 March 2018]. Visoka, G., 2017. Shaping Peace in Kosovo: The Politics of Peacebuilding and Statehood. Basingstoke: Palgrave Macmillan. Visoka, G., 2018. Acting Like a State: Kosovo and the Everyday Making of Statehood. London: Routledge. Visoka, G., and Doyle, J., 2016. Neo-Functional Peace: The European Union Way of Resolving Conflicts. Journal of Common Market Studies, 54 (4), 862–877. Voice of America, 2017. US Sees Russia’s ‘Humanitarian Center’ in Serbia as Spy Outpost, 15 June. www.voanews.com/a/united-states-sees-russia-humanitarian-center-serbia-spyoutpost/3902402.html [Accessed 15 May 2018]. Vračić, A., 2016. Turkey’s Role in the Western Balkans, SWP Research Paper No.  11. www.swp-berlin.org/fileadmin/contents/products/research_papers/2016RP11_vcc.pdf [Accessed 14 May 2018]. Weller, M., 2009. Contested Statehood: Kosovo’s Struggle for Independence. Oxford: Oxford University Press. Wisner, F. G., 2008. The United States and the Balkans: Achieving Kosovo’s Independence. American Foreign Policy Interests: The Journal of the National Committee on American Foreign Policy, 30 (4), 189–195. World Bank, 2015. Kosovo: Country Snapshot. www.worldbank.org/content/dam/World bank/document/eca/Kosovo-Snapshot.pdf [Accessed 26 February 2018]. Yee, H., 2015. Testimony by Deputy Assistant Secretary Hoyt Yee House Foreign Affairs Committee, Subcommittee on Europe, 29 April. http://docs.house.gov/meetings/FA/ FA14/20150429/103393/HHRG-114-FA14-Wstate-YeeH-20150429.pdf [Accessed 24 February 2018]. Yee, H., 2017. Testimony by Deputy Assistant Secretary Hoyt Yee Senate Foreign Relations Committee Subcommittee on Europe and Regional Security Cooperation, June 14. www.foreign.senate.gov/imo/media/doc/061417_Yee_Testimony.pdf [Accessed 24 February 2018].

6 North Macedonia A fertile ground for external influences Zoran Nechev and Ivan Nikolovski

North Macedonia’s foreign policy is characterized by its determination to join the EU and NATO, and to nurture good neighborly relations. These efforts have run parallel to the country’s struggle for international recognition under its constitutional name1 and its internal pursuit of creating a genuine democratic state. Among other issues, the name dispute with Greece has been the principal reason for North Macedonia’s delay on its path towards the EU and NATO. As a result of these circumstances, and the political uncertainty that has been created by being in the waiting room for such an extended period of time, North Macedonia has become a fertile ground for external influences from Russia, China, Turkey and the Gulf States (the United Arab Emirates and Qatar). These are actors with either opposing, complementary or veiled agendas in the country. This chapter focuses on North Macedonia’s foreign policy orientation over the last decade, exploring the linkages associated with the country’s integration in the EU and NATO alliance and the role played by other external actors across three analytical sectors – military/political, economic and societal. For analytical purposes, the linkages are investigated as transmitters of influence, but as sources of influence as well. More concretely, linkages as transmitters are understood as the communication channels that external actors may use to influence the recipient side, whereas the linkages as sources represent the external actors’ potential influence over the recipient side. This chapter looks at the extent of North Macedonia’s policy alignment with the EU and its declarations and decisions on common foreign and security policy. This also refers to those where North Macedonia does not converge with the EU vis-à-vis other external players and their policies such as, among others, sanctions towards Russia or the Syria and Ukraine crises. Out of the plethora of non-Western powers active in the country, the emphasis is placed on Russia, which has promoted increasingly diverse perceptions from those of official Skopje, Brussels and Washington. It investigates Russia’s attitude vis-à-vis the country’s objective to become part of the EU. Besides Russia, China with its largescale infrastructural investments and its latent influence is subject to analysis in this chapter. Finally, the chapter explores the role of Turkey and, to a lesser extent, the Gulf States in North Macedonia. Following the outline of Western and non-Western influences and behaviors towards North Macedonia, the last section of the chapter offers an outlook on North Macedonia’s future engagement with these actors.

North Macedonia 127 The resurrection of Russia and other external non-Western actors in North Macedonia and elsewhere in the Western Balkans has happened at a time when the EU enlargement process has been neglected by the EU and has not produced the transformative effects that many hoped for. The resulting void was used by others who, with the exception of Russia, at least for the time being, are ­taking a stance which is compatible with North Macedonia’s desire to integrate into Euro– Atlantic structures (Nechev and Trauner, 2017). Many of these influences took place in recent years but gained in intensity in times when North Macedonia was struggling to emerge from its political, economic and societal crisis. Once the EU finally decided to substantially engage, it helped North Macedonia to recover from “the edge of a cliff” (Stoltenberg, 2018, p. 2) and win back a variety of scenarios for the future of the country.

Europe’s bouncing back in North Macedonia The recent signing of the Prespa Agreement2 between North Macedonia and Greece, which is set to end the 27-year bilateral dispute, provided the necessary impetus for North Macedonia’s principal foreign objective to finally become a reality and created an opportunity for the country to commence accession negotiations with the EU and join NATO. In recognition of these developments, the June 2018 European Council conclusion on North Macedonia “sets out the path towards opening accession negotiations in June 2019” (Council of the European Union, 2018a, p. 16). In the context of the name issue, and in relation to the influences of non-Western powers, it is important to mention that one day after the official NATO invitation for North Macedonia to join the military alliance, Greece expelled two Russian diplomats and banned two others due to their alleged meddling in internal affairs, intended to obstruct the implementation of the Name Deal between Skopje and Athens (Wintour, 2018). Further expansion of NATO is seen as a threat by Russia, especially in areas of Europe perceived as belonging to their sphere of influence. Russia tried to undermine EU and U.S. diplomatic efforts to resolve the recent political crisis in the country. Through its media outlets, Russia persistently tried to fuel tensions and picture the situation in North Macedonia as that of an inter-ethnic conflict, with the aim to remind the public of the conflict in 2001. Societal support for EU membership has remained consistently high over the years, reaching its peak in 2005 with 92 percent (Damjanovski, 2014). With the steady recent trend of declining support for EU membership, it still stands at 73  percent in 2017 (Damjanovski, 2018). Therefore, North Macedonia’s social fabric is to a great extent resilient to the negative effects of the increasing foreign influences of non-Western countries. It is worth mentioning that these countries – Russia, China, Turkey and the Gulf States (the United Arab Emirates and Qatar) – recognized North Macedonia under its original constitutional name (i.e., as Republic of Macedonia) in the early to mid-1990s. This also applies regardless of the consequences of the country’s prolonged EU integration path due to its long-lasting struggle for international recognition and its dispute with neighboring Greece over the name. In 2009, the European Commission issued a positive

128  Zoran Nechev and Ivan Nikolovski recommendation for opening accession negotiations; however, North Macedonia failed to progress to a more advanced stage due to the objection by Greece over the name issue (Djolai and Nechev, 2018). This remained the case till recently, with a notable exception in 2015 and 2016 when the Commission conditioned the recommendation with continued implementation of the Przhino Agreement and substantial progress in the implementation of the ‘Urgent Reform Priorities’ (European Commission, 2016). In terms of trade, North Macedonia has benefited from close cooperation with the Union. The EU is by far North Macedonia’s biggest trade partner, accounting for 51.2 percent of its total imports and 78.7 percent of total exports (Council of the European Union, 2018b). With a share of 81.6 percent of the overall FDIs, the EU is also by far the biggest investor in North Macedonia (Council of the European Union, 2018b). North Macedonia has maintained a high level of compliance with EU declarations, positions and Council decisions in the area of CFSP. The country reached complete or nearly complete alignment in the period between 2010 and 2012 (European Commission, 2012, 2011, 2010). The worst year in this regard was 2015, when the level of alignment felt drastically to 68 percent, but it has increased ever since, reaching 83 percent in 2017 (see Table 6.1). Compared to other countries in the region, and especially those that are already under negotiation, the country’s level of alignment is sufficient, especially having in mind that North Macedonia was a candidate country for almost a decade. The real pressure for alignment with EU CFSP came with the illegal annexation of Crimea by Russia and events in eastern Ukraine, when a number of Council Decisions were reached introducing restrictive measures against Russia. Although North Macedonia “aligned its foreign policy in broad terms with the EU’s stance”, the country failed to comply “with the Council Decisions introducing restrictive measures” (European Commission, 2015, p. 71). However, it did vote in favor of Table 6.1 Level of compliance with EU in the area of the CFSP Year

No. of EU’s foreign policy declarations and measures where MKD was called upon to align with

No. of EU’s foreign policy declarations and measures MKD aligned with

Alignment percentage

2017 2016 2015 2014 2013 2012 2011 2010 2009 2008

65 41 40 45 35 70 67 61 152 170

53 30 27 33 33 70 66 61 148 170

83% 73% 68% 73% 94% 100% 99% 100% 97% 100%

Source: Authors’ compilation based on EU progress reports on North Macedonia (2008 – 2017) and ISAC fund publications (2016; 2018; 2017; 2014)

North Macedonia 129 the UN General Assembly Resolution on the territorial integrity of Ukraine (European Commission, 2014, p. 59). This period coincides with the emergence of one of the country’s deepest political and societal crises since its independence. In this internal struggle for justice, rule of law and power, Russia managed to exploit the impasse in which the country found itself and contributed significantly to pushing North Macedonia away from the EU and especially NATO. In most of the cases, its official stance can be identified in the statements made by the conservative former Prime Minister Nikola Gruevski. Thus, a correlation can be made between the Russian support for the government and the refusal to align with EU restrictive measures relating to Russia and Ukraine. Much (almost all) of the EU’s foreign policy declarations North Macedonia failed to comply with are those which relate to Russia and Ukraine (International and Security Affairs Centre and National Convention on the European Union Working Groups for Chapters 30 and 31, 2016; Pavković et  al., 2018; Perkučin and Novaković, 2017; Simović and Lazarević, 2014). Two other countries in the Western Balkans – Serbia and Bosnia and Herzegovina – also did not align with most of these EU declarations (International and Security Affairs Centre, 2018, p. 1). Interestingly enough North Macedonia, in addition to Serbia, failed to comply with the Declaration on recent developments in the South China Sea (Council of the European Union, 2016).

From the ‘edge of the cliff’ to the top of the mountain: NATO North Macedonia has been taking active participation in NATO-led peace and military missions for the last 15 years. It has joined the Partnership for Peace program (PfP), the Euro–Atlantic Partnership Council (EAPC) and the Membership Action Plan (MAP). North Macedonia appeared as a key partner of the NATO-led peacekeeping mission in Kosovo (KFOR) and has been providing support to the mission’s troops transiting its territory ever since (NATO, 2017, p. 547). Since 2015, North Macedonia has been participating in NATO’s Resolute Support peace mission in Afghanistan, contributing with a personnel of 39 people in 2017 and 47 people in 2018 (Government of the Republic of Macedonia, 2017, p. 48). North Macedonia’s external orientation toward NATO has been supported by all governments and major political parties and has been reaffirmed in several national programs and strategies in the last 25 years (Government of the Republic of Macedonia, 2017; Ministry of Defense of the Republic of Macedonia, 2018). Likewise, public support for accession to NATO has also remained high (around 75 percent) throughout the years, with the only drop in 2008 and 2009 following Greece’s decision to veto North Macedonia’s membership to the organization in 2007 (Ministry of Defense of the Republic of Macedonia, 2018, p. 23). As a result of its gradual and successful integration, North Macedonia was considered fully prepared to join NATO and receive a membership invitation at the 2008 Bucharest Summit. However, because of the unresolved name issue at that time, Greece used its right to veto North Macedonia’s membership thus effectively blocking the country’s accession. As a consequence, the Alliance decided to invite the country to start accession negotiations as soon as Skopje and Athens found a solution to the name issue (NATO, 2008). Due to the deadlock in the negotiations

130  Zoran Nechev and Ivan Nikolovski with Greece over the name dispute and the democratic downturn under the centreright government of VMRO-DPMNE led by the former Prime Minister Nikola Gruevski (2006–2016), North Macedonia’s Euro–Atlantic integrations decelerated. A new momentum was created after the early parliamentary elections in 2016 and the appointment of the new center-left government of Zoran Zaev. Strongly committed to the accession to EU and NATO as well as the resolution of bilateral issues with the country’s neighbors, in June 2018 the Macedonian government managed to negotiate the unexpected and signed a historic name deal with Greece. By signing this Agreement, the Republic of Macedonia agreed to change its constitutional name to ‘Republic of North Macedonia’, effectively unblocking its accession to NATO (Government of the Republic of Macedonia and Government of the Hellenic Republic of Greece, 2018). Following these developments, NATO’s Secretary General Jens Stoltenberg officially handed over the membership invitation to the Prime Minister Zaev on 11 July. The process of ratification of the accession protocol started as soon as the two countries completed the ratification of the name deal. Despite the inability to integrate into Euro–Atlantic structures due to the longstanding dispute with Greece, North Macedonia’s strategic priorities have remained adamant and consistent in the last 25 years. The future positioning of North Macedonia’s defense policy vis-à-vis NATO also remains intact. Namely, the country plans to increase its cooperation with the alliance by upgrading its participation in the NATO-led missions, but also by fostering cooperation with the NATO agencies and integrated defense structures (Government of the Republic of Macedonia, 2017, p. 31; Ministry of Defense of the Republic of Macedonia, 2018, p. 40). What is more, according to the Strategic Defense Overview of the Ministry of Defense of the Republic of Macedonia (2018, p. 33), the country plans to increase its defense budget up to 2 percent of GDP and modernize the army in order to align with NATO standards. Hence, the successful implementation of the name deal finally opens the door for the realization of one of North Macedonia’s most important foreign policy goals.

From Russia with love? Russia’s influence and presence have significantly increased in the last three years, the period when North Macedonia had been undergoing one of the gravest political crises since its independence from Yugoslavia in 1991. The Russian Federation and the Republic of Macedonia formally established diplomatic relations in 1992. Russia is one of the 133 world countries, and one of the four permanent members of the UN Security Council (along with the People’s Republic of China, the United States, and the United Kingdom), that recognized North Macedonia under its original constitutional name. Bilateral relations between Russia and North Macedonia are described as friendly and cooperative (The Ministry of Foreign Affairs of the Russian Federation, 2017a). Nevertheless, there was a notably higher number of public statements made by Russian Ministry of Foreign Affairs concerning North Macedonia in the period preceding, during and immediately after the last political crisis in North Macedonia.

North Macedonia 131 From the economic perspective, Russian economic influence has grown in the last 10  years, yet with little significance compared to the other countries from the region. A study conducted by the Centre for the Study of Democracy (2018, p. 1) shows that the revenues of Russian companies in North Macedonia increased from €63 million in 2006 to more than €212 million in 2015 (Center for the Study of Democracy, 2018, p.  2). Nonetheless, they make up only around 1  percent of the total revenues in the country (Center for the Study of Democracy, 2018, p.  2). The study also shows that a major part of Russia’s investment in North Macedonia is channeled through offshore companies registered in Cyprus or tax havens like Belize (Center for the Study of Democracy, 2018, p. 5). Moreover, it indicates that there are 78 companies in North Macedonia with more than 25 percent of their shares owned by Russian entities, making a little more than 1 percent of the total revenues in the economy, out of which Lukoil – the retail fuel distributor – makes one half (Center for the Study of Democracy, 2018, pp. 2–3). The rest falls on the two gas pipeline construction companies which are enlarging the country’s domestic gas transmission and distribution network, as well as Sergey Samsonenko’s3 gambling business. Russia’s corporate influence is presented in Figure 6.1. Furthermore, although Russian foreign direct investment (FDI) has increased since 2014 (see Figure 6.2), mainly due to the close ties developed with former Prime Minister Gruevski, they made around €31 million in 2015, or less than 1 percent of the total FDI in the country (Center for the Study of Democracy, 2018, p. 4). Thus, it could be argued that, despite the declarations of increased cooperation, economic relations between North Macedonia and Russia remain limited. Russia increased its influence in North Macedonia’s domestic affairs during and right after the political crisis. Namely, following the results of the early parliamentary elections in 2014 and the fourth consecutive victory for VMRODPMNE, Zoran Zaev, the leader of the opposition, accused the former Prime

1% 1% Russian Companies’ Revenues (Share of the Total %)

1% 1%

Russian Companies’ Assets (Share of the Total %)

1%

Russian Companies’ Employments (Share of the Total)

0% 0% 0%

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Figure 6.1 Russia’s corporate influence in North Macedonia (2006–2015) Source: Center for the Study of Democracy (2018, p. 4).

132  Zoran Nechev and Ivan Nikolovski Amount of FDI (USD million) 35 30 25 20 15 10 5 0

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Figure 6.2 Amount of Russian investments in North Macedonia (2002–2016) Source: Adapted from the Center for the Study of Democracy (2018, p. 3).

Minister Nikola Gruevski of election rigging. Zaev also announced that he would publish compromising materials disclosing crimes committed by key governmental officials. In response, in January 2015, Nikola Gruevski accused Zoran Zaev of staging a coup d’état aiming to topple the government, orchestrated in cooperation with foreign intelligence services. As a result, Russia’s Ministry of Foreign Affairs issued a statement calling all political forces to “act in line with constitutional democratic institutions and address existing problems through dialogue” (The Ministry of Foreign Affairs of the Russian Federation, 2015a). A few months later, in response of the antigovernmental protests and the 2015 Kumanovo armed incident,4 the Russian MFA issued another statement accusing the “opposition movements and largely Westinspired NGOs” of following “the logic of the streets and the notorious ‘color revolution’ scenario”, which have a potential to “aggravate ethnic tensions in the multi-ethnic Macedonia and neighboring areas of the Balkans” (The Ministry of Foreign Affairs of the Russian Federation, 2015b). In the period between 2015 and 2017, the Russian MFA continually published statements supporting VMRO-DPMNE’s government. At the same time, criticizing the activities of the opposition parties and movements, which, according to Russia, were an example of foreign interference by the West in the country’s domestic affairs, aimed to destabilize the country (The Ministry of Foreign Affairs of the Russian Federation, n.d.). This positioning by Moscow could be seen as a continuation of the

North Macedonia 133 policy of siding with Western Balkan rulers who have open issues with the West (Reljić, 2017, p. 45). Additionally, the tense relations worsened after the election of the pro-Western government of Zoran Zaev in May 2017. For instance, Russia disapproved of the election of Talat Xhaferi, a former field commander in the ethnic Albanian paramilitary National Liberation Army, as speaker of the parliament, portraying his election as the removal of the legitimate government from power and the realization of the so-called Tirana platform5 and the West-supported idea of Greater Albania (The Ministry of Foreign Affairs of the Russian Federation, 2017b). Russian media organizations like Sputnik and RT picked up the story and enhanced it further with the purpose of presenting the situation as an example of interethnic tensions (Russia Today, 2017; Sputnik, 2017). Furthermore, in August 2017, in an interview for Bloomberg News Agency, Radmila Šekerinska, Deputy Prime Minister and Defense Minister, accused Russia of meddling in North Macedonia’s internal affairs and stated that membership in NATO would protect the country from this kind of threat (Okov, 2017). Russia denied these allegations, calling them a distraction from the real threats to North Macedonia’s sovereignty, such as “the policy aimed at drawing Skopje into NATO at any cost” (The Ministry of Foreign Affairs of the Russian Federation, 2017c). The tension in bilateral relations intensified in March  2018, when North Macedonia, in close consultation with the EU and NATO allies and partners and in solidarity with the United Kingdom regarding the Sergei Skripal poisoning, expelled a Russian diplomat, which was seen as a concern for national security (BIRN Team, 2018; Ministry of Foreign Affairs of the Republic of Macedonia, 2018). Russian officials also made statements regarding the renewed talks between North Macedonia and Greece. Sergei Lavrov, Russia’s foreign minister, said that Russia would accept the name that would be agreed by both parties if adopted in the Macedonian constitution (The Ministry of Foreign Affairs of the Russian Federation, 2018a). However, as a result of the promising developments of the country’s Euro–Atlantic integrations due to the intensified talks over the name issue, at the beginning of 2018 Moscow summoned the Macedonian ambassador to Russia and warned the Macedonian authorities that the accession to NATO may have negative consequences for regional security and bilateral relations (The Ministry of Foreign Affairs of the Russian Federation, 2018b). Furthermore, as mentioned in the introduction, in July 2018 Greece decided to expel and ban Russian diplomats due to the alleged undermining of the Name Agreement with North Macedonia (Wintour, 2018). What is more, a month later, Athens decided to recall its ambassador in Moscow (Sputnik, 2018). Hence, it could be concluded that in the last two years Russia has been actively using the political instability in the country to hinder North Macedonia’s Euro–Atlantic integration (Center for the Study of Democracy, 2018, p. 2). Aside from bilateral relations, Russian influence could be traced in the internal political life of the country too, especially after the government change. Namely, in January 2018 the minor centre-right political party ‘Popular Movement for Macedonia’6 renamed itself ‘United Macedonia’, resembling Putin’s United

134  Zoran Nechev and Ivan Nikolovski Russia. The ‘new’ party took a firm stance against North Macedonia’s EU and NATO membership, while at the same time advocating for an alliance with Russia (Trpkovski, 2018). Alexander Dugin, a Russian philosopher and an opponent of Western liberal ideology, with close ties to the Kremlin, was a guest at the party’s founding conference (Trpkovski, 2018). That notwithstanding, United Macedonia has insignificant political influence and it seems unlikely that this party, which never won seats in the parliament of North Macedonia, will challenge the crosspartisan Euro–Atlantic consensus in the country. The impact of Russia in this respect decreased after the government change, and has remained low. The greater involvement of the EU in domestic political affairs (post-political crisis reforms) appears to have increased the Union’s credibility and visibility among Macedonian citizens (Nechev et al., 2018, p. 3). This has resulted in a significant drop in popular support for Russia as an ally (from 25 percent in 2016 to 13.8 percent to 2018), while the perceived influence in the country’s political affairs decreased from 6.2 percent in 2016 to 3.7 percent in 2017 (Nechev et al., 2018, p. 5). All in all, even though seen as friendly, the North Macedonia–Russia relations are rather troublesome in practice. Especially in recent times, Russia has openly positioned itself as the main foreign opponent of North Macedonia’s Euro–Atlantic aspirations, often discrediting the policies and objectives of the new pro-EU and pro-NATO government. By the same token, the Macedonian authorities have demonstrated a reserved or even negative stance towards the relations and role of Moscow, despite their declarations in favor of cooperation. In terms of the economy, even though it has increased, Russian economic influence remains rather low.

Turkey and the Gulf states: between neo-Ottomanism, Islam and economic influence The relations between Turkey and North Macedonia have remained close over the years, with the exception of the 2000 diplomatic crisis when North Macedonia considered recognizing the Republic of Cyprus. In response, Turkey threatened to cut off diplomatic relations (Vračić, 2016, p. 24). North Macedonia did not recognize Cyprus and despite this short-term diplomatic tension, Ankara remained one of Skopje’s greatest allies. Bilateral meetings between the officials from both sides are held regularly and in the last 10 years, North Macedonia and Turkey have signed numerous bilateral agreements advancing the cooperation in the field of diplomacy, economy, trade, culture, defense and security (European Commission, 2014, 2012, 2009). Turkey has also been one of the strongest supporters of the country’s accession to NATO (Petrović and Reljić, 2011) and it is the only member of the alliance to have requested the usage of North Macedonia’s original constitutional name in NATO official documents. In the field of security, Turkey is one of the country’s key partners, with cooperation based on regular consultations and activities as well as participation in military exercises and missions (Ministry of Defense of the Republic of Macedonia,

North Macedonia 135 2018, p. 19). The military cooperation between the two countries dates back to the 1990s, especially the Greek embargo on North Macedonia, when Turkey provided military assistance in terms of logistics, weapons and military training to the Macedonian armed forces (Gangloff, 2001). In December 2010, the defense ministries of Turkey and North Macedonia signed a bilateral agreement on military-financial cooperation between the two countries (Petrović and Reljić, 2011, p. 167). In terms of trade, in 2000 the two countries signed the free-trade agreement resulting in resetting the rates of customs duties applied in North Macedonia to industrial goods originating from the country. Around 100 Turkish companies have invested about US$1.2 billion in North Macedonia (Ministry of Foreign Affairs of the Republic of Turkey, n.d.), with significant investments in the construction sector. For instance, the Turkish company TAV Airports Holding won a 20-year contract to run the airports in Skopje and Ohrid in 2008 (Vračić, 2016, p. 25). Turkish cultural development aid in North Macedonia is mainly channeled through the Turkish Cooperation and Coordination Agency (TIKA), which is known for its activities in the Muslim-populated areas in the region, namely the restoration of Ottoman landmarks such as mosques (Vračić, 2016, p. 13). To date, TIKA has provided development aid worth US$116 million with 650 completed projects (Ministry of Foreign Affairs of the Republic of Turkey, n.d.). Other examples are Yunus Emre Institute – a public foundation that promotes Turkey, Turkish language, history, culture and art (2017), which has an office in Skopje, and also the Yahya Kemal schools and colleges and the International Balkan University in Skopje. Turkey’s public broadcaster TRT offers internet news and radio programs in all languages of the Balkans (Vračić, 2016, p. 14), while Anadolu Agency opened a bilingual Macedonian and Albanian desk in Skopje in 2015 (Vračić, 2016, p. 15). The Gülen (Hizmet) movement is also worth mentioning in this respect. As a result of the failed coup and the following anti-Gülen purge, Ankara sent an official request to the Macedonian authorities demanding the closure of schools allegedly affiliated with the Hizmet movement (Marusic, 2016) and asking for greater cooperation in the fight against the so-called FETO (Gülen) terrorist organization (Buyuk, 2018). Since Macedonian authorities did not act upon Ankara’s request, Turkey withdrew from the bilateral agreement on mutual recognition of university diplomas with North Macedonia in 2017 (Marusic, 2017). Moreover, Turkey’s Ambassador to North Macedonia, Tülin Erkal Kara, accused the Yahya Kemal college of being a ‘terrorist organization’, calling for an “essential rather than declarative fight against this organization” (Kara, 2018 quoted in META, 2018). Notwithstanding the abovementioned, North Macedonia’s response to the antiGülen purge did not have implications on the bilateral relations between the two countries in any significant way. In 2017, 7.4 percent of Macedonian citizens perceived Turkey as the country’s greatest ally. Arguably, this perception is shared mostly by the ethnic Turks living in the country (60%), following ethnic Albanians (10%) and Macedonians (5.3%).7 From the above-presented data, it can be concluded that only the Turkish community is prone to perceive Turkey as a great ally and influential foreign

136  Zoran Nechev and Ivan Nikolovski actor. That being said, it could be argued that these public opinion trends are due to Turkey’s intensified social influence in recent years, such as TIKA’s activities in the Muslim-dominated areas of the country, inhabited mainly by ethnic Turks and Albanians. North Macedonia has diplomatic relations with all seven Gulf States.8 In this chapter, we focus on the bilateral relations of the Republic of North Macedonia with the United Arab Emirates and the State of Qatar. The United Arab Emirates and the Republic of North Macedonia established bilateral relations in 1996. In 2015, North Macedonia received 0.23  million AED (more than €53,700) in religious and social charitable assistance (United Arab Emirates Ministry of Foreign Affairs and International Cooperation, 2016, p.  135). In addition, in 2017 North Macedonia received foreign direct investment amounting to €5.21 million from the UAE, according to the data compiled by the Central Bank of Macedonia (2017). Qatar is the second Gulf state with a visible presence in the country. The bilateral relations between Qatar and North Macedonia established in 1996 are perceived as amicable, resulting in several state visits by the senior officials of the two countries throughout the years. The bilateral relations are based on cooperation in the field of trade, technology, transport, investments, culture, health, education, tourism, agriculture and sports (Qatar Embassy in Skopje – Republic of Macedonia, n.d.). The role the Gulf States remains low, generally visible in the field of economy and charitable activities. Like Turkey, the Gulf States mainly invested in humanitarian assistance to the region, focusing on building mosques and schools and increasing their share of foreign aid in the country as well as in the Western Balkan region more widely (Ejdus, 2017, p. 51). Yet their role remains insignificant in terms of political and social impact.

China – the latent influencer Since the once war-torn region stabilized in the early 2000s, the People’s Republic of China has sought to establish itself as a regional player in the Balkans, mainly through increased trade, and clean energy investments, but also by building political alliances (Poulain, 2011, p. 1). The most famous example is the 16 + 1 format of cooperation – an initiative by the People’s Republic of China aiming to increase cooperation with 11 EU member states and 5 Balkan countries, including North Macedonia (Vangeli, 2017a, p. 57). Despite China’s regional rather than country-specific approach to cooperation with the countries of the Western Balkans, Sino-Macedonian relations have improved meaningfully in the last decade. The relations between the two countries have been friendly and cooperative (Ministry of Foreign Affairs of the People’s Republic of China, n.d.), with the exception of the 1999 diplomatic incident when the Macedonian authorities recognized Taiwan, which led to the temporary termination of diplomatic relations. In response, in 1999, due to China’s veto, the United Nations Security Council failed to extend the mandate of the United Nations Preventive Deployment Force in Macedonia (UNPREDEP)  – a UN peacekeeping mission that aimed to prevent violent conflicts in the country at that

North Macedonia 137 time. Relations between Skopje and Beijing were reestablished in 2001 as North Macedonia revoked its recognition of Taipei’s independence. China’s role in the country is perhaps most visible in the field of economy and trade. Being one of the biggest and fastest growing world economies, China has significantly increased its presence and economic impact in the region and thus in North Macedonia. Since 2006, there have been five major Chinese investments in North Macedonia (see Table 6.2). Furthermore, Chinese investments in North Macedonia increased from US$200,000 in 2009 to US$2.11 million in 2014, which is an increase of 955 percent (see Figure 6.3). In terms of trade, North Macedonia mainly imports machines and electronics as well as textiles from China. Beijing mainly imports ferroalloys from Skopje (Vangeli, 2017b, p.  114). Since the launching of the 16 + 1 initiative in 2012, trade cooperation between North Macedonia and China has had ups and downs. In the period between 2012 and 2017, there was one significant positive trade growth in 2015 (22.69%) and two negative growths in 2013 and 2016 (–11.85% and  –10.64%, respectively). In 2017, there was a slight increase in Sino-­Macedonian trade cooperation, with 2.82 percent growth compared to 2016 (see Figure 6.4). In addition, in 2017, China was North Macedonia’s third trading partner, with roughly €450 million total trade (Directorate-General for Trade, 2018, p. 9).9 Nevertheless, by comparing China’s level of cooperation with the EU – especially with the Western European countries – the economic cooperation between China and North Macedonia and the rest of the countries from the region remains low (Vangeli, 2017a, p. 57). Moreover, as part of the abovementioned 16 + 1 initiative, China established a credit fund of US$10 billion for infrastructural projects and North Macedonia Table 6.2 Major Chinese investments in North Macedonia since 2006 Year

Company

Sector

2006 China International Energy Water and Electric Corp. 2010 Zhengzhou Yutong Public Group transport 2014 Sinohydro Corp. Motorway Exim Bank Construction 110 KM 2014 China Railway Railway Rolling Stock Corp. 2017 China Railway Electric Rolling Stock locomotives Corp. Total

EUR State of Nature of investment million investment N/A

Completed TP Kozjak Hydro Power Plant

N/A

Completed Supply of double-decker buses for Skopje Ongoing Lending/ Construction Kicevo – Ohrid Miladinovci – Stip Completed Electrical trains Railway modernisation Ongoing Supplementary investment to 2014

574 50 N/A 674

Source: Bastian (2017, p. 17), based on publically available documents and interviews with country representatives.

USD million

2.5

2

1.5

1

0.5

0

2009

2010

2011

2012

2013

2014

Figure 6.3 Amount of China’s investments in North Macedonia 2009–2014 (million USD) Source: Adapted from Liu (2016, p. 166), based on the data of the Ministry of Commerce of the People’s Republic of China

Total Trade Growth (%) 25.00% 20.00% 15.00%

10.00% 5.00% 0.00% -5.00%

2012

2013

2014

2015

2016

2017

-10.00% -15.00% Figure 6.4 Total trade growth between North Macedonia and China (2012–2017) Source: Authors’ compilation based on the data of the State Statistical Office of the Republic of North Macedonia

North Macedonia 139 was the first country to use these funds for the construction of two new highways: Miladinovci-Shtip and Kichevo-Ohrid, amounting to €580 million (Ministry of Foreign Affairs of the Republic of Macedonia, n.d.). However, the agreements with the Chinese companies, such as Sinohydro Corporation LTD, the company chosen to construct the two highways, were signed in such a way that the latter won the contracts dealing directly with the government rather than through public bidding (Makocki and Nechev, 2017, p. 1; Vangeli, 2017a, p. 59). As a result, in 2015 the Social Democratic Union of Macedonia – the largest opposition party at that time – published recorded conversations relating to the contracting with Sinohydro Corporation LTD that uncovered cases of corruption involving high officials from the previous government led by Nikola Gruevski (Makocki and Nechev, 2017, p. 1; Vangeli, 2017a, p. 59). The investigation initiated by the Special Prosecutor’s Office under the name ‘Trajectory’ raised suspicions that the project-related procurements favored national subcontractors politically affiliated with the former ruling party VMRO-DPMNE (Makocki and Nechev, 2017, p. 1). As a result, criminal proceedings were initiated against four governmental officials, including former Prime Minister Nikola Gruevski and former transport minister Mile Janakievski, who allegedly abused their positions by gaining financial benefits, therefore violating the Law on Public Procurement in order to meet Chinese conditions (Public Prosecutor’s Office for Prosecuting Criminal Offences Related to and Arising from the Content of the Illegally Intercepted Communication, 2017). Additionally, the Ministry of Transport revealed that the highway projects had major errors that postponed the construction and increased the costs of its implementation by €120 million (Makocki and Nechev, 2017, p. 1; Vangeli, 2017a, p. 59). This example demonstrates that cooperation with China is based solely on Beijing’s terms, including practices such as direct dealing or preferable contracting legislation aiming to meet its demands, which often diverge from EU directives and regulations (Makocki and Nechev, 2017, p.  2; Vangeli, 2017b, p.  59). The EU’s major objections refer to a lack of transparency in competitive and lawbased public tenders and reciprocal market access (Bastian, 2017, p. 43). In this context it is also worth mentioning that, despite China’s support for the region’s integration in the EU and 16 + 1 compatibility with the Sino-European relations (Vangeli, 2017b, p. 60), the EU perceives China’s projects in the Western Balkans as a threat to the Union’s principles of governance, that is, its reformist agenda in the region (Makocki, 2017). Moreover, the EU fears that China’s politico-­ economic model of capitalist-based authoritarianism might be appealing to some of the region’s governments and increase Beijing’s political influence in the Western Balkans (Heath and Gray, 2018). All in all, besides China’s increased role in North Macedonia and the rest of the region, its political, economic and societal influence remains rather insignificant compared to that of the other regional players, especially the EU. According to a 2017 public opinion analysis conducted by Nechev et al. (2007), only 0.3 percent of Macedonian citizens see China as the most influential foreign actor in the country, while 1.5 percent perceive it as the country’s greatest ally and donor respectively.

140  Zoran Nechev and Ivan Nikolovski Nevertheless, China’s impact in the region is expected to additionally strengthen in the future, which may be seen as an opportunity for the Western Balkans to upgrade their role and position in international affairs (Vangeli, 2017a, p. 61). Such an example is the Budapest–Piraeus train line, which passes through North Macedonia and connects Central Europe with the Greek Chinese-owned harbor.

Future prospects Despite the almost three-decade struggle for international recognition under the original constitutional name, as well as the continuous striving for democratic and political consolidation, North Macedonia’s major foreign policy goals – ­membership in the EU and NATO – remained unchanged. Especially now, when the political leadership in North Macedonia and Greece have come to an Agreement on the name dispute, thus opening the country’s perspective for future membership in these two organizations. However, with each day, statements and events are clear reminders that the will of the government in Skopje and the EU and NATO perspectives are disputed and challenged by political forces from inside, but also from outside. There are internal forces which want to see the country outside the Euro–Atlantic structures, and there are external actors which are ready to dispute this Western orientation of the country. Examples of this are the recent establishment of the ‘United Macedonia’ political party, which takes a strong stance against North Macedonia’s EU and NATO membership. Therefore, based on North Macedonia’s linkages with the external actors, which this chapter investigated as transmitters and sources of influence through three analytical sectors – military/political, economic and societal – one can conclude that the only credible, certain and economically viable solution for North Macedonian foreign policy is accession to the EU and NATO. For the foreseeable future, and especially until the finalization of all the activities related to the full implementation of the name agreement, Russia will continue to play the role of a spoiler and to spread disinformation with regards to the country’s Euro–Atlantic integration. As North Macedonia moves ahead in the EU accession process, it is expected to fully comply with all EU foreign policy declarations and actions, especially those relating to Russia and its dealings in Ukraine. On the other hand, the latent influencer, China, through its investment (lending) opportunities offered to the country, is expected to gain more ground in North Macedonia and thus have more influence in the foreign policy position the country will take in the future. A trace of this attitude is North Macedonia’s position of non-aligning with the EU declaration concerning the deployment of missiles on islands in the South China Sea. Unlike Russia, which is openly against the integration of the country in Euro–Atlantic structures, China is a different kind of external influencer. It openly supports the process of integration while positioning itself to better protect its own interest within the process. Turkey is one of the greatest supporters of North Macedonia’s accession to NATO, as well as one of Skopje’s main economic and trade partners. Moreover, by using the Ottoman legacy and Muslim ­heritage, especially under Erdoğan’s leadership, Ankara has managed to build a strong connection with the Muslim community in the country, which has additionally

North Macedonia 141 increased its political leverage and impact. This is especially visible in the case of the anti-Gülen purge, which, as it appears, became a (foreign) policy of ‘blackmailing’ rather than a Turkish internal affair. Furthermore, the detoriated relations between Brussels and Ankara over the democratic downturn in Turkey may also have an impact on bilateral relations with North Macedonia in the future, especially if the latter accelerates its EU accession. On the other hand, the Gulf States (primarily Qatar and the United Arab Emirates) have sought to increase their trade collaboration with North Macedonia while also spreading their societal influence, mainly through charitable and religion-based activities. Nevertheless, compared to Turkey and the other regional actors, their role in the country, in all respects, remains insignificant to this date.

Notes 1 The country’s constitutional name has been Republic of Macedonia until the ratification of the Prespa Agreement. 2 The full name of the Agreement is: Final agreement for the settlement of the differences as described in the United Nations Security Council resolutions 817 (1993) and 845 (1993), the termination of the Interim Accord of 1995, and the establishment of a strategic partnership between the parties. 3 Sergey Samsonenko is a Russian businessman operating in Macedonia. He is the owner of the Macedonian football and handball clubs ‘Vardar’. 4 A clash between Macedonian police forces and an armed group associated with the National Liberation Army, which took place on 9 May 2015. 5 The Tirana platform is an unofficial program of political demands by three Macedonian parties that mainly represent ethnic Albanians, believed to have been drafted in Tirana under the leadership of Albanian Prime Minister Edi Rama (Macedonian Information Agency, 2017). 6 In Macedonian: Narodno Dvizhenje za Makedonija. 7 Data compiled by the authors for the purposes of Institute for Democracy’s 2018 annual analysis of public opinion on North Macedonia’s EU integration. 8 The Gulf States include Bahrain, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates. 9 EU28 are taken as a single trading partner.

References Bastian, J., 2017. The Potential for Growth Through Chinese Infrastructure Investments in Central and South-Eastern Europe Along the ‘Balkan Silk Road’. Athens and London: European Bank for Reconstruction and Development. BIRN Team, 2018. Macedonia Claims Expelled Russian Diplomat Breached Security. www.balkaninsight.com/en/article/macedonia-claims-expelled-russian-diplomat-breachedsecurity-1-03-27-2018 [Accessed 8 July 2018]. Buyuk, H. F., 2018. Erdogan Pushes Macedonia to Suppress ‘Gulenist Terrorists’, 21 February. www.balkaninsight.com/en/article/erdogan-pushes-macedonia-to-suppressgulenist-terrorists [Accessed 8 October 2018]. Center for the Study of Democracy, 2018. Assessing Russia’s Economic Footprint in Macedonia. Center for the Study of Democracy, 1–15. Council of the European Union, 2016. Declaration by the High Representative on behalf of the EU on Recent Developments in the South China Sea – Consilium. www.consilium.

142  Zoran Nechev and Ivan Nikolovski europa.eu/en/press/press-releases/2016/03/11/hr-declaration-on-bealf-of-eu-recentdevelopments-south-china-sea/ [Accessed 8 December 2018]. Council of the European Union, 2018a. Enlargement and Stabilisation and Association Process Council Conclusions. Council of the European Union, Brussels. Council of the European Union, 2018b. EU and Western Balkans Intertwined. www.consil ium.europa.eu/en/infographics/western-balkans-economy/ [Accessed 8 December 2018]. Damjanovski, I., 2014. Public Opinion and Macedonia’s Accession to the European Union 2004–2014. The Konrad Adenauer Stiftung in the Republic of Macedonia and Institute for Democracy ‘Societas Civilis’ – Skopje, 7–46. Damjanovski, I., 2018. Analysis of Public Opinion on Macedonia’s Accession to the European Union (2014–2017). The Konrad Adenauer Stiftung in the Republic of Macedonia and Institute for Democracy ‘Societas Civilis’ – Skopje, 3–29. Directorate-General for Trade, 2018. European Union, Trade in Goods with the Former Yugoslav Republic of Macedonia. http://trade.ec.europa.eu/doclib/docs/2006/september/ tradoc_113381.pdf [Accessed 8 August 2018]. Djolai, M., and Nechev, Z., 2018. Bilateral Disputes Conundrum: Accepting the Past and Finding Solutions for the Western Balkans. Balkans in Europe Policy Advisory Group, 6–17. Ejdus, F., 2017. The Impact of Turkey and the Gulf States. In: Lange, S., Nechev, Z., and Trauner, F. (eds.), Resilience in the Western Balkans. Paris: European Union for Security Studies. Issue Report No 36, pp. 51–56. European Commission, 2009. Commission Staff Working Document the Former Yugoslav Republic of Macedonia 2009 Progress Report Accompanying the Document Communication from the Commission to the European Parliament and the Council. Brussels. European Commission, 2010. Commission Staff Working Document the Former Yugoslav Republic of Macedonia 2010 Progress Report Accompanying the Document Communication from the Commission to the European Parliament and the Council. Brussels. European Commission, 2011. Commission Staff Working Document the Former Yugoslav Republic of Macedonia 2011 Progress Report Accompanying the Document Communication from the Commission to the European Parliament and the Council. Brussels. European Commission, 2012. Commission Staff Working Document the Former Yugoslav Republic of Macedonia 2012 Progress Report Accompanying the Document Communication from the Commission to the European Parliament and the Council. Brussels. European Commission, 2014. The Former Yugoslav Republic of Macedonia Progress Report. European Commission, Brussels. European Commission, 2015. Commission Staff Working Document the Former Yugoslav Republic of Macedonia 2015 Report Accompanying the Document Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions. Brussels. European Commission, 2016. Commission Staff Working Document the Former Yugoslav Republic of Macedonia 2016 Report Accompanying the Document Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions. Brussels. Gangloff, S., 2001. The Relations Between Turkey and Macedonia: The Incoherencies of a Political Partnership. Turkish Review of Balkan Studies, 37–56. Government of the Republic of Macedonia, 2017. Annual National Programme for Membership of the Republic of Macedonia in NATO for year 2017–2018 [Godishna Nacionalna Programa za Chlenstvo na Republika Makedonija vo NATO za 2017–2018 godina]. Skopje. Government of the Republic of Macedonia, Government of the Hellenic Republic of Greece, 2018. Final Agreement for the Settlement of the Differences as Described in the United Nations Security Council Resolutions 817 (1993) and 845 (1993), the Termination of the

North Macedonia 143 Interim Accord of 1995, and the Establishment of a Strategic Partnership Between the Parties. http://vlada.mk/sites/default/files/dokumenti/spogodba-en.pdf [Accessed 8 July 2018]. Heath, R., and Gray, A., 2018. Beware Chinese Trojan Horses in the Balkans, EU Warns. Politico. www.politico.eu/article/johannes-hahn-beware-chinese-trojan-horses-in-thebalkans-eu-warns-enlargement-politico-podcast/ [Accessed 8 August 2018]. International and Security Affairs Centre, 2018. The Impact of the Content and Dynamics of the Belgrade-Pristina Brussels Negotiations to Foreign Policy Alignment of Serbia with the European Union, 4. International and Security Affairs Centre, National Convention on the European Union Working Groups for Chapters 30 and 31, 2016. Analysis of the Harmonization of Serbia’s Foreign Policy Declarations and Measures of the EU in 2015. International and Security Affairs Centre, Belgrade. Macedonian Information Agency, 2017. President Ivanov Calls for Broad International Condemnation of the Tirana Platform. MIA. www.mia.mk/en/Inside/RenderSingleNews NewsCategory/61/133599404 [Accessed 8 July 2018]. Makocki, M., 2017. China in the Balkans: The Battle of Principles. European Council on Foreign Relations. www.ecfr.eu/article/commentary_china_in_the_balkans_the_bat tle_of_principles_7210 [Accessed 8 August 2018]. Makocki, M., and Nechev, Z., 2017. Balkan Corruption the China Connection. Issue Alert. Paris: Institute for Security Studies. Marusic, J. S., 2016. Macedonia May Shut Gulen-Linked Turkish Schools. www.balkan insight.com/en/article/macedonia-hints-closing-gulen-organizations-upon-turkishrequest-08-25-2016 [Accessed 8 October 2018]. Marusic, J. S., 2017. Turkey Scraps Diploma Deal with Macedonia. www.balkanin sight.com/en/article/students-shocked-over-scrapping-of-macedonia-turkey-diplomadeal-01-23-2017 [Accessed 8 October 2018]. META, 2018. The Turkish Ambassador Called the Yahya Kemal College a Terrorist Organisation [Turskata ambasadorka go nareche koledzhot „Jahja Kemal“ teroristichka organizacija]. http://meta.mk/turskata-ambasadorka-go-nareche-koledhot-jahja-kemalteroristichka-organizatsija/ [Accessed 8 October 2018]. Ministry of Defense of the Republic of Macedonia, 2018. Strategic Defense Review 2018 of the Republic of Macedonia: Toward NATO Membership and ‘Future armed forces 2028’ [Strategiski odbranben pregled 2018 na Republika Makedonija: Kon chlenstvo vo NATO i “Idni vooruzheni sili 2028”]. Skopje. Ministry of Foreign Affairs of the People’s Republic of China, n.d. China and Macedonia. www.fmprc.gov.cn/mfa_eng/wjb_663304/zzjg_663340/xos_664404/gjlb_664408/ 3200_664650/ [Accessed 8 August 2018]. Ministry of Foreign Affairs of the Republic of Macedonia, 2018. Statement by the Ministry of Foreign Affairs of the Republic of Macedonia. www.mfa.gov.mk/index.php?option=com_ content&view=article&id=2628:soopshtenie-na-ministerstvoto-za-nadvoreshni-rabotina-republika-makedonija&catid=52&Itemid=684&lang=en [Accessed 8 July 2018]. Ministry of Foreign Affairs of the Republic of Macedonia, n.d. Diplomatic Relations with PR China. www.mfa.gov.mk/index.php?option=com_content&view=article&id=257& Itemid=398&lang=en [Accessed 8 August 2018b]. Ministry of Foreign Affairs of the Republic of Turkey, n.d. Economy of the Republic of Macedonia [Makedonya Cumhuriyeti’nin Ekonomisi] www.mfa.gov.tr/makedonyacumhuriyeti-ekonomisi.tr.mfa [Accessed 8 July 2018]. The Ministry of Foreign Affairs of the Russian Federation, 2015a. Comment by the Information and Press Department on the Abortive Coup in Macedonia. www.mid.ru/foreign_ policy/news/-/asset_publisher/cKNonkJE02Bw/content/id/917223 [Accessed 8 July 2018].

144  Zoran Nechev and Ivan Nikolovski The Ministry of Foreign Affairs of the Russian Federation, 2015b. Comment by the Information and Press Department on the Growing Tensions in Macedonia. www.mid.ru/ foreign_policy/news/-/asset_publisher/cKNonkJE02Bw/content/id/1257608 [Accessed 8 July 2018]. The Ministry of Foreign Affairs of the Russian Federation, 2017a. Press Release on Deputy Foreign Minister Alexey Meshkov’s Meeting with Macedonian Foreign Minister Nikola Dimitrov. www.mid.ru/foreign_policy/news/-/asset_publisher/cKNonkJE02Bw/content/ id/2805129 [Accessed 8 July 2018]. The Ministry of Foreign Affairs of the Russian Federation, 2017b. Comment by the Information and Press Department on Aggravated Domestic Political Situation in Macedonia. www.mid.ru/foreign_policy/news/-/asset_publisher/cKNonkJE02Bw/content/id/2739769 [Accessed 8 July 2018]. The Ministry of Foreign Affairs of the Russian Federation, 2017c. Foreign Ministry Spokesperson Maria Zakharova’s Response to a Media Question Regarding the Bloomberg Article Accusing Russia of Interfering in the Internal Affairs of Macedonia. www. mid.ru/maps/mk/-/asset_publisher/Bx1lWHr8ws3J/content/id/2836686 [Accessed 8 July 2018]. The Ministry of Foreign Affairs of the Russian Federation, 2018a. Foreign Minister Sergey Lavrov’s Statement and Answers to Media Questions at a News Conference on Russian Diplomacy in 2017, Moscow, January 15. www.mid.ru/diverse/-/asset_publisher/ zwI2FuDbhJx9/content/vystuplenie-i-otvety-na-voprosy-smi-ministra-inostrannyh-delrossii-s-v-lavrova-v-hode-press-konferencii-po-itogam-deatel-nosti-rossijskoj-diplomati-1 [Accessed 8 July 2018]. The Ministry of Foreign Affairs of the Russian Federation, 2018b. Press Release on Deputy Foreign Minister Alexander Grushko’s Meeting with Macedonian Ambassador to Russia Goce Karajanov. www.mid.ru/foreign_policy/news/-/asset_publisher/cKNonkJE02Bw/ content/id/3131596 [Accessed 8 July 2018]. The Ministry of Foreign Affairs of the Russian Federation, n.d. News. www.mid.ru/foreign_ policy/news?p_p_id=101_INSTANCE_cKNonkJE02Bw&p_p_lifecycle=0&p_p_state= normal&p_p_mode=view&p_p_col_id=column-1&p_p_col_pos=1&p_p_col_count= 2&_101_INSTANCE_cKNonkJE02Bw_delta=20&_101_INSTANCE_cKNonkJE02Bw_ keywords=&_101_INSTANCE_cKNonkJE02Bw_advancedSearch=false&_101_ INSTANCE_cKNonkJE02Bw_andOperator=true&p_r_p_564233524_categoryId= 11006&p_r_p_564233524_resetCur=false&_101_INSTANCE_cKNonkJE02Bw_cur=1 [Accessed 8 July 2018]. NATO, 2008. Bucharest Summit Declaration – Issued by the Heads of State and Government Participating in the Meeting of the North Atlantic Council in Bucharest on 3 April  2008. NATO. www.nato.int/cps/en/natohq/official_texts_8443.htm [Accessed 8 July 2018]. NATO, 2017. NATO Encyclopedia 2017. Nechev, Z., and Trauner, F., 2017. Fostering Resilience in the Western Balkans. Issue Alert. Paris: Institute for Security Studies. Nechev, Z., Markovikj, N., and Nikolovski, I., 2018. The European Union on the Verge of Bouncing Back in Macedonia. Institute for Democracy “Societas Civilis” – Skopje and Konrad Adenauer Stiftung, 1–26. Okov, S., 2017. Republic of Macedonia Eyes NATO to Ward Off Russian Interference. Bloomberg.com. Pavković, T., Perkučin, J., Novaković, I., and Bogosavljević, J., 2018. An Analysis of Serbia’s Alignment with the European Union’s Foreign Policy Declarations and Measures in 2017. International and Security Affairs Centre, Belgrade.

North Macedonia 145 Perkučin, J., and Novaković, I., 2017. An Analysis of Serbia’s Compliance with EU Foreign Policy Declarations and Measures in 2016. International and Security Affairs Centre, Belgrade. Petrović, Ž., and Reljić, D., 2011. Turkish Interests and Involvement in the Western Balkans: A Score-Card. Insight Turkey, 13, 159–172. Poulain, L., 2011. China’s New Balkan Strategy. Central Europe Watch, 1, 1–14. Public Prosecutor’s Office for Prosecuting Criminal Offences Related to and Arising from the Content of the Illegally Intercepted Communication, 2017. NSK-KO.br.9/17 Indictment with a Claim for Detention and Precautionary Measures [NSK-KO.br.9/17 Obvinitelen akt so predlog za opredeluvanje merka pritvor i merki na pretpazlivost]. Qatar Embassy in Skopje – Republic of Macedonia, n.d. Qatar- Macedonian Relations http://skopje.embassy.qa/en/macedonia/qatar-macedonian-relations [Accessed 8 July 2018]. Reljić, D., 2017. The Impact of Russia. In: Lange, S., Nechev, Z., and Trauner, F. (eds.), Resilience in the Western Balkans. Paris: European Union for Security Studies. Issue Report No 36, pp. 43–50. Russia Today, 2017. Scores Injured as Protesters Storm Macedonian Parliament. www. rt.com/news/386396-macedonia-parliament-protesters-fight/ [Accessed 11 January 2018]. Simović, K., and Lazarević, N., 2014. Introduction to Serbia’s Negotiations with the EU on Chapter 30. Friedrich Ebert Stiftung Office in Belgrade, International and Security Affairs Centre Fund, European Policy Centre and Nikola Petrović, Belgrade. Sputnik, 2017. Greater Albania’: Why Macedonian Political Crisis Is Part of Broader Strategy. https://sputniknews.com/politics/201704291053141710-macedonia-greateralbania/ [Accessed 11 January 2018]. Sputnik, 2018. Greece Recalls Ambassador From Russia – Source. https://sputniknews.com/ world/201808101067110488-greece-russia-ambassador/ [Accessed 8 December 2018]. Stoltenberg, J., 2018. Address of Mr. Jens Stoltenberg, Secretary General of NATO, Transcript of the 31st Session of the Assembly of the Republic of Macedonia, convened on January 18, 2018 [Obrakjanje na Jens Stoltenberg, Generalen sekretar na NATO, Stenografski beleshki od 31-ta sednica na Sobranieto na RM, odrzhana na 18–01–2018] www.sobranie.mk/sessiondetails.nspx?sessionDetailsId=5ae319b4-9d2d-4f0e-a74ae7491d157be9&date=18.1.2018 [Accessed 13 July 2018]. Trpkovski, G., 2018. Kremlin ‘Guru’ Rouses Anti-Western Feeling in Macedonia. www. balkaninsight.com/en/article/kremlin-guru-rouses-anti-western-feeling-in-macedonia03-05-2018 [Accessed 8 July 2018]. United Arab Emirates Ministry of Foreign Affairs and International Cooperation, 2016. United Arab Emirates Foreign Aid 2015. Abu Dhabi. Vangeli, A., 2017a. The Impact of China. In: Lange, S., Nechev, Z., and Trauner, F. (eds.), Resilience in the Western Balkans. Paris: European Union for Security Studies. Issue Report No 36, pp. 57–62. Vangeli, A., 2017b. China’s Engagement with the Sixteen Countries of Central, East and Southeast Europe Under the Belt and Road Initiative (SSRN Scholarly Paper No.  ID 3039788). Social Science Research Network, Rochester, NY. Vračić, A., 2016. Turkey’s Role in the Western Balkans. Berlin: Stiftung Wissenschaft und Politik -SWP- Deutsches Institut für Internationale Politik und Sicherheit Wintour, P., 2018. Greece to Expel Russian Diplomats Over Alleged Macedonia Interference. The Guardian. Yunus Emre Institute, 2017. Yunus Emre Enstitüsü. Türkiye – Merkez. www.yee.org.tr/en/ corporate/yunus-emre-enstitusu [Accessed 8 July 2018].

7 Montenegro Always at a crossroads Jovana Marović

Montenegro, like the whole of the Western Balkans, is experiencing a surge of new interest from all around the world. Due to internal problems such as a continuing lack of democracy at the supranational level, an inability to counter illiberal tendencies in its member states, the migration/refugee crisis and Brexit, the European Union (EU) has shifted its focus from the Western Balkans, opening up space for other actors. Of these, Russia, China, Turkey and the United Arab Emirates (UAE) have contributed the most to the Montenegrin economy. Russia is an important investor in Montenegro, present mostly in the real estate and tourism sectors, with its interest also stretching to internal affairs, as Russia regards Montenegro as a traditional ally which has recently gone through a complete turnaround in external priorities and goals. There are suspicions of Russian meddling in both elections and state affairs, and despite the level of investments and the high number of Russian citizens residing in Montenegro, relations are cold and fragile. Of all the Western Balkan countries, Montenegro has best used Russia’s spoiler role, which had an impact on its accelerated accession to the NATO alliance. China has been involved in vital infrastructure projects, as it seeks to exert influence solely by economic ventures, loans and innovative visions. Chinese companies are working on the most expensive and demanding infrastructure project in Montenegrin history, the Bar–Boljare highway, which is the main focus of the Montenegro–China relations. However, Chinese investments are accompanied by various controversies. Turkey is regarded as a stable partner which invests heavily in maintaining not only economic ties, but also cultural and religious ones, mostly through the significant minority of Bosniaks and Muslims. The UAE is currently the biggest single investor in Montenegro, with €112 million invested in 2017 (Economist, 2018). Companies and individuals from this Gulf state are investing in tourism, agriculture, industry and real estate projects, such as Porto ­Montenegro in Tivat and Capital Plaza in Podgorica. However, the European Union has been the most significant source of foreign direct investments (FDI) since 2006. Looking at the data on FDI for all of the EU member states in Montenegro from 2006 to 2017, almost half of all investments during this period have come from the EU. In spite of the widespread perception that the Russian Federation is the most significant investor and source of FDI, since Russia individually has invested most in Montenegro since 2006 compared to other countries, the Central Bank and MIPA’s

Montenegro 147 data show that, between 2006 and 2017, 46 percent of all direct investments came from the EU (looking at investments by all member states), and 26 percent from the Russian Federation (Raičević, 2017). The focus of this chapter is on how the non-Western powers exert their influence over Montenegro and how such influence aligns with the country’s EU accession process. The chapter explains existing linkages between Russia, Turkey, China and the Gulf states on the one side and Montenegro on the other, exploring their impact on the political, economic and cultural sphere in the country. A separate section focuses on the implications of these relations and how far reaching the non-Western powers’ interests and influences in Montenegro are, listing all important investments and projects from the countries and their companies. The political implications of such investments are also considered. The chapter briefly explains the current state of affairs in Montenegro’s EU accession negotiations, before detailing the existing relations of the abovementioned countries with Montenegro for each country specifically. The chapter analyses the period since the opening of Montenegro’s accession negotiations with the European Union in 2012. The chapter points to the numerous recent political tensions between Montenegro and Russia, as well as the significant economic investments by all the countries covered by the analysis. As the question arises in the introduction part, this chapter shows that the participation of all the abovementioned external powers does not threaten the implementation of the Western liberal reform agenda at present, but the factors slowing down the process are of a different nature. While turned towards the West, Montenegro is struggling to achieve a significant level of democratization due to the numerous internal problems stemming from almost the 30-year rule of the same party. Unlike other actors who also have economic, cultural and other interests for closer relations and investments in Montenegro, for the time being only the European Union offers, albeit still with limited success, a democratization framework and guidelines for political consolidation. Hence, regardless of a certain degree of interference in domestic political affairs and significant foreign investment by non-Western actors and companies, their political influence is still weak. The stronger EU position in Montenegro is also conditioned by the fact that it is still the most significant source of foreign direct investments. Balancing between the clear foreign-political commitment to becoming a member of the EU and the growing interest of non-Western countries will depend on a number of factors, but is necessarily linked to democratization and therefore the EU’s stronger commitment to the reforms and better understanding of the potential threats arising from the increased presence of other actors. Related to this is also the improved business climate in Montenegro, meaning a better negotiating position for the conclusion of large investment and infrastructure projects. The basis for these assumptions will be explained in the following text.

The EU and Montenegro: business as usual The EU’s enlargement policy is a source of aid and expertise for the Western Balkan countries.1 For the EU, one of the three main conditioning pillars for countries

148  Jovana Marović who have aspirations to join the club, besides economic stabilization and legislative alignment based on the Copenhagen criteria, is political consolidation. Besides the aforementioned economic interest, the Montenegrin government also advocates, at least declaratively, for the EU’s democratic principles and standards. The benefits of EU accession and democratization and aspects of the EU’s active influence are just some of the reasons for this which have found fertile ground in official messaging and, partly, in the activities of the government. Such a position is practical since the democratization framework that the EU offers is still better than the efforts that are (not) taken by other international actors to promote democracy. Even though Montenegro has been oriented towards NATO and the EU since the restoration of its independence in 2006, as clearly indicated in the Constitution that was adopted one year later, certain reform results have only been visible since 2010, when Montenegro attained candidate status for full membership in the EU. Montenegro succeeded in joining NATO in June 2017, while EU integration has also had a partially successful dynamic. Montenegro has opened 32 negotiation chapters and temporarily closed 3 within the EU accession talks. However, during this period the only progress that has been attained is in the fulfillment of criteria linked with the legislature and institutional framework improvements. In practice, the problems which the European Commission refers to in its strategy “A ­credible enlargement perspective for and enhanced EU engagement with the Western Balkans” apply to Montenegro as well. The intertwining of public and private interests, highly politicized institutions, corruption at all levels, the government’s connections with organized crime groups, a lack of responsibility for infringements of the law, still lacking conditions for free and fair elections and misuse of public resources, as well as pressure and attacks on media and civil society are just some of the issues which affect the democratization process. Therefore, one could state that the lack of government commitment to implementing key reforms is the main hindrance for achieving results in the negotiation talks. However, the European Commission’s assessments in its annual reports, as well as in the reports on the current state of affairs in Chapters 23 and 24 (European Commission, 2017), although softened by the bureaucratic language (European Commission, 2018b), do not correspond with EU officials’ statements which are regularly more positive and by which Montenegro has made “an encouraging progress in the reforms in public services and economy in general” (N1, 2018) and is in “good negotiating form” (EWB, 2018). By constantly evading public criticism of undemocratic practices, the EU is indirectly supporting the long-standing ruling party,2 the Democratic Party of Socialists (DPS), which has also influenced the slow tempo of reforms. At the same time, the EU is not giving enough of an impetus for more decisive efforts in establishing the rule of law. Therefore, it is questionable whether Montenegro was ready for NATO membership at the time of accession, especially in the area of complementary EU criteria on rule of law; but the fear of possible further Russian interference among key NATO members accelerated the accession process (Bechev, 2018). When it comes to economic ties, the EU is one of Montenegro’s most important trading partners, the biggest donor and the most important source of FDI. The data

Montenegro 149 show that since 2006 the EU has invested €4.5 billion in Montenegro, nearly three times more than Russia, for example (Raičević, 2017).3 In 2015, the EU invested nearly half a billion euros, in comparison to the €69 million which came from Russia, and in 2017 it invested almost four times more than Russia. The EU is investing heavily in telecommunications, energy and banking (Economist, 2018). Considering investments coming from the EU’s individual member states, Italy was the second largest single investor in 2016, and third in 2016, after Norway with €189 million (or 30% of total FDI) and the Russian Federation with just over €52 million (MIPA, 2018a). During 2015, Austria was the most important investor, with €263 million, with the Netherlands in second place with €71 million (MIPA, 2018a). Montenegro’s foreign policy is firmly conditioned by that of the EU, partly because of the Stabilization and Association Agreement’s stipulations (SAA) and partly because of the need to ‘show solidarity’ with the EU and NATO members. Furthermore, Montenegro has a “100% aligned foreign policy” (N1, 2018) with the European Union. This conclusion is not only derived from the instruments and sanctions which Montenegro has taken since 2014, but was also stated by the EU’s foreign and security policy chief Federica Mogherini during her visit in April 2018 (N1, 2018). Certainly, even though this foreign policy has not been harmonized in the EU itself, like the measure on the expulsion of Russian diplomats undertaken by 18 EU member states (Dewan et al., 2018),4 Montenegro has decided to implement it. The goal was, besides the harmonization of the foreign policy, the strengthening of the country’s ties with the ‘Western bloc’. With a new indicative accession framework until 2025, and with the existing pace of reforms and the ruling party’s lack of orientation for substantial reforms, the conditions that were set out (interim benchmarks) for progressing through phases cannot be fulfilled without a more intensive approach by the EU (BiEPAG, 2018) including the improvement of monitoring and reporting tools (Marović, 2018). Even though the EU’s credible strategy foresees six new flagship initiatives and a whole new set of instruments to support reforms, these instruments are yet to be developed in practice. In short, the EU remains a key factor in streamlining political and economic developments in the country, based on foreign direct investment and aid through the integration process. However, when it comes to the negotiation process, the results are extremely limited. Besides the harmonized foreign policy instruments, Montenegro has acquired a certain level of harmonization (mostly moderate) with the EU acquis, while significant results are missing in practice. As the EU’s focus has shifted from the Western Balkan region in the last few years, it created more space for maneuver for other interested countries to invest and establish influence in Montenegro.

From Russian VIP resort to dangerous destination for Russian citizens Throughout history, Montenegro has always had special and friendly relations with Russia. Russia provided support to Milo Đukanović5 after he turned his back

150  Jovana Marović on the Serbian autocrat Slobodan Milošević. Russia was among the first to recognize Montenegrin independence. Just prior to the proclamation of independence, in 2005 the Government sold the aluminum plant KAP to a Cyprus-based company owned by Russian tycoon Oleg Deripaska. KAP used to contribute about 15 percent of Montenegro’s GDP, make up 51 percent of exports and employ 2.3  percent of the population (CSD, 2018). Since then, Russian investments in Montenegro have grown rapidly. Yet political and diplomatic relations have experienced a sharp decline in the last few years. Moscow made a request in September 2013 to use the Montenegrin ports of Bar and Kotor as a naval logistics base en route to Syria. After the ensuing pressure from NATO, the government rejected this proposal (Borović 2015 and Šekularac, 2017). The cooling of relations between the two states continued after Montenegro introduced sanctions on Russia in March 2014 following the EU’s policy over the annexation of Crimea. Sanctions were then extended in 2017 and 2018 (N1, 2017). Russia responded by the same measure.6 Such a measure was based on reciprocity, since Montenegro, hardly exported any products to Russia, except wine. Two days before ratification of the NATO accession treaty in the Montenegrin Parliament, Russia banned the import of Montenegrin wine because of “elevated levels of metalaxyl and pesticides and particle plastic diphthalata in some vintages” (Crosby and Šćepanović, 2017). Just a few days before the official NATO admission ceremony, the DPS Member of Parliament Miodrag Vuković was deported from Moscow airport as persona non grata. In response, Montenegro has banned entry to 149 Russians including the deputy prime minister, the head of intelligence services, and the leader of the Republic of Chechnya (RFE, 2017). The list of persons who have been banned from entering Montenegro has been extended in April 2018 (Tomović, 2018b). In March 2018, as already highlighted, Montenegro expelled a Russian diplomat, joining an action carried out by most EU countries. Relations between the two countries have continued to deteriorate over the Montenegrin desire to join the NATO. After the country received an invitation to join NATO in December 2015. Montenegro again found itself in the center of confrontations between Russia and the West after the 2016 parliamentary elections, when the government announced that it had prevented a Russian-connected plot to seize power in the country and prevent Montenegro from joining NATO. Two suspects for plotting the coup are Russian citizens allegedly affiliated with the GRU (Russian military intelligence). For the opposition (two leaders of the opposition Democratic Front (DF) Andrija Mandić and Milan Knežević) involved in the case, the alleged coup attempt is a fabrication by the state and DPS. The ‘coup d’état’ case has divided the Montenegrin and international public for many reasons. Firstly, the Prosecution has uneasily communicated this case to the public from the very beginning. Secondly, a suspect and later the key witness, Serbian citizen, Aleksandar Sinđelić, voluntarily surrendered to the Montenegrin police after the Montenegrin Chief Prosecutor’s visit to Belgrade. Thirdly, although some sources indicated that the Chief Prosecutor had known about the criminal group’s activity the day before the election, information was broadcast on the Election Day (Bechev, 2018).

Montenegro 151 Several events around the 2016 election have also been qualified by the r­uling DPS as a Russian attempt to block the country’s accession to NATO. In ­October 2015, the DF organized a series of protests demanding Đukanovic’s resignation, with a set of amendments that would lead to free and fair elections. However, Đukanović, due to the events in front of the parliament and intervention by the police, described the protests as an attempt to prevent Montenegro from getting an invitation to join NATO. This scenario was strongly ‘supported’ by the protesters’ anti-NATO rhetoric. Later, one of the DF leaders Milan Knežević signed a set of documents with the Russian Duma’s Deputy Sergei Zheleznyak and several parties across the Balkans calling for a militarily neutral Balkans DNP (2016). In the context of the protests and the events before the 2016 election, first at the level of DPS accusations and then through the Special Prosecution’s indictments in November 2017, the DF has been charged with money laundering ­(financing activities with money from Russia), but these allegations have not yet been confirmed.7 As a result of all these events, the U.S. Senate ratified Montenegro’s Accession Protocol in March 2017. Montenegro’s accession to NATO was accelerated due to the fear of a further expansion of Russian influence in the Balkans, especially after the events in Montenegro surrounding the 2016 parliamentary elections. Former prime minister and DPS leader Milo Đukanović accused Russia of supporting anti-NATO parties and media in 2015 and early 2017 (Associated Press, 2017). Russia has responded by accusing Đukanović of destroying traditionally good relations between the two countries (Šekularac, 2017). Out of over 4,200 foreign-owned companies registered and operating in Montenegro, Russians own 32 percent (Tomović, 2016). In 2017, Russia was ranked fourth in terms of foreign direct investment in Montenegro. Overall, Russian companies and individuals invested more than €61 million in 2017 (Economist, 2018). While still high on the investor list, there is a decline in interest and investment from €122 million in 2015 to €61 million in 2017, which could also be attributed to the cooling down in political relations. Despite tense political relations, Russian investment flows have never dropped below 10  percent of the total direct foreign investment (FDI). The number of Russian tourists in Montenegro is also high, amounting to a quarter of the total number of tourists in 2016. Every third foreign-run company in Montenegro in 2016 were owned by Russians. Nevertheless, the Russian share in the economy has fallen by a fifth in the last 10 years, mirroring a broader decrease over several years in the other Western Balkan countries (Samorukov, 2017). For almost a decade until 2015, Montenegro had been a prominent Russian destination for real estate investment. In the past 10 years, more than €2 billion euros arrived in Montenegro from Russia. However, immediately after the imposition of sanctions on Russia, the purchase of real estate decreased by 44 percent (Tomović, 2015). Sanctions also had a strongly negative impact on exports, with exports to Russia declining by 50 percent in 2015. Moreover, the Russian share in the economy decreased from 29.4 percent of total revenues in 2006 to 5.5 percent in 2015 (Kovačević and Mirjačić, 2018).

152  Jovana Marović Despite the aforementioned tensions, Russian citizens are still in first place by the number of overnight stays in Montenegro.8 A significant number of Russian tourists and a high number of arrivals are also influenced by the many properties purchased by Russian citizens, mostly on the Montenegrin coast, from 2005 onwards. The sanctions that Montenegro imposed on Russia were followed by the Russian authorities’ negative campaign targeting Montenegro as a dangerous destination for Russian citizens (Buzaladze, 2017). Despite this negative campaign fueled by discontent with the Montenegrin accession to NATO, Russian citizens who have visited or lived in Montenegro started a counter-campaign focusing on their good experiences and the merits of visiting this Balkan state. Many Russians have managed to obtain a long-term permit to stay in Montenegro and there are approximately 4,200 Russians living in Montenegro, mainly on the coast. In 2012, a new law on foreigners was adopted that allows foreigners to stay in Montenegro for up to 12 months without obtaining a visa. The only condition is that they own property in the country. According to the Ministry of Education’s data, there are 493 Russian citizens in Montenegrin schools.9 In addition, two schools in Budva work in accordance with the official Russian program and are attended by 90 pupils (RFE, 2018). Although Montenegro is clearly orientated towards the EU, statements by domestic officials indicating other influences in Montenegro that can endanger the European Union’s policy are not unusual. They not only represent an acknowledgment of the increased interest of other non-Western actors for the Western Balkans and Montenegro, but also signify an attempt by the ruling party to obtain faster progress to the EU due to ‘persistent and growing threats’. In this way the DPS persistently reminds the West of the sacrifice that Montenegro has made to earn its European path, confirming that turning its back on Russia actually serves the interests of the ruling party. However, economic ties between Russia and Montenegro are still maintained despite the fact that bilateral political ties have deteriorated.

Turkey in Montenegro: (still) moderate influence at all levels Montenegro and Turkey have seen a new momentum in their relations arising after 2006 and the renewal of Montenegrin independence. This can be seen through the establishment of firm diplomatic and political relations, as well as through numerous investments and acquisitions in Montenegrin enterprises and real estate by Turkish companies and entrepreneurs. Thus, the relations between these two countries have become amicable and interest-fueled. With the creation of Davutoğlu’s uniform policy towards the Western Balkan region,10 which had the goal to reinstate Turkey as an important player in the region, Montenegro was recognized as one of the footholds for Turkish influence. Nowadays, Turkey is mostly focused on strengthening economic, cultural and religious ties. By widening the framework for co-operation and areas of mutual interest, Turkey gradually expanded soft-power mechanisms in the economic sphere, thereby strengthening its influence and presence in Montenegro. The two countries have signed several

Montenegro 153 agreements and memorandums on cooperation in trade (Free Trade Agreement (FTA), 2008), commerce, transport, tourism, culture, sport, agriculture, healthcare and many other areas. Montenegro and Turkey are currently negotiating to further liberalize access to agricultural goods and services in the existing framework of the free-trade agreement that was signed between the two countries in 2010.11 An important factor for Turkey’s interest in investing in the country is also the Bosniak-Muslim community in Montenegro. Based on the official data from the 2011 census, 8.6 percent of the Montenegrin population are Bosniaks, living mostly in the north-eastern part of the country (Monstat, 2011). Even though Turkish political influence is not noticeable, the leaders of the Montenegrin Bosniak Party (BP), which forms a part of the ruling coalition, have met regularly with high-ranking Turkish officials, who in return overtly support all actions undertaken by this party. Besides the BP, Turkey is closely cooperating with the Islamic community in Montenegro, as can be seen in regular visits by both sides and investments in religious buildings and dissemination. Moreover, the leaders of the Islamic community and the BP have openly supported President Erdoğan’s internal and external policies (Vijesti online, 2016; Janković, 2016). This was most notably evident during the failed coup attempt in Turkey in 2016 and the subsequent referendum in 2017, even though it did not meet EU and OSCE standards. Hence, the bolstering of economic, cultural and religious ties has contributed to good relations between the two countries. The best examples of this could be seen in the financing of the construction of the Islamic center in Bar, the madrasah Mehmet Fatih in Tuzi, as well as the renovation of the old clock tower in Podgorica, all financed by the Turkish Cooperation and Coordination Agency (TIKA). The TIKA office in Montenegro was established in 2007 and has so far implemented over 300 projects worth more than €20 million. Out of this, the largest number, over 40, were undertaken in the healthcare system, while other projects were in the fields of agriculture, education and infrastructure. The most notable investment in the healthcare system is the reconstruction of the ER in the Clinical Centre of Montenegro.12 When it comes to economic interests between these two countries, a visible tendency of increased cooperation has been recorded. Turkish investors are mostly interested in tourism, heavy industry and services. About US$116 million have been invested since 2006, most of it after 2012 (Chamber of Economy of Montenegro, 2017). In 2016, the FDI inflow to Montenegro measured €17 million, whereas in 2017 it was €23 million, making Turkey the ninth biggest single investor in Montenegro (Economist, 2018). Despite the interest in considering Montenegro a great destination for investing, the inflow from Turkey has never surpassed 5 percent of the total FDI in Montenegro.13 The biggest investments came in the fields of tourism and industry.14 Recently, an increasing interest for establishing new companies and purchasing real estate, by Turkish companies and individuals respectively, has been noted. So far, 810 companies have been opened by Turkish investors, of which a staggering 441 were established in 2017 alone. There has also been a noticeable influx of Turkish

154  Jovana Marović citizens resettling in Montenegro, most of whom are fleeing from the current political situation in their homeland. Therefore, real estate has been up for grabs for the incoming Turks, who are mostly interested in purchasing properties in Podgorica and on the coast. Currently Turkish citizens account for around 30 percent of all real estate clients in Montenegro (Milošević, 2018). Turkey is in third place by traffic of passengers at Montenegrin airports in 2017, with 106,071 passengers (Monstat, 2017, p. 33). An increasing number of people from Montenegro visit Turkey due to a direct flight connection between Podgorica and Istanbul (operating every day by Turkish Airlines) and visa-free travel. Turkey also utilizes a lot of soft power diplomacy to exert influence. This could be seen through the rapid rise in popularity of Turkish television series, which instigated an increase of interest among the general population for visiting Turkey and learning the Turkish language. Furthermore, Turkey offers a myriad of scholarships for all levels of higher education,15 as well as many discounts and benefits for health services for Montenegrins. When it comes to the dilemma of whether Turkey is a strategic partner of the EU or a competitor in the Western Balkans (Dursun-Ozkanza, 2016), influences of these two are not conflicting in Montenegro at the moment. Although Montenegro has a favorable business climate and low tax rates, and despite Turkey’s intensified interest in recent years to strengthen economic ties with Montenegro, ­Turkish–Montenegrin economic and trade relations show rather low figures. Bilateral trade volume between the two countries was US$75 million in 2017, while officials are planning to increase this to US$250 million in the next four years on the basis of the free-trade agreement and further liberalization (The Government of Montenegro, 2017). As far as Turkey’s political influence is concerned, it is still limited, albeit persistent, partly because it is channeled through the Bosniak Party in Montenegro, which is part of the ruling coalition. In this way, this party supports the Government’s policy, thus advocating the democratization of the country within the EU framework. Turkey’s political leverage across the region is still significantly lagging behind the EU policy. In Montenegro, this also applies to the influence on the economy, although Turkey’s goal is to significantly strengthen its presence in the Western Balkans and to secure its interests in this part of Europe in the light of its uncertain EU perspective.

Controversies over Chinese investments Bilateral relations between the People’s Republic of China and Montenegro can be briefly described as “friendly and cooperative” (FMPRC, 2018).16 Montenegro is part of the ‘16 + 1’ platform developed by the People’s Republic of China to strengthen co-operation in the areas of transport, finance, science, education and culture with eleven EU members and five Balkan states. Overall, this is all part of the Chinese initiative ‘One Belt, One Road’, which has the goal to spread Chinese interests throughout Asia, Europe and Africa and affirm China as a new superpower. Unsurprisingly, Montenegro, in need of financial support essential

Montenegro 155 for its sustainable development, more than welcomed Chinese investors looking for huge potential projects. According to the three defined economic priorities of the ‘16 + 1’ platform (infrastructure, high technologies and green technologies) there has been a growing interest for Montenegro among Chinese infrastructure investment companies in recent years. High-ranking officials have met on various occasions, where they always stated firm ambitions to bolster the relations between the two states. Visits by high Chinese officials also indicate the growing interest of Chinese companies in Montenegro. Thus, the main achievements have been in the fields of infrastructure and economy. Moreover, China is in fourth place among the countries with the highest turnover from foreign trade in Montenegro, with 9 percent in 2016, or €185.2 million (Monstat, 2017, p. 29). The largest Chinese infrastructure project in Montenegro is the highway between Bar and Boljare.17 Its priority section Smokovac–Mateševo is worth €809 million18 and the loan is to be paid in the next 20 years, with a grace period of 6 years and a yearly interest rate of 2 percent. State officials frequently call it the “project of the century”. They claim that the highway will boost economic growth and create preconditions for regional development and valorization of the Port of Bar (Grgić, 2017, p.  11) So far, the project has been accompanied by secrecy and numerous controversies and has already generated a level of public debt that has led Montenegro to surpass the Maastricht Criteria. The Government signed the contract with the China Communications Construction Company (CCCC) and its daughter company the China Road and Bridge Corporation (CRBC) in February 2014. CRBC is one of the biggest construction companies in China.19 In accordance with the Law on the Bar–Boljare Highway (2014), CRBC is absolved of paying taxes on salaries for Chinese employees, taxes on profit for its activities and customs fees on material and machinery for the highway. Although the governments in the region often decide to grant investors incentives to get them onside for their projects, the benefits granted to the Chinese company in Montenegro exceed previous practices. Similar claims were rejected in Serbia and Bosnia and Herzegovina (Grgić, 2017, p. 10). Besides, after two failed agreements with companies from Croatia and Greece, the contract was awarded to the Chinese company without any public tender.20 Montenegro is the only Western Balkan country which doesn’t have “one kilometre of highway”, and this stands as a big obstacle for further development and economic growth. However, the benefits of the “biggest project in history” are questionable and controversial for many reasons. First, the choice of investor was not transparent. Second, the Chinese company dictated the contractual conditions, since the Montenegrin government was under pressure, due to the two previous failed tenders, for investors to accept incentives which, for example, were not given by other neighboring countries. Third, despite the experts’ advice, the government decided that the highway construction project should commence with the most complex section, which has reflected on the cost-effectiveness of the overall investment. Fourth, even after three feasibility studies, the government

156  Jovana Marović has not been able to precisely define the investor’s obligations. This negligence has had a multi-million-euro impact on the state budget. Fifth, because of the highway construction, public debt in 2018 is projected to be around 70 percent of GDP, and the overall project will amount to more than half of Montenegrin GDP. Therefore, even though this necessary investment could potentially lead to significant economic growth, better connectivity with the region, and more tourists, it was not well planned and it seriously jeopardizes the country’s financial stability. Despite this, the highway is presented as an achievement, a gift to the citizens and a proof of the government’s (i.e., the ruling party DPS) successful policies. Big infrastructure projects are often the base for the ‘easy gaining’ of political points and acquiring of voters, especially during election campaigns. In Montenegro, the highway construction has been in the spotlight of all election campaigns, and it has been brought into the political discourse since the referendum in 2006. When one talks about the interests of China (Chinese companies) for infrastructure projects in the Western Balkans, including in Montenegro, this is an important channel for a stronger presence, and therefore influence in Europe. On the other hand, the Chinese strongly condition granting loans with appropriate guarantees from a non-EU country, while the EU members have stricter rules and restrictions regarding non-EU financial inflows. The evidence of increased Chinese interest in investing in infrastructure in the Western Balkans is the construction of a highway between Montenegro and Albania, which will be part of the future Adriatic-Ionian highway. A memorandum regarding this future highway connection has been signed between China, Albania and Montenegro, but no further steps have been undertaken. Regardless of the growing presence of Chinese companies and significant infrastructure projects, Chinese tourists are not frequent guests in Montenegro. The reason for this lies in the complicated procedure for obtaining visas for the entry of Chinese tourists in Montenegro. Even though the political influence of China is still not visible, there is uncertainty when it comes to the future relations between these two countries. In April 2018, it was agreed that the Chinese CRBC infrastructure company will construct the whole Bar-Boljare highway, with the contract bringing more suspicion and controversy (Tomović, 2018a). Given the aforementioned fact that the overall cost of the highway will amount to more than half of Montenegro’s GDP and increase the public debt significantly, it will be interesting to see whether China will use the loaned resources as leverage to bring Montenegro closer to its sphere of influence. Any failure to meet the due dates for installments could entail repercussions from China, since almost every asset used for building and financing the highway is Chinese and loans are to be paid to Chinese state banks. On the other hand, since China has not shown any interest in interfering in Montenegrin politics, nor any other country’s politics (at least in Europe), the ‘One Belt, One Road’ initiative can be regarded solely as a geopolitical and economic tool for exercising influence and asserting presence in regions which were never before of interest to the Chinese. Without any ambitions to spread the values and principles it fosters, China is so far only focused on economic interests,

Montenegro 157 in an effort to find new markets hungry for Chinese manufactured and high-tech products. Montenegro’s willingness to better connect itself with neighbors and further has been welcomed by Chinese companies with a firm dedication to conclude the biggest Montenegrin infrastructure project on time, while simultaneously ensuring new markets and new gains for the Chinese in the ever-changing game of geopolitics. However, the construction of the Bar–Boljare highway has been overshadowed by many discrepancies and controversies, which in the long run could jeopardize Montenegrin ambitions for economic stability, given the magnitude of the project. Likewise, as this project has been relentlessly promoted by the government as a guarantee for revitalization and prosperity, it was also used as a tool and will be used in the foreseeable future for gaining easy political points.

The Gulf states: current investment leaders The United Arab Emirates (UAE) has shown growing interest in economic cooperation with Montenegro in the last few years. Montenegro concluded an agreement on economic cooperation with the UAE in 2012, as well as a Bilateral Investment Treaty. Currently the most lucrative investments in Montenegro are those from the UAE, which is currently the biggest single investor in Montenegro (MIPA, 2018b),21 with more than €112 million in FDIs in 2017 (Ekonomist, 2018). Significant projects and investments by the UAE companies include the €140 million business center of Capital Plaza in the center of the Montenegrin capital of Podgorica, opened in 2015. A complex of 1 million square feet of prime retail, business, hospitality and residential space is now owned by the Abu Dhabi Capital Group, “established by a number of institutions, family offices and other investors” (Barnard, 2015). The most important project by far is the purchase of the luxury tourist complex and marina Porto Montenegro by the Investment Corporation Dubai (ICD) in 2016,22 a company established by the local government with a mandate to strengthen Dubai’s presence and expertise globally. However, UAE companies’ investments are not without controversy either. Another potentially significant investment project was abandoned when the Royal Group, a company from the UAE, stopped its investment project on Queen’s Beach (Kraljičina plaza). The investment would have amounted to €300 million, but was stopped due to a months-long campaign that compromised the company, the royal family and high-ranking officials in the UAE. Certain high-ranking officials from the junior coalition partner at the time, the Social Democratic Party (SDP), initiated the campaign, pointing out that such potential investment was unlawful and would cause damage to Montenegro (Prekić, 2015). Tourist links between the two countries have been facilitated by a visa-free agreement that allows Montenegrin citizens to travel and stay in the UAE for 90 days without a visa, as well as the direct flight connection between Tivat and Dubai which was launched in summer 2017 and is operated by Fly Dubai. UAE companies are also showing interest to buy the national airline Montenegro Airlines.

158  Jovana Marović Besides that, the UAE has given a very affordable loan for agriculture, worth €50 million, which was granted by the Abu Dhabi Fund for Development (ADFD). In industry, BMJ Industries is set to open a new tobacco plant in February in Podgorica, where €18 million have been invested so far. The UAE’s increased interest in investment, particularly in the tourism sector, is also followed by senior officials’ visits such as the visit by the Minister of Foreign Affairs and International Cooperation in 2017. Such high-level visits are another UAE instrument used to open new windows for cooperation and strengthen economic interests. Finally, Qatar is also interested in investing in Montenegro. The Qatari Diar planned to build a five-star hotel in Tivat, a €350 million investment, but due to unsettled property issues this attempt was ended unsuccessfully. While the economic interest is clear on both sides, for now, there is no apparent negative or stronger political influence resulting from the Gulf states’ increased presence in Montenegro, as in other Western Balkan countries, such as the promotion of Islamic radicalism (Ejdus, 2017). The controversy over the recent investments is linked to internal problems in Montenegro such as the undefined framework for public-private partnerships, unsettled property issues, and the privatization or sale of tourist complexes with short-term and particular goals, with contracts that are not always in accordance with the law or the citizens’ interests. The most important investments by the Gulf states come from companies that are directly established or linked to national or local authorities, which is again part of these countries’ strategy for increased presence and influence in Europe.

Conclusion As Russian influence is stagnating at best, other countries are starting to become interested in Montenegro and are engaged in significant economic and cultural ties. China shows a strong emphasis on investing in vital infrastructure projects, while Turkey maintains strong ties through the TIKA with the Bosniak community in Montenegro, but also through investment in the health sector and infrastructure in general. However, along with the still moderate political influence of Turkey, China and the UAE’s influence on Montenegro’s foreign policy remains limited. It is of no doubt that Montenegro has benefited significantly from the increased role of other actors besides the EU. Some of the biggest and most lucrative projects have been and are led by China, Turkey, Russia and the UAE, which will have enormous implications for the economic development and prosperity of the nation. However, these countries are not interested in improving the political system, aiding in the fight against corruption or organized crime, or promoting democratic values and principles (human rights, rule of law, fair elections, etc.) and therefore are not compatible as partners on the way to EU accession. Thus, the EU can hinder any negative interference by firmly advocating and implementing its newly published strategy for the Western Balkans, which will not by any means prevent other partners from cooperating and investing in Montenegro, but will divert them from collusions in internal affairs.

Montenegro 159 As most of the vital investments and projects by foreign companies in this analysis are still ongoing, it is difficult to predict what implications and how much influence the countries involved will exert on Montenegro in the future. One thing is for sure: the EU will have strong rivals in the region, which may or may not aid it in incorporating not only Montenegro, but the whole region of the Western Balkans into the European Union.

Notes 1 The sum that the EU has allocated to Montenegro through pre-accession funds for the period 2014–18 is over €150 million. 2 In power since 1991. 3 195 compared to 50 million. 4 Because of the poisoning of the former spy Sergei Skripal and his daughter in Salisbury UK in March 2018. 5 The long-term leader of the ruling Democratic Party of Socialists (DPS) in Montenegro. Đukanović has served six mandates as prime minister and two as president (the second mandate is underway). 6 The latest economic sanctions are from June 2017, prohibiting the import of certain types of agricultural products, raw materials and food from the United States, the EU and eight other countries, including Montenegro. 7 The process is still ongoing. 8 Russia was also the first in terms of passenger traffic to the Montenegrin airports in 2017, with 641,742 passengers. 9 43 in pre-school institutions, 375 in primary and 75 in secondary schools. 10 During the mandate of Prime Minister Ahmet Davutoğlu (2009–2016), Turkey pursued a proactive role in aiding the reconciliation of the region. 11 Moreover, in September 2017, the Turkish-Montenegrin Business Centre was opened with the goal to facilitate Turkish companies with all the necessary information to invest in Montenegro. A website dedicated towards fostering good relations between Montenegro and Turkey has been created, where all relevant information about the current state of Turkish projects and plans are to be found: www.crnagoraturska.com/ 12 Worth €700,000. 13 Port of Adria, the newly branded old container port in Bar, is the biggest investment made by a Turkish company. However, there has been a lot of controversy surrounding both the purchase and the operation of the port. The port was acquired for €8 million, and a mere €24.9 million were invested in the already dilapidated port, less than previously promised and stated by the contract. Some employees in the company protested, expressing the lack of contractual obligations being fulfilled, as well as the working conditions that were unsuitable. Also, the company has yet to turn a significant profit, since the revenue for 2016 was €1.7 million in deficit. In addition, the company still owes more than €10 million in various installments and contractual obligations; therefore, the company is taking new loans just to cover its operational costs. 14 The largest and most important investments by Turkish companies in Montenegro are the following: Gintas Industry constructed the Mall of Montenegro and Hotel Ramada in September 2010; Global Ports Holding purchased the old container port in Bar in 2013; and Tosçelik bought the Nikšić Steel factory in 2012 for €151 million. 15 Around 300 Montenegrin students are currently studying in Turkey. 16 Website of the Ministry of Foreign Affairs of the People’s Republic of China, www.fmprc.gov.cn/mfa_eng/wjb_663304/zzjg_663340/xos_664404/gjlb_664408/ Montenegro_664680/

160  Jovana Marović 17 Before any talks about the Bar-Boljare highway took place, the first credible outcome of the Montenegro-China relationship were the two Chinese-built ships intended for the restoration of the Montenegrin merchant ship fleet. This was made possible with a loan granted by the Chinese Exim bank, which amounted to around €93 million. The ships ‘Kotor’ and ‘21 Maj’ were delivered in 2012. Although agreed, two additional ships have not been delivered yet (Matijašević, Biljana and Ines Mrdović (2016), Ugovorili brodove od 100 miliona bez prave analize o isplativosti” [Ships of 100 million were agreed without a true cost-benefit analysis], Vijesti, www.vijesti.me/vijesti/ ugovorili-brodove-od-100-miliona-bez-prave-analize-o-isplativosti-897101). 18 688.18 million from the Chinese Exim bank credit, and the rest is paid by the Montenegrin government. 19 This company came to the fore after the first and second-placed companies in the tender (the Croatian Konstruktor and the Greek-Israeli consortium Aktor-HCH) failed to deliver the required completion guarantees after financing the preparation of three feasibility studies. 20 Much controversy has been also caused by the dilemma of whether the Chinese investor is obliged to build an unforeseen intersection as a part of the highway in Smokovac, worth more than €30 million. So far, no official agreement has been reached on whether the intersection will be enlisted in the project, and who will finance it. Current indications are that the government will need to pay for these unplanned costs. Interestingly, Minister Osman Nurković, before becoming Minister of Transport and Maritime Affairs, was the director of Monteput, which was responsible for the supervision of the project and the construction of the priority section Smokovac – Mateševo. Thus, this clearly indicates that the intersection has been overlooked and not included in the original project. The minister has also changed his personal opinion, as he firstly stated that this intersection was part of the loan that was taken for this section, and then claimed that the intersection was not even part of the priority section. Moreover, the investor, CRBC, has rejected financing this intersection, which will add an additional €30 million to the project, as already highlighted. 21 Individually, not counting the EU member states collectively. 22 For €210 million.

References Antena M, 2018, Bojanic in Berane: It turns out that Djukanovic is building a highway from his own money, https://www.antenam.net/politika/74647-bojanic-u-beranamaispade-da-djukanovic-gradi-autoput-od-svojih-para-a-ne-svi-mi. Associated Press, 2017. Montenegro’s Ex-PM Accuses Russia of ‘Destructive’ Politics. VOA. www.voanews.com/a/montenegro-russia-coup-attempt-djukanovic/3733326.html. Barnard, Lucy, 2015. Abu Dhabi Investors Expand in Montenegro as Capital Plaza Opens. The National. www.thenational.ae/business/property/abu-dhabi-investors-expand-inmontenegro-as-capital-plaza-opens-1.123864. Bechev, Dimitar, 2018. The 2016 Coup Attempt in Montenegro: Is Russia’s Balkans Footprint Expanding? Foreign Policy Research Institute. www.fpri.org/article/2018/04/the2016-coup-attempt-in-montenegro-is-russias-balkans-footprint-expanding/. BiEPAG, 2018. New European Balkans Partnership. www.biepag.eu/2018/04/29/neweuropean-balkans-partnership/. Borović, Gordana, 2015 and Šekularac, 2017, POBJEDA: Russians requested the ports of Bar and Kotor in 2013, Portal analitika, https://portalanalitika.me/clanak/174714/ pobjeda-rusi-2013-trazili-luke-bar-i-kotor-za-vojne-brodove.

Montenegro 161 Buzaladze, Alexander, 2017. Alliance Ready: Montenegro in One Step from Joining NATO, TV Russia1. www.vesti.ru/doc.html?id=2871302. Chamber of Economy of Montenegro, 2017. Direct Foreign Investments. www.privredna komora.me/strane-direktne-investicije. Crosby, Alan, and Šćepanović, Lela, 2017. Kremlin’s Diplomatic Sour Grapes Leave Bad Taste for Montenegrin Winemaker. RFE. www.rferl.org/a/montenegro-plantaze-wineryrussia-ban-nato/28527931.html. CSD, 2018. Assessing Russia’s Economic Footprint in Montenegro, Center for the Study of Democracy, Policy Brief No. 73. Dewan, Angela et al., 2018. These Are All The Countries That Are Expelling Russian Diplomats. https://edition.cnn.com/2018/03/26/europe/full-list-of-russian-diplomatsexpelled-over-s-intl/index.html. DNP (2016), Support to the Balkan Alliance of Neutral States, http://www.dnpcg.me/ podrska-balkanskom-savezu-neutralnih-drzava/. DPS, 2018, Đukanović in Štitari, https://www.dps.me/me/vijest/dukanovic-u-stitarimana-sjeveru-se-nikada-nije-ovako-intenzivno-gradilo-kao-danas. Dursun-Ozkanca, Oya, 2016. Turkey and the European Union: Strategic Partners or Competitors in the Western Balkans. Journal of Regional Security, 11 (1), 33–54, Belgrade Centre for Security Policy. Economist, 2018. Arabs Are Still Investing in Companies and Russians in Real Estate. http://ekonomist.me/arapi-i-dalje-ulazu-u-preduzeca-a-rusi-u-nekretnine/. Ejdus, Filip, 2017. Turkey and the Gulf States as Drivers of Fragility in ‘Resilience in the Western Balkans’, ISSReport, No. 36. European Commission, 2017. Non-Paper on the State of Play Regarding Chapters 23 and 24 for Montenegro. www.eu.me/images/6_XII_17_Non_Paper_ENG_v1.pdf. European Commission, 2018a, A Credible Enlargement Perspective for and Enhanced EU Engagement with the Western Balkans. https://eeas.europa.eu/sites/eeas/files/com munication-credible-enlargement-perspective-western-balkans_en.pdf. European Commission, 2018b. Montenegro 2018 Report. https://ec.europa.eu/neighbour hood-enlargement/sites/near/files/20180417-montenegro-report.pdf. EWB, 2018. Tusk: Montenegro Is in Good Negotiating Form, European Western Balkans. https://europeanwesternbalkans.com/2018/04/25/tusk-montenegro-good-negotia ting-form/. FMPRC, 2018, China and Montenegro, Website of the Ministry of Foreign Affairs of the People’s Republic of China. www.fmprc.gov.cn/mfa_eng/wjb_663304/zzjg_663340/ xos_664404/gjlb_664408/Montenegro_664680/. Free Trade Agreement (FTA) Between the Republic of Turkey and Montenegro (2008) Government of Montenegro, 2017. Mixed Commission for Economic Cooperation Between Montenegro and Turkey Holds Session: Goal Is Liberalization of FTA and Tripling of Trade Exchange. www.gov.me/en/News/178585/Mixed-Commission-forEconomic-Cooperation-between-Montenegro-and-Turkey-holds-session-Goal-is-liber alization-of-FTA-and-tripling.html. Grgić, Mladen, 2017. Chinese Infrastructural Investments in the Balkans: Political Implications of the Highway Project in Montenegro. Territory, Politics, Governance. DOI: 10.1080/21622671.2017.1359106. Janković, Srđan, 2016. Podrška Turske sprječila radikalizam u Crnoj Gori (The Support of Turkey Prevented Radicalism in Montenegro). RFE. www.slobodnaevropa.org/a/ podrska-turske-sprijecila-radikalizam-u-crnoj-gori/27865484.html.

162  Jovana Marović Kovačević, Milica, and Mirjačić, Marija, 2018. Russia Is Still Strong in Montenegro (Rusi i dalje jaki u Crnoj Gori). Vijesti. www.vijesti.me/vijesti/rusi-i-dalje-mocni-u-crnojgori-976380 Law on Bar-Boljare Highway; Zakon o autoputu Bar-Boljare, Official Gazette of Montenegro, 2014. No 52/2014, 16 December. Marović, Jovana, 2018. Montenegro Well Prepared for Reform Simulation, European Commission for Imprecise Reporting, European Western Balkans. https://europeanwest ernbalkans.com/2018/04/25/montenegro-well-prepared-reform-simulation-europeancommission-imprecise-reporting/. Matijašević, Biljana, and Mrdović, Ines, 2016. Ugovorili brodove od 100 miliona bez prave analize o isplativosti (Ships of 100  Million Were Agreed Without a True CostBenefit Analysis). Vijesti. www.vijesti.me/vijesti/ugovorili-brodove-od-100-miliona-bezprave-analize-o-isplativosti-897101. Milošević, Milorad, 2018. Turci sve češće ostvaraju firme i kupuju nekretnine (Turks Are More and More Opening Companies and Purchasing Real Estate). Vijesti. www.vijesti. me/vijesti/turci-sve-cesce-otvaraju-firme-i-kupuju-nekretnine-979556. MIPA, 2018a. FDI Statistics, Montenegrin Investment Promotion Agency. www.mipa. co.me/en/-fdi-statistics/. MIPA, 2018b. United Arab Emirates (UAE)  – The Largest Foreign Investor in Montenegro, Montenegrin Investment Promotion Agency. www.mipa.co.me/me/ujedinjeniarapski-emirati-(uae)-najve%C4%87i-strani-investitori-u-crnoj-gori/. Monstat, 2011. Population by Age and Ethnicity, Census 2011 Data, Montenegro, Statistical Office of Montenegro. https://monstat.org/userfiles/file/popis2011/saopstenje/MON TENEGRO%20-%20CRNOGORSKI.pdf. Monstat, 2017. Montenegro in Figures 2017, Statistical Office of Montenegro, Podgorica, 2017. http://monstat.org/userfiles/file/publikacije/2017/CG%20u%20brojkama%20%202017ENG%20-%20za%20sajt.pdf. N1, 2017. Montenegro Extended Sanctions to Russia. http://rs.n1info.com/a278354/Svet/ Region/Crna-Gora-produzila-sankcije-Rusiji.html. N1, 2018. Mogherini: Montenegro’s Foreign Policy Completely Adjusted. http://ba.n1info. com/a255708/English/NEWS/Mogherini-Montenegro-s-foreign-policy-completelyadjusted.html. Prekić, Adnan, 2015. Royal Group from the Arab Emirate Abandons Investment Project in Montenegro. Independent Balkan News Agency. www.balkaneu.com/royal-grouparab-emirate-abandons-investment-project-montenegro/. Raičević, Dubravka, 2017. Info-Graphic: Who Invests More in Montenegro, the EU or Russia? RFE. www.slobodnaevropa.org/a/infografika-ulaganja-eu-rusija-crnagora/ 28943949.html. RFE, 2017. Montenegro Bars 149 Russians Linked to Annexation of Crimea. www.rferl. org/a/montenegro-bars-149-russian-linked-annexation-crimea-retaliation-russiansecret-blacklist/28526014.html. RFE, 2018. Ruske škole na crnogorskoj obali (Russian Schools on the Montenegrin Coast). www.slobodnaevropa.org/a/ruske-skole-crna-gora-budva/28956614.html. Samorukov, Maxim, 2017. Russia’s Tactics in the Western Balkans. Carnegie Europe, 3 November. http://carnegieeurope.eu/strategiceurope/74612. Šekularac, Ivana, 2017. End of the affair: Montenegro jilts Russia by Joining NATO. Reuters. www.reuters.com/article/us-montenegro-nato/end-of-the-affair-montenegrojilts-russia-by-joining-nato-idUSKBN18I0W3.

Montenegro 163 Tomović, Dušica, 2015. Russian Interest Wanes in Montenegro Real Estate. Balkan Insight. www.balkaninsight.com/en/article/russian-interest-in-montengro-s-real-estate-wanes. Tomović, Dušica, 2016. Russians Dominate Foreign Ownership of Montenegrin Companies. Balkan Insight. www.balkaninsight.com/en/article/russians-own-every-third-companyin-montenegro-report-08-17-2016. Tomović, Dušica, 2018a. Highway Deal with Chinese Arouses Suspicions in Montenegro. Balkan Insight. www.balkaninsight.com/en/article/montenegro-mulls-new-highway-dealwith-chinese-companies-03-30-2018. Tomović, Dušica, 2018b. Montenegro Sanctions Target Ukraine Ex-President’s Son. Balkan Insight. www.balkaninsight.com/en/article/montenegro-imposes-sanctions-againstyanukovych-s-associates-04-19-2018. Vijesti Online, 2016. Husović uputio pismo podrške Erdoganu (Husović Sent a Letter of Support to Erdogan). www.vijesti.me/vijesti/husovic-uputio-pismo-podrske-erdoganu897061.

8 Albania New geopolitics and shifting linkages Enika Abazi

In June 2017, a few days before the parliamentary elections in Albania, the reconstruction of the main square in Tirana, named after Skanderbeg, the Albanian national hero, was completed. History is condensed in the square’s buildings: historical continuities and disruptions can be traced, and the putative borderline between the history of the buildings and the history of the country is often blurred. Subtle levels of choreography and the style of the buildings symbolically craft the deeds of foreign influence better than any other source. There is the Ethem Bey Mosque (1789) and the city clock tower (1830), both built in Ottoman style before the declaration of Albanian independence from the Empire (1912). Next, the monument of the national hero, Skanderbeg (1968), symbolizes the Albanian struggle against the long five centuries of Ottoman rule, and maybe coincidently also the end of the Soviet era. It replaced the statue of Stalin (1951) that had been placed in the square to value Albania’s friendship with the Soviet Union after its break with Tito’s Yugoslavia. Then comes the National Bank (1936): its architectural style belongs to the stream of ‘Rationalism’, designed by Italians together with the administrative complex of the Ministries and the City Hall. In between is the Children’s Theater, designed by the Austrians (1918), which later served as the headquarters of the Albanian parliament (1925–1944). With the communists’ arrival to power, it served as the headquarters of the Anti-Fascist Council of National Liberation. Later, in the early years of the communist regime, it again changed purpose, becoming the Soviet Pioneer House, available to the children of Russian specialists in Albania. The Grand Palace of Culture (1959) stands on the other side of the square, taking the place of the old bazaar in the Ottoman style. There, Nikita Khrushchev placed the first stone to signify the Soviet–Albanian communist brotherhood, which ironically ended only one year later. The 15-floor Tirana Grand Hotel (1981), in a rectangular shape typical of the socialist style, left on the square the mark of the friendship with China that had already ended in 1978. It replaced the city’s Orthodox church, which preceded the constitutional ban of any religion in 1968. The National Historical Museum (1981), with a monumental mosaic named ‘Albania’ on the facade depicting the Albanian people’s history, from the Illyrians to the glorious communist ‘new man’, faced the monument of Enver Hoxha (1988) that was deposed from the square by the crowd in the beginning of 1991. During the post-communist transition, the square turned into an

Albania 165 anarchic marketplace, a perfect mirror of the country’s chaotic transition, before receiving its latest modern look in June 2017. The new square offers the largest pedestrian space in the Balkans: 28,000 stones and 32,000 square meters of trees and flowers collected from every province inhabited by Albanians throughout the Balkans. The European aspirations, and those towards pan-national unity, are clearly on display, aiming to project a modern Albania and its national interests. Across history, the square illustrates a bitter struggle between various foreign powers looking to be present in the country’s affairs in various forms, metaphorically indicating the existence of a certain ‘linkage’.1 The history of linkages dates back to Albania’s proclamation of independence (1912) in the midst of the Balkan wars (1912–1913). The newly created state was a consequence of three driving factors: the Great Powers’ rivalries for zones of influence in the Balkans, the Albanian national movement and the neighboring Balkan states’ appetite for new territories. All three in combination not only expose Albanian vulnerabilities and the linkages of the past; they tell a lot about present realities. The anger, bitterness, fear and resentment of lost territories long remained an important obstacle to the establishment of relations of a certain degree of intensity and regularity with the country’s neighbors. This situation prevented the development of functional linkages with other states in the region, which neo-functionalists propose as essential for the initiation and facilitation of regional cooperation and stability thereafter (Haas, 2004), which Albania much needed to embark on modernization and development after 500 years under Ottoman domination. Actually, the linkage as a phenomenon in the case of Albania seems inevitable, considering the size and the multiplicity of interests pursued by a small state which “tends to believe in its inability to rely on its own means”. This is “then recognized by the other states involved in international politics” (Braun, 1983, p.  9). However, the rigidity of the Cold War consolidated the authoritarianism and autarchy in Albania, leading to an isolation without precedent, resulting in weak linkages with the rest of the world. This situation was not challenged, as it served as a means to preserve the rigid shatter belt dividing the zones of influence between the West and the East in the Balkans (Treadway, 1997). It is understandable that, after the end of the Cold War, Albania inherited economic structural problems, caused by the lack of connectivity in and out the region, the small size of the market, the lack of technological infrastructure, and the like. To that should be added the lack of a democratic culture, effective government, and control over corruption. Overall, this chapter will try to expose the extent to which Albania has capably established useful linkages to secure geopolitical stability, reduce dependency, consolidate democracy, fight corruption, resolve the country’s modernization and democratization, and settle identity issues. In the analysis below considerable emphasis is placed on linkages Albania has developed in the last decade. The specificities of Albanian linkages will be discussed in view of the competing interactions between the EU and Russia, Turkey, China and the Gulf countries. A meaningful description of linkages will be rooted firmly in a clear understanding of the interests and purposes of the external actor, desirability, and the areas

166  Enika Abazi involved, premised on the very rationale of the contextualized power configuration at the regional level and beyond. The choice of actors is based on their potential to influence and impose important changes in Albanian policy choices. The historical linkages are of help to better understand the opportunities and the constraints of today’s political choices and the possibilities of their contribution to synergistic linkages. This pragmatic multifaceted approach will eventually form the basis of a comprehensive vision of Albania’s linkages and political challenges.

Albania’s European tough love Fostering political, economic and cultural linkages with the EU seems desirable to Albania as it balances both its traditional policy of aligning with a great power to trim security and political vulnerabilities and its ambition of being part of the European project to ensure modernization, development and belonging to the West. This leverage remains very attractive given the EU’s capacity and willingness to enlarge towards the former communist space and grant membership to the club. This explains why Albanian political parties and people are all enthusiastic about European integration (AIIS, 2014; Balkan Barometer, 2017). Albania was among the first in the region to apply for membership to Euro–Atlantic institutions.2 Although deemed the first strategic partner of Albania, the linkage with the United States has been more of a rhetorical one than a relationship developed in all its components. Politically and militarily, American linkages are operational. In the Albanian perception, the U.S. should be the country’s main strategic partner, with 80 percent of the public in favor of this (AIIS, 2014, p. 50). The cultural linkage works mainly through Fulbright grants and other opportunities for exchanging experience with the U.S. The economic linkage is mainly developed through aids and grants offered by USAID, while U.S. direct investments are almost absent and mutual trade exchanges remain insignificant. Albanians’ proAmerican attitudes should be mainly attributed to the perception that the U.S. at all times supports the Albanian cause in the region.3 As a matter of fact, at the end of 2016, the EU remains Albania’s first trading partner, with 62 percent of imports and 77 percent of exports, the key FDI stock contributor with 59.3 percent of the total (IMF, 2017), and the main investor in foreign and joint ventures, with 70 percent of the total (INSTAT, 2017). The EU is the largest provider of financial assistance, with €1.24 billion in EU pre-accession funds, €359 million provided in European Investment Bank loans since 1999, and leveraging investments estimated at €1.2 billion (EU Data, 2018). The EU also stands as a leading donor in relation to the promotion of human rights by financing several projects in the framework of the European Instrument for Democracy and Human Rights, with a contribution of €86.5 million (European Commission, 2018c). The visa liberalization regime for Albanian citizens in the Schengen area (2010) fostered social and cultural linkages. Exchanges under Erasmus+ and support for civil society brought students, journalists, young politicians, trade union leaders and teachers closer, to share ideas and projects with their European partners. In only one year, 2015–2016, 3,660 students, academics and youth from

Albania 167 Albania visited different EU academic institutions (EU Data, 2018). Participation in the EU Research and Innovation program created opportunities for Albanian academia to be part of projects for excellent science, industrial leadership and tackling societal challenges. Albania has participated in the FP7 (2017–2013) with 245 projects, providing €2,361,838 (World Bank, 2013). As a result, “Albania, a country with a relatively small volume of scientific publications, has high-­quality publications relative to the rest of the region. With 4.03 cites per document, it is the leader in the Western Balkans in the 2003–2010” (World Bank, 2013, p. 5). Moreover, the EU provides funds for a wide range of projects and programs covering areas such as regional and urban development, employment and social inclusion, agriculture and rural development, consolidation of the justice system and fighting and supporting the formulation, coordination and implementation of anti-corruption policies (Euralius IV). These linkages increased the number of domestic actors with a political, economic, or professional stake in adhering to European norms that keep support for EU membership high. For Albania, the EU linkage is desirable, and not simply a rational calculation of possible benefits and an agency of problem-solving. Above all, it is a signifier of identity (Abazi, 2008a). The well-known Albanian writer Ismail Kadare marks this importance by emphasizing that Albanian “sensational rebellion against the Ottoman state avowed a new idea and a new ideal: the division from the East and the alliance with the West” (Kadare, 2006, pp.1 9, 6, 20). The current Prime Minister Edi Rama affirms the same intentions: “We look . . . to make a European Albania” (Rama, 25 May 2017). One must not forget that actors’ self-­ understanding is constitutive of their interests and a prerequisite for their choices. Assuming that actor identity is reproduced by what they make of it (Wendt, 1994), surveys of public opinion provide an important clue not only about the support Albanians give to EU membership, but also regarding Albanians’ perceptions of their identity. This could also explain why a European panache was chosen for the recent choreography of the capital’s main square. It may be a trivial and symbolic sign, but it marks a point of vulnerability that speaks for desirable linkages that exert leverage on the Albanian state’s policy choices. One may assume that the multiple, decentralized and ‘soft’ linkages that Albania has developed with the EU and its member states should have contributed to fostering its institutional relationship with the Union. Regardless of Albanian willingness and extended linkages, this is still not the case. The status of candidate country has been rejected three times by the European Council, despite the fact that Albania had made sufficient progress to receive a positive assessment at least three times from the European Commission, acknowledging that “Albania has delivered on EU requirements” (European Commission, 2013). Again, in April 2018, the European Commission stated that “Albania is ready to open negotiations, maintaining and deepening the reforms” (European Commission, 2018b), and again the EU Council declined to open accession negotiations immediately, agreeing to set “out the path towards opening accession negotiations in June 2019” (European Council, 2018). The Council’s postponement of the decision on granting candidate status to Albania seems to be calculated to avoid

168  Enika Abazi causing headaches with European public opinion, as 68 percent of Europeans are against the accession of the Western Balkan countries (Eurobarometer, 2006, p.  222), and to prevent fissures among the Member States facing the negative influence of populism, migration and the like. This limbo is triggering a ‘patience fatigue’ among the Albanian public and a feeling that the EU membership process is uneven and unfair. Based on the longitudinal data of annual surveys, the Albanian public’s support for EU membership was almost unanimous, reaching up to 95 percent in 2008, just before the Albanian application for membership (Abazi et al., 2008), but it dropped to 77 percent in 2014 after it was rejected. Finally, in June 2014, the Council granted candidate status to Albania, but the opening of negotiations for full membership is still pending. The abortive EU accession efforts continue to strain the patience of the Albanian public, and consequently the promise of EU membership cannot gain median voters any longer. In the 2013 election campaign, the winning Socialist Party projected to the voters the promise of a “European Albania” – the slogan of the campaign, with the assistance of Tony Blair and his former advisor Alastair Campbell. The Democratic Party proposed a similar slogan: “Employment, Welfare, and Integration”. In the 2017 election the slogans changed perspective, with both Parties looking to offer the voters something other than the EU membership promise, focusing on “the Albania we want” for the Socialist Party and “A New Republic” for the Democratic Party. Moreover, both competed for U.S. support in their favor and searched for lobby groups which could do the job. This choice could pay off, knowing that Albanians remain among the most pro-American peoples in the region and consider the U.S. as their first and indisputable strategic partner (AIIS, 2015). According to a story published by the U.S. investigative magazine Mother Jones, the Democratic Party leader Basha hired an offshore company to enable a picture of him with U.S. President Donald Trump a few days before the Albanian election (Corn et al., 6 March 2018). Earlier, a Judicial Watch investigation indicated that the Soros Foundation was involved in lobbying for the Albanian Socialist Party to get the support of the Obama administration, including the organization of a photoshoot of PS leader Rama with Obama (Judicial Watch, 4 April 2018). Considering clientelism as a form of political linkage in international relations, these moves can serve to judge vulnerability trends. They can be altered by elites that hold political power. In the case of Albania, the risk of switching preferences is high as economic linkages with the EU remain below their potential, which creates high political costs for pro-European elites in Albania. In 2016, enterprises from EU countries counted for approximately 2.5 percent of the total active enterprises in the country. Focused mainly in the service sector rather than the high value-added manufacturing industry or agriculture (809 enterprises of a total of 3,944 enterprises) and the majority (3,024) being small in size, employing between one and four people (INSTAT, 2017), their input on FDI hardly addresses the country’s economic structural problems and the lack of connectivity with the wider region and Europe. Even trade between the EU and Albania is still below its potential, with Albania representing only 0.1 percent of its total trade. Skeptical public opinion weakens

Albania 169 the country’s internal transformation capacity, while the absence of a membership perspective and a coherent strategy reduces the EU’s leverage, which may favor other foreign influences’ efforts to deepen their grip on local elites, especially if, in their calculations, the change would help in retaining or gaining more power. The expanding activities of those countries may provide insights on the nature and intensity of linkages and the leverage they have upon Albanian politics. The next section will deal with the cases of Russia, China, Turkey and the Gulf countries.

Russia To most Albanians, Russia is the country that backed Milosevic yesterday and does not recognize Kosovo today. The political linkages between the two countries are at their lowest ever level, with Albania fully aligned with EU foreign policy including the imposition of EU-type economic sanctions on Russia and the expulsion of 2 out of 28 Russian diplomats in Tirana as an act of solidarity with NATO and the EU on the Skripal case. One must not forget that pro-American sentiment in Albania is the highest in the region. In Albanians’ perceptions, strategic relations with Russia are not a priority (AIIS, 2014, p.  50). The Russian Ambassador in Tirana, Alexander Karpushin, acknowledged this state of relations by saying “I am not so certain of the political will and commitment of our Albanian colleagues” (Rusisworld, 5 June 2017). Albania has never been Russia’s ally throughout history, except for several years during the communist regime, which led to a short-lived ideological alliance. Tirana relied on Moscow for trade, economic aid, know-how, money and weapons. Soviet specialists offered expertise in the construction of hydropower and other industrial plants. Albanian specialists and military staff graduated from the Soviet Union’s universities and academies. The Soviet-Albanian agreement in early 1958 created the framework for the establishment of a permanent operating military base in Vlora permitting regular Soviet forays into the central and eastern Mediterranean (McCromic, 1987). After the Sino-Soviet split and Albania siding with China, the military base was closed in 1961 and all other linkages soured, including diplomatic relations. Albania and Russia reestablished diplomatic relations in the 1990s. Since then, a series of interstate, intergovernmental and cross-institutional agreements have been signed. However, trade and economic relations between the two countries remain at a very low level. Russia’s share in Albanian total trade is about 1.1 percent (Trade, 2017). The EU-type economic sanctions that Albania imposed on Russia and counter-measures prohibiting imports of Albanian agricultural products to Russia partly explains the low level of trade exchanges. There are no direct flights between the two countries, and Russian tourists come via either Montenegro or Greece. On April 2017, the Meeting of the Co-Chairs of the Russian-Albanian Intergovernmental Commission took place after eight years of interruption. Russia hopes that experienced Russian companies could step in to help in the restoration and upgrade of the Soviet-designed hydropower plants. Russia is interested in the rich mineral and water resources explored during Soviet

170  Enika Abazi times. Now, efforts are being made to have access on Albanian concessions for the exploitation of old mines, but without success. Besides, Albania is one of the few countries that are not yet covered by a pipeline system, although TAP is under construction. Russia is looking forward to filling the gap if Albanian permission is granted. For Vladislav Kurbatskiy from Russian Foreign Affairs, “in addition to economic opportunities, Albania has a significant political potential in the area. Albania has the fourth largest population in the Balkans, which tends to increase. The ‘Albanian factor’ has to be reckoned with. All this, along with nostalgic memories of the former strong friendship and the development of economic relations, could yield good results, given a thoughtful approach to modern Albania” (Kurbatskiy, 2012). Politically, Tirana is strongly geared to the West, which does not encourage the development of other linkages to Russia. However, now that Russia cannot put Albania on edge economically and politically, it can turn its attention to fostering cultural linkages enlivening the old sentiments of Albanian-Soviet friendship period. The Albanian national hero Skanderbeg had already been chosen to be idolized in Soviet times with a film in collaboration with a cast of Albanian actors, where Skanderbeg’s unrelenting fight against the Ottomans represented a vibrant example of anti-imperialism. Trying to work with Soviet nostalgia to bust cultural linkages, in September 2011, Days of Russian Culture was organized in Tirana, featuring a Russian film festival with great Russian films from the 1960s to the 1980s, which Albanians did not have a chance to see at the time due to the estrangement of relations. A  Maslenitsa (Pancake) week was also organized in Tirana to introduce Albanians to the background of Russian traditional national cultures, costumes and music. Russian classic and modern literature is translated into Albanian, although classic Russian literature has always been available in Albania. Albanian poems are also translated into Russian for the Russian public. Free courses in the Russian language are sponsored by the Embassy with the assistance of the Organization of Russian Compatriots in Albania and the financial support of the Russian World Foundation. In 2017, 300 high school students attended Russian language courses in Tirana, Fier and Vlora, while 40 graduate scholarships are granted every year for Albanians to study at Russian universities (Rusisworld, 5 June 2017). Most of the media and political discourses claim that, since the invasion of Ukraine and annexation of Crimea in 2014, Russia has waged a robust campaign to increase its influence in Albania as elsewhere, which includes using cyberspace, funding and disinformation to influence political parties and voting constituencies. The idea is that Moscow is trying to sow confusion and distrust and help advance its interests in the country without having to resort to conflict (Cappello, 2017a). Sputnik, based in Serbia since 2014 and now opening an office in Tirana, provides virtually all defense and security news to the mainstream media (Cappello, 2017b). However, some of Russia’s growing sway is unseen by the public and difficult to witness. For the first time, in the Albanian media it is insinuated that Russia could have influenced the last parliamentary elections of 2017. According to the investigative magazine Mother Jones, the offshore company hired by the

Albania 171 Democratic Party was supposedly controlled by Russians (Corn, Levintova, and Friedman 6 March 2018). The assumption is that a victory by the DP would have blocked the judicial reform, thus inevitably chilling Albanian relations with the EU, which ultimately would have helped Russian plans to destabilize the entire region. Much of the story did not make sense for many Albanians, and was considered fake news. The very low level of economic and political ties between the two countries do not offer to Russia leverage in Albanian politics. Moreover, Russia cannot compete with the EU as an attractive role model for Albania. For Albanian Minister of Foreign Affairs Ditmir Bushati, there is an increased presence of Russia in the past five or six years in the region and in Albania, but the model most people in Albania prefer remains that of the European Union (Bushati, 5 December 2017). The surveys prove him right (AIIS, 2014; Balkan Barometer, 2017). Yet Russia is increasingly exploiting its leverage to extend its spheres of influence in the Western Balkans by using its favorable position with the Slavic and Eastern Orthodox communities, which can play an ‘obstructive’ role if trying to inflame inter-ethnic conflicts involving the Albanians in the region. But this is an important issue that goes beyond the scope of this chapter.

China China’s historical linkage to Albania started after the break with the Soviet Union and close relations began based on communist ideological affinity. Throughout the 1960s and 1970s, Albania received from China US$125 million in loan agreements providing for food, raw materials, technical assistance and equipment, cash and armaments (Qin, 2013). China soon become Albania’s main commercial partner, holding 80 percent of its total foreign trade. China’s commercial fleet sailed in international waters under the Albanian flag to avoid problems with countries which did not recognize the Chinese communist government. In 1971, on Albanian initiative, the United Nations General Assembly voted in favor of China becoming a full UN member instead of Taiwan. The alliance with China allowed Albania to pursue a basically independent foreign policy and assure its national security (Biberaj, 1986). For China, Albania represented a gate in Europe that challenged Moscow’s dominance in Eastern Europe and kept an eye open on the West. Ties between the two countries began to deteriorate in the 1970s, particularly as China began to make overtures to restore relations with the United States. In 1978, China’s financial and technical assistance to Albania was over. Afterwards, the relationship between the two countries was downgraded at a minimum level. After the end of the Cold War, Sino-Albanian relations were a work in progress, with nothing substantial to mark up until recently. Albania’s EU membership perspective, which is expected to gain momentum by 2025 (European Commission, 2018a), seems to have encouraged China to start working at full pace on institutionalizing cooperation in the framework of the 16 + 1 initiative, which is now integrated into the platform of the Belt and Road Initiative. Chinese capital and infrastructure projects represent a tempting market

172  Enika Abazi proposition for Albania and a potential platform for China to leverage its growing economic and political influence in Europe (Poggetti, 24 April 2017). In the last few years, China has become Albania’s second trading partner, with 7.1 percent of total trade, leaving behind long-term partners like Greece and Turkey, though still well behind EU trade (67.5%) (Trade, 2017). Still, the trend is stunning, as no one could account for Albanian export growth to China of over 6,000 percent (Rapoza, 10 March 2017). The integration of culture and language in the “16 + 1” Cooperation Initiative is of particular interest. Settling in the country also seems to be taking the path of language and culture linkages. Working in this direction, the former Albanian Language Department of Beijing University, established in 1961, is transformed into a consistent Albanological center, the only one in the Asian continent. It offers programs at all three levels of higher education, addressing a wide range of issues such as history, culture, literature, linguistics, politics and religion. Publications is another important area of activity sponsored by the same program. It is worth mentioning here the publication of a Chinese-Albanian and Albanian-Chinese dictionary of 40,000 words, while a larger one of 70,000 words is in progress. The program also sponsors the Confucius Institute of Tirana University, which offers free Chinese language courses. 600 Albanians are enrolled in these courses. Chinese is now a language taught in primary schools and colleges in Albania.4 Likewise, China’s ambition to control Albanian strategic sectors and extractive industries, such as petroleum and chromium, road, air and sea infrastructure, and agriculture, seems to be growing in pace. In 2016 alone, China has invested in at least five major projects. In March 2016, China’s Geo-Jade Petroleum bought Canadian Bankers Petroleum oil exploration and production rights for a price of €384.6 million, an important deal that accounted for nearly 5 percent of Albanian nominal GDP (Rapoza, 2016). On April 2016, China Everbright and Friedmann Pacific Asset Management took hold of Tirana International Airport. The investment is promising, as Tirana airport is one of the fastest-growing in Europe, with annual passenger rates rising from 600,000 in 2005 to two million in 2015 (Mejdini, 3 May  2016). In June  2016, the Albanian Ministry of Transport and Infrastructure signed an agreement with the ‘Adriatic’ company for a marina yacht section in Shengjin port, worth US$7 million and a capacity of 200 yachts (Mecule, 2016). In the same month, China signed a €1.3 million grant agreement in support of the agriculture sector in Albania (See News, 6 June 2016). There are also 150 Chinese businesses registered in Albania operating in small services, construction or extracting industries as sub-contractors, which import their working force from China in deplorable working conditions. In February 2017, three Chinese workers died digging chrome in one of the Bulqiza mines, and a Chinese engineer was accused of not respecting working protocols. Still, the number of Chinese enterprises and joint ventures is rather insignificant, and so is their impact on employment, exports and imports (INSTAT, 2017). China’s leverage seems to be a charming ‘soft power’ offensive, mostly based on economic, infrastructure and trade penetration leading to dependency linkages. The ‘Chinese wisdom’ or ‘Chinese approach’ comes as an alternative to Western

Albania 173 democracy, “a new option for other countries” to solve their development problems (Jinping, 2017, p. 9). The Chinese approach does not engage in the domestic affairs of the country and gives little consideration to the nature of the regime and government. It favors economic and trade interests while showing political pragmatism. China pursues investments and is often able to come in as an investment alternative in a country in desperate need of foreign capital for its modernization. After so many years of EU reforms, Albania is still many years behind its neighbors. Chinese investments promise development, while the EU adjustment funds for development and structural and economic change would come only if Albania becomes an EU member. Ironically, Albania cannot be a member without having transformed its economy. In this respect, Chinese investments are both an opportunity and a challenge. Being state-backed or state-owned, most Chinese companies adopt streamlined procurement procedures that facilitate their penetration into the Albanian market and the money they bring is tempting and potentially promising. Yet the infrastructure projects and lending agreements burden the government with large debt obligations. Despite promises and perspectives, it remains to be seen if these investments will bring serious technological development and not just adjustment to increase profits, or an increase in environmental pollution and no increase in employment, as most Chinese companies import their own labor from China and serve as proxies for the Chinese government (Bastian, 2017). In addition, the political positions of Albania and China are far from close on important international issues. The strong commitment of the Albanian government to EU and NATO foreign policies and China’s refusal to recognize the independence of Kosovo are hindrances to political rapprochement between the two countries. The strong Western orientation of the Albanian political elite, supported by the Western cultural and ideological orientation of ordinary people, means that in the near future relations most probably will be dominated by the development of economic linkages.

Turkey Albania is considered a ‘kin’ country, not only because of a large number of Albanians living in Turkey (Poulton, 1997), but also because of geography and history. Albania was under Ottoman rule for five centuries. That assures the existence of historical, religious and cultural links between the two countries (Davutoglu, 2009). The promotion of these links has been part of Turkish policy towards the ‘kin’ countries in the Balkans since the early 1990s, when Turkish President Turgut Ozal (1989–1993) launched the idea of reviving Ottoman cultural heritage in former Ottoman territories. In this framework, Ozal himself inaugurated the opening of the first Turkish college in Albania. In the early 2000s, such a strategy turned into the principal pillar of Turkish foreign policy towards the Balkans. Based on the idea of gönül coğrafyası (geographies of the heart), it aimed to promote and encourage what is perceived as the natural expression of existing Turkish geographical, historical and cultural linkages to the region (Davutoglu, 2001, 2009). In 2007, at the opening ceremony of Turgut Ozal education complex

174  Enika Abazi in Tirana, the Turkish Prime Minister Recep Tayyip Erdoğan wrote in the school’s guestbook: “Turkish educational institutions in Albania are good examples of fraternity” (Aras, 2012, p. 28). As a matter of fact, since the 1990s all Turkish Presidents and Prime Ministers have visited Albania, some even more than once. During the first decade of the 2000s, Turkey invested efforts to upgrade cultural, historical and religious linkages. Mosques, madrasas and bazaars, part of the Ottoman heritage in Albania, were rehabilitated (Sabah, 07 September 2015). Free Turkish language course were offered, and a Turkology Program was established at the University of Tirana. Various cultural activities that promoted Turkish art, architecture, geography, cuisine and music were organized throughout the country (Sabah, 15 September 2016). Academic conferences and scholarships to Albanian students to study at Turkish universities were granted (UPT, 2015). Not to be neglected were other projects in infrastructure, health care, education, energy and trade sectors. All intended to reach the attention of the local population and strengthen ties between the two countries. Turkey is extensively present in the education field, supporting most of the madrasas, a half-dozen secular private schools, one private university and the first formal Islamic institution of higher education in Albania (Krauthamer, 2012). Turkish soap operas are also very successful in Albania, although they must compete with Italian TV productions that still dominate Albanian preferences. To sum up, TIKA projects, Yunus Emre Cultural Centers, Turkish education institutions and Turkish soap operas have extensively contributed to a kind of r­e-consideration of the Ottoman period and exposed and popularized Turkish culture and contemporary way of life. They have promoted the image of Turks as a modern people countering the traditional awkward image previously widespread in the country through history textbooks, which represented the Ottoman yoke as ruthless and responsible for the country’s backwardness and the forceful conversion of Albanians from Christianity to Islam. The outcome of sponsored religious, cultural and historical linkages need to be accounted under the optic of perceptions and misperceptions of Albanian elites, especially after recent de-Europeanizing tendencies in Turkish politics (Demirtas, 2015). While there may be a constituency in Albania that is more pro-Turkish or pro-Ottoman, an important part of the Albanian elite remains strongly pro-­secular and critical of Ottoman heritage and Turkish interference. In many respects, Albanian national identity is built primarily upon anti-Ottoman discourses and a proEuropean choice, as shown in the well-known verse of the nineteenth-century poet Naim Frashëri, “Thou blessed Light that raises from where the sun sets in the West”,5 upon which the Albanian national movement thrived (Abazi and Doja, 2013). In recent years, while Turkey’s divergences from Europe and the United States have grown, the traditional skepticism about Turkey encouraged Albanian elites to perceive it as a hindrance to their Western choice (Misha, 2002). Moreover, many politicians and publicists express their suspicions about Turkey, even by attributing Islamist and expansionist motives to Turkish involvement in the country (Economist, 21 January 2016). The MP Dashamir Shehi alerted the parliament to Erdoğan’s ‘invasion’ in Albania. He stated “I am against the expansion of the

Albania 175 Turkish presence in Albania. I don’t want Turkish investments and the turbulence of Turkish politics in our country. Chromium, metallurgy, schools, airports are taken by the Turks. We aim toward Europe, not the East” (Politiko, 30 January 2018). The demand of Erdoğan during his visit in Albania (2015) for the closure of Gülenist colleges in the country (Likmeta, 14 May 2018) sparked a fierce reaction in the Albanian parliament. The MP Ben Blushi reacted by declaring: “The Turkish president visited us and wanted us to close schools . . . This request put before us is unacceptable, we are not a Turkish colony” (Blushi, 15 May 2015). Others fear that political problems and instability in Turkey could drag Albania into a political and economic morass (Xharra and Ben-Meir, 3 May 2018). In the 2010s, rapid economic growth enabled Turkey to strengthen its linkages with Albania, which are now more ambitious and assertive. Turkey is Albania’s third commercial partner (Trade, 2017) and an important source of foreign direct investments by several public and private enterprises in strategic sectors such as communication, infrastructure and banking. In 2007, Albania received 42.2 percent of overall outward FDI from Turkey through the partial privatization of public assets. At the end of 2017, Turkish total direct investments in Albania reached €2.7 billion (Yoruk, 16 April 2018). Nevertheless, Turkish FDI outflows are still insignificant compared to the investments from the EU and individual member states (Trading Economics, 2018). Turkey is the sixth partner in terms of investments. Although the number of Turkish enterprises is increasing, they still represent just 7.7 percent of total foreign and joint enterprises in Albania, compared to 71.4  percent for the EU (INSTAT, 2017). The volume of total trade reaches €423 million, which represents only 5.9 percent of all Albanian trade, leaving Turkey behind the EU28 (66.2%) and China (6.5%) (Trade, 2017). Since 2009 Albania has been a member of NATO and has an invested confidence on its relevance for regional issues, marked by the intervention in Kosovo and its aftermath. Additionally, on military matters Turkey remains an important strategic partner. A defense cooperation pact was signed between the two countries in 1992 in Ankara, to be followed by a declaration of strategic partnership in 2013. Ankara has been always a balancing actor in the Balkans, preventing the creation of a Serb–Orthodox axis that may block Turkey’s way to Europe, placing Russia back in an advantageous position and jeopardizing Albanian security interests. These calculations pushed Turkey to recognize the independence of Kosovo, even though risky parallels could be drawn with the Kurdish question (Abazi, 2008b). Turkish leverage on the Albanian security field is tangled recently, as Turkey is aligning with Russia on different foreign policy, security and economic issues, while Albania is looking to open EU accession negotiations and is following EU and NATO policies regarding Russia. Turkey proposes an alternative development model to Albania. In his speech in Sarajevo in October 2009, the Turkish Minister of Foreign Affairs made this idea clear: “as the Republic of Turkey, we would like to construct a new Balkan region based on political dialogue, economic interdependence, cooperation, and integration, as well as cultural harmony and tolerance. These were the Ottoman Balkans, and hopefully we will re-establish the spirit of these Balkans” (Davutoglu, 2009).

176  Enika Abazi The Ottoman Empire model of millet coexistence is proposed as ‘complementary’ rather than ‘competitive’ to the European Union’s integration policy (Davutoglu, 2008). Following this course, Turkey has launched various Balkan initiatives for participation in newly established structures.6 It established a visa-free regime with Albania and signed a free-trade agreement as part of a Turkish-style Schengen and economic community area in the Western Balkans. In fact, the idea is similar to EU Neighbourhood Policy. Yet, observers consider Turkish policies to show how the Europeanization discourse is used as an instrument to establish it as primus inter pares. Without the European anchor, Turkish leaders would not be in a position to promote Turkey as an example and call on Albania to rally around it (Demirtas, 2015, p. 9). Turkey’s political influence cannot compete with that of the EU. Although many Albanians feel a strong religious and cultural affinity with Turkey, they see themselves as part of the European Union. A large majority consider EU membership to be the paramount goal of domestic transformations (Balkan Barometer, 2017). Ironically, while for many foreigners the construction of a mega-mosque in Tirana, financed by Diyanet,7 goes against the Western choice of Albanians, its address is on George W. Bush Street.

Gulf countries Investments in Albania by the Gulf states have recently gathered pace. This trend could be explained by the recent economic stagnation of the European economies and the thwarting of their foreign investments. Albania welcomes the flow of financial aid and investments from the Gulf countries to cope with its economic problems and lack of financial resources. The Albanian prospect for EU membership is seen by the Gulf states as long-run economic and diplomatic leverage they can use in their relations with the EU. In addition, after the fall in oil prices in recent years, the Gulf states envisage a modernization of their economies by developing trade and investing in countries beyond their region to cope with their dependence on oil revenues and assure secure food supplies. The states seem to follow similar strategies, which are characterized by primarily getting involved in large state-owned businesses such as banks and large infrastructure projects to make way for private companies that behave in conjunction with their governments’ long-term political agendas (Dudley, 2013). Albanian economic relations with the Islamic world begun with the establishment of the Islamic Development Bank in Tirana in 1992 and membership of the Organisation of Islamic Cooperation the same year, causing great concern for many public figures who considered it an ‘anachronism’ (Cota, 3 December 1992). In 1993 an Arab-Islamic Bank was set up in Tirana to promote business in accordance with ‘Islamic principles’ as a joint venture of the Bank of Bahrain and three Saudi-Arabian based banks (Esposito, 2004). Saudi Arabia, Qatar and the UAE, with the support of the Islamic Development Bank, are financing important infrastructural projects. Over the last seven years, the Abu Dhabi Fund for Development has, through concessionary loans worth Dh424 million, financed urban infrastructure in Tirana and one small segment of the Tirana-Elbasan Highway

Albania 177 (Gulf News, 5 March 2018). The UAE financed the construction of Kukes airport, which is still not operational. The volume of investments, particularly from Saudi Arabia and Kuwait, in the sectors of banking, telecommunications, transportation, tourism and textiles, are on the way to prospering. To facilitate the investments coming from the Gulf states, the Albanian Government negotiates agreements on the avoidance of double taxation and the prevention of fiscal evasion, protection and promotion of investments, commercial and economic cooperation, the waiver of visas for holders of diplomatic and service passports, and facilitation of the visa regime for citizens. In April 2014, Prime Minister Rama visited Qatar together with several ministers, members of the Parliament and mayors, in an effort to attract investments from the rich Arab countries in Albania and to send Albanians to work in Qatar. In July 2014, a Business Council between Qatar and the Albanian Chambers of Commerce was formed to regulate the growing economic relations between the two countries (Kurani, 14 April 2014). In the early 1990s, the Gulf states showed interest in filling the confessional vacuum in the country. In 2008, the number of students studying in foreign Islamic countries rose to 1,500, and 450 to 500 mosques were built and run by foreign funded organizations, mainly from Gulf countries, undermining the authority of the Albanian Muslim Community’s institution (Vickers, 2008, p. 10). Cynics point out that, for every investment in Albania from the Arab countries, a new mosque is gifted preaching Arabian-style Islam and extremist fundamentalism (Drake, 1997). In the period 2001–2005, Albanian authorities closed down many so-called charity missionary organizations that had international connections with terrorism, deported foreign citizens related to them, and seized their assets, estimated at about US$20 million (Kullolli, 2009). Obviously, Albania is not about to turn into a hub of jihadism in Europe, as is exaggerated in some circles of the international media (Zola, 6 January 2016). Albanians do not feel religious or cultural affinity with the Gulf countries, as they do not share historical ties. For many Albanians, Gulf religious practices are not compatible with Albanian Islam, and as an ICG report on the Balkans confirms: “the potential for Islamist-inspired violence seems slight, and to hinge on the weakness of institutions rather than ideological sympathies with the enemies of the West” (ICG, 2001, p. i). Yet Albania is not immune from the problems that religious radicalism and violent extremism may cause for national security (AIIS, 2015; IDM, 2015). The leverage that Gulf countries could have in the field of identity needs more careful attention. Recently, a post-nationalist conception of religious identity is rising among young Muslims. The debates in this subject are mounting not necessarily because of an Albanian majority of nominal Muslims; above all this is part of the global trend of rupture with ‘moderate’ Islam, which in the Albanian case is combined with the estrangement with the traditional Islam of the grandparents, with the ideas on religion of the nineteenth-century national awakening, and with the current politics of Western orientation in the country. This rupture is advocated by a post-colonialist discourse rooted in the rhetoric of human and democratic rights. They write and act to “protect the [universal] image of Islam” and “the

178  Enika Abazi original Muslim identity” of Albanians against traditional Islam, nationalism and “state secular Catholicism”, which impose European identity and a Western way of life that deny the supposed Albanian oriental roots.8 In the post-national and postmodern Muslim worldview, the Ottomans enjoy a vogue as models of enlightened Muslim multiculturalism, which Albanian national-communist historiography had blamed for Albanian backwardness and forceful conversion to Islam. Suddenly, it is the secularist who is seen as the anti-democratic, authoritarian, Islamophobic and slavish lackey of the political establishment and the hegemonic games of neoimperialism (Abazi, 2016). The weakness of leverage and economic, trade and financial linkages means that the external pressure of the Gulf states upon Albanian politics is insignificant, yet subtle effects of religious linkage could have serious implications in the identity field, especially if the European promise fades away.

Conclusion This chapter is an effort to better understand the role of foreign influence in Albanian politics and the country’s orientation. It examined the nature of linkages that the country has developed with different international and regional powers. By aligning with the EU and trying to develop prudent economic and political linkages with other actors, Albania seems to be looking to balance identity issues with security and economic concerns on the one hand, and regional challenges with strategic partnership choices on the other. Having exposed the nature and intensity of linkages that different powers have developed and the leverage they have upon Albania, one can also observe in the political discourse of the Albanian elites that the risks and challenges facing the country often turn into a narrative of choices and alternatives. Rama’s narrative is not far from that, as he said: “Russia and China have many things to offer. Russia can give you energy for the rest of your life if you give up the rule of law. It is not entirely uninteresting. . . . China has the luxury to plan for the next 100 years. I would not say they have nothing to offer. And then there is also radical Islam. In our region, we are multiethnic, multi-religious. If the EU will not run to catch us, believe me, many multi-problems can restart and then it will be much more costly to join in marriage later” (Rama, 5 December 2017). While it is Albania that needs to catch the train to Europe, Rama brings on stage regional security challenges and possible alternatives to put out of sights the delays in the economic and judiciary reforms. With the EU project in jeopardy, new challenges from Russia, Turkey, China and Gulf Arab countries are gaining strength, opting to change the existing configuration of leverages and linkages in the country and beyond. In this unsafe environment both sides, the EU and Albania, need not fall for the prisoner’s dilemma, the notorious paradox in game theory in which two parties act out of individual self-interest and both lose out in the process.

Notes 1 The concept of linkage is detailed in the introduction of this book and operationalized in this chapter, but not further explored here from a theoretical point of view.

Albania 179 2 In June 1992 Albania joined the North Atlantic Cooperation Council, and, in February 1994, the Partnership for Peace. In 1992, Albania signed the first agreement with the European Economic Community on trade, commercial and economic cooperation (Agreement, 25 November 1992). 3 Albanians appreciate Woodrow Wilson’s role in the defense of the right to national selfdetermination, which guaranteed the survival of the Albanian state after World War I, Bill Clinton’s intervention in Kosovo to stop Milosevic’s massacres and the expulsion of Albanians from their lands, and George W. Bush, who declared de facto independence of Kosovo in the name of the United States. 4 “Albania-China Traditional Friendship Bearing New Fruits”, interview of the Ambassador of China Mrs. Jiang Yu with Albanian Daily News, Albanian Daily News, 30.12.2016. http://www.china-ceec.org/eng/sbhz_1/t1427655.htm; “An Albanology Department at Beijing University, Tirana Times, 09.11.2018. http://www.tiranatimes. com/?p=139215 5 Jak’ o drit’ e uruar, që lint nga perëndon – in Albanian, Naim Frashëri, Luletë e Verësë, IV.11–12. 6 Such as the South East European Cooperation Process, the Regional Cooperation Council, the Southeast European Cooperative Initiative, the Peace Implementation Council, and the South-Eastern Europe Brigade, while also recently supporting the Western Balkans Fund Secretariat in Tirana. 7 Turkish Directorate of Religious Affairs. 8 “Katolicizmi shtetëror kërcënon tolerancën fetare në Shqipëri e në Kosovë, [State Catholicism threatens religious tolerance in Albania and in Kosovo]” (5 January 2012), www.zeriislam.com/artikulli.php?id=2160.

References Abazi, Enika, 2008a. Albania in Europe: Perspectives and Challenges. Eurasian Files (Avrasya Dosyasi): International Relations and Strategic Studies, 14 (1), 229–252. https://halshs.archives-ouvertes.fr/halshs-01142295. Abazi, Enika, 2008b. A New Power Play in the Balkans: Kosovo’s Independence. Insight Turkey, 10 (2), 67–80. Abazi, Enika, 2016. Albaniens Weg zur Religiosität: Glaube im Wandel. OST-WEST: Europäische Perspektiven, 17 (2), 136–142. Abazi, Enika, and Albert Doja, 2013. Further Considerations on the Politics of Religious Discourse: Naim Frashëri and His Pantheism in the Course of Nineteenth-Century Albanian Nationalism. Middle Eastern Studies, 49 (6), 859–879. DOI:10.1080/00263206. 2013.836495. Abazi, Enika, Rakipi, Albert, and Hyseni, Dorarta, 2008. Albania and European Union: Rethinking EU Integration. Tirana: AIIS Press. www.houseofeurope.org/pdf/Perceptions_ 2008.pdf. Agreement, 1992. Agreement Between the European Economic Community and the Republic of Albania on Trade and Commercial and Economic Cooperation. Official Journal L 343, Brussels, 25 November. AIIS, 2014. The European Perspective of Albania: Perceptions and Realities. Tirana: AIIS Press. AIIS, 2015. The Assessment of Risks to National Security: The Birth of a New Radical Religious Influence and Radical Extremism in Albania. Tirana: AIIS Press. Aras, Bülent, 2012. Turkey and the Balkans: New Policy in a Changing Regional Environment. Washington, DC.: The German Marshall Fund of the United States. http://www. gmfus.org/publications/turkey-and-balkans-new-policy-changing-regional-environment.

180  Enika Abazi Balkan Barometer, 2017. Public Opinion Survey. Analytical Report. Sarajevo. Bastian, Jens, 2017. The Potential for Growth Through Chinese Infrastructure Investments in Central and South-Eastern Europe Along the ‘Balkan Silk Road’. London: European Bank for Construction and Development. www.ebrd.com/documents/policy/the-balkansilk-road.pdf. Biberaj, Elez, 1986. Albania and China: A Study of an Unequal Alliance. Boulder, CO: Westview Press. Blushi, Ben, 2015. Debati për kushtin e Erdogan, Blushi: Nuk jemi koloni e Turqisë. Gazeta Standard, 15 May. Braun, Aurel, 1983. Small-State Security in the Balkans. London: Palgrave Macmillan. Bushati, Ditmir, 2017. EU Outshines Russia in Western Balkans, 5 December. https://euob server.com/foreign/140146. Cappello, John, 2017a. Russia Escalates Disinformation Campaign in Western Balkans, 5 April. www.defenddemocracy.org/media-hit/john-cappello-russia-escalates-disinformationcampaign-in-western-balkans/. Cappello, John, 2017b. Russia Ramps Up Media and Military Influence in Balkans. Washington: Foundation for Defense of Democracies (FDD), 13 October. www.defenddemocracy. org/media-hit/john-cappello-russia-ramps-up-media-and-military-influence-in-balkans/. Corn, David, Levintova, Hannah, and Friedman, Dan, 2018. How a Russian-Linked Shell Company Hired an Ex-Trump Aide to Boost Albania’s Right-Wing Party in DC. Mother Jones, 6 March. www.motherjones.com/politics/2018/03/how-a-russian-linked-shellcompany-hired-an-ex-trump-aide-to-boost-albanias-right-wing-party-in-dc/. Cota, Lulzim, 1992. Shunned by the West, Albania joins Islamic Conference. UPI, 3 December. www.upi.com/Archives/1992/12/03/Shunned-by-the-West-Albania-joins-IslamicConference/4656723358800/. Daily Sabah, 2015. TİKA Contributes to Albania’s Cultural and Historical Heritage. Daily Sabah, 7 September. www.dailysabah.com/feature/2015/09/08/tika-contributes-toalbanias-cultural-and-historical-heritage. Daily Sabah, 2016. Turkish Painter Opens Exhibition in Tirana, 15 September. Davutoglu, Ahmet 2009. The Ottoman Legacy and the Balkans’ Muslim Community Today. Sarajevo. Davutoglu, Ahmet, 2001. Strategik Derinlik, Turkiye’nin Uluslararasi Konumu [Strategic Depth, Turkey’s International Position]. Istanbul: Kure Yayinlari. Davutoglu, Ahmet, 2008. Turkey’s Foreign Policy Vision: An Assessment of 2008. Insight Turkey, 10 (1), 77–96. Demirtas, Birgul, 2015. Turkish Foreign Policy Towards the Balkans: A Europeanized Foreign Policy in a De-Europeanized National Context? Journal of Balkan and Near Eastern Studies, 17 (2), 123–140. Drake, Jams, 1997. Missionary Muslims Find Albania to Be Fertile Ground. The Christian Science Monitor. www.csmonitor.com/1997/0626/062697.intl.intl.4.html. Dudley, Dominic, 2013. GCC Countries Are Starting to Explore Opportunities in Europe’s Southern Extremities. The Gulf Business News and Analysis. www.domdudley.com/ articles/2015/02/15/peripheral-vision-in-south-east-europe. The Economist, 2016. Mosqued Objectives. Turkey Is Sponsoring Islam Abroad to Extend Its Prestige and Power, 21 January. www.economist.com/news/europe/21688926-turkeysponsoring-islam-abroad-extend-its-prestige-and-power-mosqued-objectives. Esposito, John, 2004. The Islamic World: Past and Present. Oxford: University Oxford Press. EU Data, 2018. Albania on Its European Path. Brussels. Eurobarometer, 2006. Standard Survey. Public Opinion in the European Union.

Albania 181 European Commission, 2013. Albania Has Delivered and so Should the EU. Progress Report on Albania. Strasbourg. European Commission, 2018a. A Credible Enlargement Perspective for and Enhanced EU Engagement with the Western Balkans. https://ec.europa.eu/commission/sites/beta-polit ical/files/communication-credible-enlargement-perspective-western-balkans_en.pdf. European Commission, 2018b. Mogherini: Albania Is Ready to Open Negotiations, Maintaining and Deepening Reforms Ahead. Brussels. European Commission, IPA II, 2018c. Revised Indicative Strategy Paper For Albania (2014–2020). Brussels. European Council, 2018. Enlargement and Stabilisation and Association Process. Council Conclusions. Brussels, 26 June. www.consilium.europa.eu/media/35863/st10555-en18. pdf. Gulf News, 2018. ADFD Funds Three Mega Projects in Albania, 5 March. https://gulfnews. com/news/uae/government/adfd-funds-three-mega-projects-in-albania-1.2183092. Haas, Ernst B., 2004. The Uniting of Europe: Political, Social, and Economic Forces, 1950–1957. Notre Dame: University of Notre Dame Press. Original Edition, 1958. ICG, 2001. Bin Laden and the Balkans: The Politics of Antiterrorism. Edited by International Crisis Group Balkans Report. Brussels. IDM, 2015. Religious Radicalism and Violent Extremism in Albania. Edited by Institute of Democracy and Mediation. Tirana. IMF, 2017. Country Report Albania: Selected Issues. 17/374. INSTAT, 2017. Foreign Enterprises in Albania 2014–2016. Tirana. www.instat.gov.al/ media/3663/foreign-enterprises-in-albania.pdf. Jinping, Xi, 2017. Report at 19th CPC National Congress. Beijing: Xinhua. www.xinhua net.com/english/download/Xi_Jinping’s_report_at_19th_CPC_National_Congress.pdf. Judicial Watch, 2018. State Department Records Show Obama Administration Helped Fund George Soros’ Left-Wing Political Activities in Albania, 4 April. Kadare, Ismail, 2006. Identiteti Europian i Shqiptarëve: sprovë [Albanian European Identity]. Tirana: Onufri. Krauthamer, K. Y., 2012. In Albania, Madrasas Even the Secular Love. Transitions Online: Regional Intelligence. www.tol.org/client/article/23425-in-albaniamadrasas-even-thesecular-love.html. Kullolli, Arben, 2009. Proselytization in Albania by Middle Eastern Islamic organizations. Monterey, CA: Naval Postgraduate School. Kurani, Edison, 2014. Albania Seeks Investments in Qatar. Independent News Agency in the Balkans, 14 April. www.balkaneu.com/albania-seeks-investments-qatar/. Kurbatskiy, Vladislav, 2012. Albania and Russia Rapprochement. Moscow. http://russian council.ru/en/analytics-and-comments/analytics/albania-and-russia-rapprochement/: RIAC. Likmeta, Besar, 2018. Erdogan Takes War on Gulen Movement to Albania. Balkan Insight, 14 May. www.balkaninsight.com/en/article/erdogan-calls-on-albania-to-bootgulen-s-movement. McCromic, Gordon H., 1987. Soviet Presence in the Mediterranean. Santa Monica: The RAND Corporation. Mecule, Blerina, 2016. Chinese Investment Developments in the Balkans 2016: Focus on Albania. Balkanalysis. www.balkanalysis.com/albania/2016/06/24/chinese-investmentdevelopments-in-the-balkans-2016-focus-on-albania/. Mejdini, Fatjona, 2016. Chinese Investments Raise Eyebrows in Albania. Balkan­Insight, 3 May. www.balkaninsight.com/en/article/chinese-investments-raise-eyebrows-inalbania-05-02-2016.

182  Enika Abazi Misha, Piro, 2002. Invention of a Nationalism: Myth and Amnesia. In: SchwandnerSievers, Stephanie, and Fischer, Bernd J. (eds.), Albanian Identities: Myth and History. London: Hurst, pp. 33–48. Poggetti, Lucrezia, 2017. China’s Charm Offensive in Eastern Europe Challenges EU Cohesion. The Diplomat, 24 April. https://thediplomat.com/2017/11/chinas-charm-offensivein-eastern-europe-challenges-eu-cohesion/. Politiko, 2018. Dashamir Shehi i shqetësuar nga Turqia: Ka marrë të gjithë sektorët strategjikë, po ndërtojmë Perandorinë Osmane, 30 January. http://politiko.al/ dashamir-shehi-shqetesuar-nga-turqia-ka-marre-te-gjithe-sektoret-strategjike-po-nder tojme-perandorine-osmane/. Poulton, Hugh, 1997. Turkey as Kin-State: Turkish Foreign Policy Towards Turkish and Muslim Communities in the Balkans. In: Poulton, Hugh, and Taji-Farouki, Suha, (eds.), Muslim Identity and the Balkan State. London: Hurst, pp. 194–213. Qin, Amy, 2013. A Friendship Is Rekindled with Albania. New York Times Blog. https:// sinosphere.blogs.nytimes.com/2013/11/29/a-friendship-is-rekindled-with-albania/. Rama, Edi, 2017a. Any Attempt to Pave the Way Towards the EU, 25 May. https://kry eministria.al/en/newsroom/press-releases/any-attempt-to-pave-the-way-towards-the-eu. Rama, Edi, 2017b. EU Must Marry Western Balkans Quickly to Avoid New Risks. Brussels: Friends of Europe, 5 December. www.euractiv.com/section/enlargement/news/ eu-must-marry-western-balkans-quickly-to-avoid-new-risks-albania-pm/. Rapoza, Kenneth, 2016. Albania Becomes Latest China Magnet. Forbes. www.forbes. com/sites/kenrapoza/2016/06/13/albania-becomes-latest-china-magnet/#81f12ac24901. Rapoza, Kenneth, 2017. China Courts Albania Investment While U.S. Pushes Politics. Forbes, 10 March. Rusisworld, 2017. Albanians are traditionally very affectionate about Russia and Russian culture’ – Russian Ambassador to Albania. Tirana, 5 June. http://rusisworld.com/en/ editors-choice/albanians-are-traditionally-very-affectionate-about-russia-and-russianculture. SeeNews, 2016. China Backs Albania’s Farming Sector with 10 mln yuan (1.3 mln euro) Grant. SeeNews, 6 June. https://seenews.com/news/china-backs-albanias-farmingsector-with-10-mln-yuan-13-mln-euro-grant-527742#sthash.4DWckF8x.dpuf. Trade, 2017. European Union, Trade in goods with Albania. http://trade.ec.europa.eu/ doclib/docs/2006/september/tradoc_113342.pdf. Trading Economics, 2018. Albania Foreign Direct Investment 2004–2018. https://trading economics.com/albania/foreign-direct-investment. Treadway, John D., 1997. Of Shatter Belts and Powder Kegs: A Brief Survey of Yugoslav History. In: Danopoulos, Constantine P., and Messas, Kostas G. (eds.), Crisis in the Balkans. Views from the Participants. Boulder, CO: Westview Press, pp. 19–45. UPT, 2015. Meeting with the Director of Yunus Emre Turkish Cultural Center. Tirana: Polytechnic University of Tirana. Vickers, Miranda, 2008. Islam in Albania. London: ARAG, Defence Academy of the United Kingdom. www.da.mod.uk/colleges/arag/documentlistings/.../08(09)MV.pdf. Wendt, Alexander, 1994. Collective Identity Formation and the International State. American Political Science Review, 88 (2), 384–396. World Bank, 2013. Overview of the Research and Innovation Sector in the Western Balkans. In: Western Balkans Regional R&D Strategy for Innovation. Washington, DC: World Bank.

Albania 183 Xharra, Arbana, and Ben-Meir, Alon, 2018. Tepërim i rrezikshëm në raportet mes Edi Ramës dhe Erdoganit. Gazeta Shqiptare, 3 May. www.balkanweb.com/site/teperimi-irrezikshem-ne-raportet-mes-edi-rames-dhe-erdoganit/. Yoruk, Murat-Ahmet, 2018. Perspektiva te reja ekonomike midis turqise dhe Shqiperise. Gazeta Shqiptare, 16 April. www.balkanweb.com/site/perspektiva-te-reja-ekonomikemidis-turqise-dhe-shqiperise/. Zola, Matteo, 2016. Di jihadismo balcanico e altre sciocchezze. Una risposta ai giornali italiani, 6 January. www.eastjournal.net/archives/68961.

Part III

Non-Western actors

9 Russia Playing a weak hand well Dimitar Bechev

It was a hot July day in Kosovo’s capital, Prishtina. General Fabio Mini, in command of KFOR, was bidding farewell to the Russian peacekeepers. Four years after it was hoisted over the city’s Slatina airport in 1999, the white, blue and red flag would fly no more. “I have been with them on patrol. I have seen how they contributed on a daily basis to our shared mission of maintaining the safe and secure environment in Kosovo”, Mini poured praise on the Russians (NATO, 2003). Who would have foreseen such a cordial departure when the NATO troops first rolled into the Yugoslav province, only to find out that the Russian paratroopers had made it first? Then, the Alliance and the Russians were looking at each other literally through the sights of a gun. “I’m not going to have my soldiers be responsible for starting Third World War for you”, was how British Gen. Michael ‘Mike’ Jackson, leading the Alliance force, countered orders from Gen. Wesley Clarke, Supreme Allied Commander for Europe (SACEUR), to expel the Russians who had rushed overnight from their base in Bosnia (Tran, 1999; Jackson, 2007, Chapter 12). In comparison to the tense days in 1999 when the Balkans was the focus of world attention, few seemed to notice the Russians’ departure. A mere two weeks before vacating Prishtina airport, on 14 June 2003, the Russian contingent had packed up and left Camp Ugljevik, in Bosnia and Herzegovina, their base since 1996 (NATO, 2003). Russia’s military deployments in former Yugoslavia were a thing of the past, a relic from the policy zig-zags and blunders of the Yeltsin era. Yugoslav successors were gravitating towards the West. In between the pull-out from Bosnia and the end of the Russian presence in Kosovo, the EU leaders conferred with their counterparts from “the Western Balkans” near the Greek city of Thessaloniki, offering the region a “membership perspective”. In May, NATO had signed the Adriatic Charter with Albania, Croatia and North Macedonia, a document geared towards smoothing their eventual accession to the Alliance. The West was moving in, on a major scale. Russia was on its way out. Flash forward to the present, and much seems to have changed. Though both the EU and NATO have expanded, and the Western Balkans are now an enclave surrounded by members of both organizations, there is a perception that the West is in retreat. Opinion makers, politicians as well as the public at large view nonWestern actors as gaining prominence in local politics and economies, with the EU in apparent retreat. Russia furnishes a prime example. Its footprint in the international politics, and increasingly the domestic affairs, of countries such

188  Dimitar Bechev as Serbia, Bosnia and Herzegovina, North Macedonia and Montenegro is seen as growing (Szpala, 2014; Reljić, 2017; Mujanović, 2017; Samorukov, 2017b; Bechev, 2017). Whether it is high-profile energy deals, indirect or direct involvement in crises taking place between, but also within, states, support for radical anti-Western parties and societal actors or influence over the media and the public sphere writ large, Russia is making a comeback and is throwing its weight around. So much so that Montenegrin authorities blame Moscow’s military intelligence for fomenting a coup attempt on the eve of parliamentary elections in October 2016. Senior figures in both the EU and the U.S. have been raising the alarm about Russian meddling posing a direct threat to Western interests. The Russians are repaying in kind: “You should remember what happened around Yugoslavia”, Vladimir Putin told journalists in 2016, referring to the crisis in relations with the West. “Everything started back then” (Samorukov, 2017b, p. 5). Are these concerns justified? How serious is the Russian challenge to the EU and NATO in the Western Balkans? What drives Moscow’s policies and how does it impact on the politics of the region? These are some of the questions this chapter tackles.

Russia and the West in the 1990s and 2000s Russia’s approach to Southeast Europe is by and large a function of its relations with the U.S. and Europe. In times when relations are in a good shape, Moscow pursues economic and political opportunities without challenging the West. In moments of tension, however, Russia shifts gears to being the spoiler. The Balkans were high on Moscow’s agenda in the early 1990s, as the Russian Federation emerged from the ashes of the Soviet Union. Under President Boris Yeltsin and Foreign Ministers Andrei Kozyrev (1992–1996) and Evgeny Primakov (1996–1998), Moscow aspired to play a leading role in the management of the conflicts in Bosnia (1992–1995) and Kosovo (1998–1999). The stakes were high: Russia’s place in the European security architecture, and its relationship with NATO and the U.S. Yeltsin and his ministers struggled find a fragile balance – cooperating with the West at both the UN Security Council and the so-called Contact Group set up in 1994, but also nurturing ties with Slobodan Milošević and the Bosnian Serbs to maximize their leverage (Nikiforov, 1999; Gus’kova, 2001; Romanenko, 2002; Headley, 2008). Assertive policies in exYugoslavia also aimed to silence the hardline anti-Western opposition entrenched in the Russian legislature. Russia suffered a number of setbacks and failed to prevent NATO interventions in Bosnia and especially Kosovo (March-June 1999). Taking risks, such as the famed dash to Prishtina, proved counterproductive (Simić, 2001; Antonenko, 1999; Levitin, 2000; Headley, 2008). More than once, Russia was forced to compromise and bandwagon with the West – for example, by authorizing ex post Western interventions at the UN Security Council and joining NATO peacekeeping missions such as IFOR/SFOR in Bosnia and KFOR in Kosovo.1 The Balkans of the 1990s came to symbolize post-Soviet Russia’s diminished status in international affairs (Allison, 2013).

Russia 189 When Putin arrived in the Kremlin, first as prime minister in August 1999 and then as president in the following year, Russia and the West lived through a new honeymoon. Though much ink has been spilled about the resentment Putin and his entourage harbor against the U.S., NATO, and Europe, blaming them for the disintegration of the Soviet Union and the humiliating experience of the 1990s including during the Kosovo war, his initial policy was to build strong ties with Western states and leaders. The new master in the Kremlin prioritized consolidation at home and the assertion of Russian leadership within the Commonwealth of Independent States (CIS). Rising levels of trade interdependence with the EU, on the back of an oil boom and surge of FDI into Russia, and strategic cooperation with George W. Bush in the post-9/11 ‘war on terror’ were the hallmarks of the period (Tsygankov, 2016, pp. 135–177). In those early days, Putin even toyed with the idea of Russia joining NATO, restoring institutional relations with the Alliance that had been severed during the Kosovo war. It was small wonder, therefore, that Russia disengaged from the Balkans in the early 2000s. Attention shifted away from the Balkans, as the former Yugoslavia was pacified and past commitments appeared to be more of a liability than an advantage. Moscow accepted EU enlargement and made no noises when Romania and Bulgaria joined NATO in 2004, pulling out its troops from Bosnia and Kosovo (Trenin, 2011, pp. 105–106; Bechev, 2017, pp. 54–55). During Putin’s second term as president (2004–2008), Moscow’s relations with the West turned more confrontational (Trenin, 2011, pp. 32–33; Tsygankov, 2016, pp. 177–209; Stent, 2019, pp. 125–133, 304–310). The Kremlin perceived color revolutions in Georgia, Ukraine and Kyrgyzstan as part of a larger U.S. plan to export regime change, threatening Russia itself. In a much-quoted speech delivered at the 2007 Munich Security conference, Putin upbraided America’s arrogance and unilateralist impulses, manifest in the war in Iraq. To him, the U.S. was breeding instability and strife in global politics. However, he continued to see the main EU powers, principally Germany and France, which had opposed the U.S. invasion in Iraq, as partners rather than adversaries. The EU and its enlargement did not appear to be posing a challenge to Russian interests. In contrast to NATO, a U.S.-dominated military bloc, the Union was seen primarily as an economic association with little impact on high politics and security affairs. In that sense, the EU expansion into the Balkans, taking a step forward with Bulgaria and Romania’s accession in 2007, was anything but a game changer from the perspective of Moscow. In the same vein, the former Yugoslavia together with Albania (but minus Slovenia, which had already joined both the EU and NATO) moved into Brussels’ orbit by means of the Stabilization and Association Process (SAP). In other words, Russia remained largely indifferent to the Balkans’ inclusion into the Western sphere of influence.

Russia’s incipient strategy in Southeast Europe One popular misconception is that Russia ‘came back’ to Southeast Europe in the 2010s. In reality, its return was already underway in Putin’s second term.

190  Dimitar Bechev Two factors were at play. First, the Kosovo status process. Second, the designs to establish an export route for Russian gas bypassing Ukraine (Simonov, 2009; Bechev, 2017, Chapter 7). In both cases, Moscow sought to leverage its ties with the region to compete and gain equal standing with the West – the essence of its Balkan policy. Russia turned Kosovo into a battlefront with the U.S. and its allies. As a founding member of the Contact Group for former Yugoslavia, Russia was part of the status process from the very start in 2004. Martti Ahtisaari, the former president of neutral Finland who had piloted the negotiations in 2006–2007, was a figure seen as equally acceptable to Russia and the West (Ker-Lindsay, 2011). However, after many twists and turns, Moscow refused to accept Ahtisaari’s plan foreseeing independence for the province which, under UN Security Council resolution 1244 (1999), was defined as part of the rump Yugoslavia (Serbia and Montenegro). It forged a common front with Serbia, rekindling ties that had gone stale after the ouster of Milošević (Ker-Lindsay, 2011). The alliance blossomed in the immediate aftermath of Kosovo’s unilateral declaration of independence in February 2008, an act supported by the U.S. and the bulk of the EU member states. While blocking Kosovo’s acceptance in international bodies, Moscow has used what it calls “the Kosovo precedent” to advance its objectives in the former Soviet space – first by recognizing Abkhazia and South Ossetia as independent states in the wake of the war with Georgia in August 2008, then by annexing Crimea in 2014. Though Russia’s direct interest in Kosovo has been and remains limited, it has nevertheless drawn dividends by both obstructing international recognition and taking advantage of Kosovo’s independence. In either case, Kosovo is a piece of a bigger puzzle to do with Russian pushback against what it sees as U.S. unilateralism. The transit of natural gas has been the other facet of Russia’s strategy. Its centrality is proven by the fact that Vladimir Putin, both as president and during his terms as prime minster (2008–2012) during the Medvedev interregnum, has been directly in charge. The official foreign policy concept promulgated by the Russian MFA (2013) also stresses the role of Southeast Europe as a conduit of hydrocarbons.2 On the face of it, the trade in natural gas is not a zero-sum issue. It underscores the interdependence between the Russian Federation and the consumer countries in the EU. By extension, turning Southeast Europe into a supply route interests both parties, as well as the states hosting the infrastructure. South Stream, a pipeline which is projected to ship 63 billion cubic meters (bcm) of gas to Italy and Central Europe via the Black Sea and the Balkans, exemplified that logic (Simonov, 2009; Baev and Øverland, 2010). It did serve Russia. Along with the northern route through the Baltic Sea, the Balkans offered an alternative to the Ukrainian grid which had been the main export conduit since the East–West gas trade got off the ground in the late 1960s (Högselius, 2013). But it was embraced by other countries too. By 2009, South Stream enlisted all countries in the region, from Bulgaria to Slovenia, as partners, along with Italy, Austria and others. It opened the prospect of additional Russian investment – for example, through the privatization of the NIS, Serbia’s national oil and gas company, and the Burgas–Alexandroupolis oil pipeline undertaken with Bulgaria and Greece (Bechev, 2017).

Russia 191 However, Russian energy initiatives have never been universally seen as winwin business ventures. From the outset, critics dismissed South Stream as a geopolitical ploy to perpetuate Europe’s dependence on Russia and enhance the latter’s power over smaller countries west of its borders (Bugajski, 2008, pp. 73–101). The cut-off of deliveries through Ukraine in 2006 and then in 2009 generated pushback in the EU. In the 2000s, the European Commission launched its own competing plans to foster the diversification of supplies: the Nabucco Pipeline aimed to bring gas from the Caspian, Central Asia and even the Middle East, inaugurating the so-called Southern Gas Corridor; a major legislative overhaul and an ambitious scheme for interconnecting national gas grids prompted by the second gas crisis between Russia and Ukraine (January 2009). This agenda has also been supported by successive U.S. administrations, from George W. Bush all the way to Donald Trump. They have all championed the Southern Gas Corridor and the construction of liquefied natural gas (LNG) facilities allowing direct imports over sea from the U.S.3 In a nutshell, energy has been politicized and ‘securitized’ and is therefore an area of competition. Though South Stream was shelved in 2014, partly as a result of the geopolitical standoff between Russia and the West, Southeast Europe continues to be a key region for EU–Russian energy relations owing to TurkStream, which is planned to be extended past Turkey’s borders. By the late 2000s, Russia was already firmly ensconced in the Balkans. It is questionable however whether its initiatives had added up to a coherent strategy. Both then and now, Russia has no long-term plan. In strategic terms, the Western Balkans, as well as Southeast Europe more broadly, lies beyond Moscow’s claimed privileged sphere of interest in the former Soviet Union. It is outside the focus of institutions such as the Eurasian Economic Union (EEU) or the Collective Security Treaty Organization (CSTO), which are all central to the Russian bid to reestablish regional hegemony. The Russian Federation plays second fiddle to the EU. It is excluded from or loosely associated with regional institutions and occupies a less prominent place in local economies. While the Russian Federation supplies gas and crude oil to the region, it is not a significant export market or purveyor of FDI or other forms of financial transfers. For instance, Russia accounted for 4.9 percent of FDI in Serbia in 2014, 4.6 percent in 2015 and 3.9 percent in 2016. The EU’s share is between 70 and 80  percent (Samorukov, 2017b, p.  10). Russian capital corresponds to around 10 percent of the economy, largely thanks to NIS. In Montenegro, where Russian individuals and businesses play an outsized role in the real estate and tourism sectors, Russia’s share fell from a high of 29.4 percent (2006) to 5.5 percent (2015) when measured in terms of corporate revenues (Center for the Study of Democracy, 2018c). Notably, economic relations are skewed in Russia’s favor. Virtually every country runs large trade deficits with Russia due to imports of natural gas (sold at prices that are on average higher than those charged elsewhere in Europe) and crude oil.4 So rather than seek to achieve full parity with NATO and the EU in material terms, which also involves the expenditure of material resources (whether military or various forms of financial subsidies or other economic incentives), Russia sees

192  Dimitar Bechev Southeast Europe first and foremost as a weak spot on the Western periphery (Krastev, 2015). That allows it to engage selectively, avoid undue commitments, and extract strategic benefits.

Russia and the West in the Balkans after Ukraine The Ukraine crisis of 2013–2014 reshaped relations between Russia and the West, bringing them to the lowest point since the end of the Cold War. To a large degree, key Russian decisions, from the pressure on Viktor Yanukovych to scrap the association agreement with the EU to the annexation of Crimea following the Ukrainian president’s downfall in February 2014, could be explained in light of Russia’s domestic affairs. The Putin regime, which had been in slow but steady decay since the global economic crisis struck in 2008, resorted to muscular foreign policy to shore up internal legitimacy (Galeotti, 2017). The long-term effect, however, was to put ties with both the U.S. and the EU firmly on the adversarial footing. Western sanctions have stuck and initiatives for mending fences in the name of tackling common challenges, such as those pioneered by U.S. President Donald Trump’s administration, have gone nowhere. The competition between Russia and the West has had fallout in the Balkans. Moscow’s energy ventures took a serious hit. In the summer of 2014, South Stream was effectively cancelled as Europe’s political will to resolve a longstanding legal dispute between Gazprom and the European Commission expired (Stern et  al., 2015). Russia struck back: mobilizing political and civil society actors to push against both the U.S. and the EU. Russian-sponsored media such as the Serbian branch of the Sputnik news agency gained prominence (Pomerantsev and Weiss, 2014; Bugajski and Assenova, 2016; Conley et al., 2016; Galeotti, 2017). Leaders such as Serbian Prime Minister (now President) Aleksandar Vučić and Milorad Dodik, president of Republika Srpska in Bosnia and Herzegovina, vowed to preserve strategic links to Russia. Nationalist parties and civic associations sent monitors to the independence referendum held in Russian-occupied Crimea. There have been multiple reports of volunteers from Serbia and other parts of former Yugoslavia fighting alongside the forces of the self-proclaimed peoples’ republics of Donetsk and Luhansk (DNR/LNR) in Eastern Ukraine. In November 2017, Ukraine’s Ambassador to Serbia, Oleksandr Aleksandrovych, caused a stir by accusing Belgrade of turning a blind eye to Russian-trained Serbs militiamen in the Donbas (BalkanInsight, 2017b). Though the Kremlin’s default policy of divide and rule has largely failed in the EU, it has made inroads in the former Yugoslavia. Along with North Macedonia and Bosnia and Herzegovina, Serbia declined to join the EU sanctions in response to the annexation of Crimea and the war in Eastern Ukraine. As early as October 2014, Vladimir Putin was accorded royal treatment in Belgrade where he was the guest of honor at a military parade marking the 70th anniversary of the liberation of Yugoslavia’s capital from Nazi occupation. His visit to Belgrade on 17 January 2018 was another triumph. Even members of NATO and the EU in exYugoslavia, such as Slovenia and Croatia, have been eager to upgrade economic

Russia 193 cooperation with Moscow (Gower, 2013; Marini, 2016; Samorukov, 2017a). Like Greece, Bulgaria and Hungary, Western Balkan governments have been eager to take part in TurkStream. As of 2019, the most likely route goes through Bulgaria, Serbia and Hungary. Most important of all, Russia’s actions in the region and the response it has elicited from local players have put EU and U.S. policymakers on alert. In February 2015, Secretary of State John Kerry said “Serbia, Kosovo, Montenegro, Macedonia, other places. They’re all in the firing line [together with] Georgia, Moldova, Transnistria” (Congressional Quarterly Transcriptions, 2015).5 He seconded German Chancellor Angela Merkel, according to whom Russia “[was] trying to make certain Western Balkan states politically and economically dependent” (Welt am Sonntag, 2014). Even Federica Mogherini, dismissed as too dovish on Russia when she originally took up the position of a EU High Representative for Foreign and Security Policy, has warned the Balkans are turning into “a geopolitical chessboard” (EUObserver, 2017). What is more, speculations have cropped up that tensions in ex-Yugoslavia can escalate into war, with Vladimir Putin intervening on the sides of Russia’s nationalist allies in Serbia, Republika Srpska in Bosnia and Herzegovina, Montenegro and elsewhere (Schindler, 2017). Even if Russia is hardly a peer of the West by any objective measure, there is a strong perception that it has staked a claim to be a bona fide rival in the Balkans (Blank and Kim, 2014; Bershidsky, 2017).

Mechanisms and instruments of Russian influence Ironically enough, its limited objectives help Russia assert its influence in the Balkans. Russia can leverage scarce resources to attain the maximum payoff (or “play a weak hand well”, as Strobe Talbott (2002, p.  194) once characterized Primakov’s strategy) – be it diplomatic gains, PR coups against the West, commercial advantages or nourishing its prestige as a pivotal international actor (cf. Stent, 2019). What also gives present-day Russia an advantage is that it is not bound by a particular ideology or normative aspirations. In that sense, it differs from the Soviet Union, where the communist doctrine influenced policy, and also from the pre-1917 Tsarist Empire with its attachment to Orthodoxy and autocracy. Russia enjoys large room for maneuver and transacts with a variety of actors in politics, business and civil society. Moreover, it has a spectrum of instruments at its disposal: from coercion to co-optation to disruptive interference in the domestic affairs of other countries. Coercion As far as the Balkans are concerned, coercion is the least important part of Russia’s toolbox – a clear difference from the ‘near abroad’. Moscow has no boots on the ground in former Yugoslavia. However, the seizure of Crimea has made a profound difference for Balkan countries bordering the Black Sea. The military buildup in the annexed peninsula has led to near Russian dominance, of

194  Dimitar Bechev direct concern to Romania, Turkey and Bulgaria, as well as to NATO, which has undertaken countermeasures under the heading of “enhanced forward presence”, (Bugajski and Doran, 2016). Co-optation In the Western Balkans, Russia’s security and defense capabilities are mostly a co-optative tool. The case in point is the growingly active cooperation with Serbia since the conclusion of a bilateral agreement in 2013 (Szpala, 2014). The two militaries have regularly trained together since November 2014, both in Serbia and in Russia. After lengthy negotiations, Moscow agreed to donate to Belgrade 6 surplus MiG-29 fighter jets, 30 T-72 tanks and 30 BRDM-2 armored reconnaissance vehicles (Božinovski, 2016). Pro-government media in Serbia hailed the deal as a step towards evening the balance with neighboring Croatia (an adversary in the wars of the 1990s), which has been modernizing its armed forces. Serbia enjoys observer status in the Russia-led Collective Security Treaty Organisation (CSTO). It has been hosting a Russian ‘humanitarian center’ in the southern city of Niš, not too far from Kosovo, which Western officials suspect to be an intelligence outpost under the guise of a search-and-rescue mission (Djurdjić, 2017; Samorukov, 2017b). Russian assistance puts in the spotlight Serbia’s policy of “sitting on two chairs”, to use U.S. Deputy Assistant Secretary Brian Hoyt Yee’s phrase (BalkanInsight, 2017a). Belgrade is keen to work with the West, too, and has signed an Individual Partnership Agreement (IPAP) with NATO. Serbian officials point out that, in 2016, the army has carried out 200 activities with NATO and the US, as opposed to just 17 with Russia (Wilson et al., 2017). However, Russia is able to maintain its influence over the Serbian security sector, notably through the maintenance and service contracts attached to the transfer of second-hand hardware. Moscow’s co-optative power is even more pronounced in the economy. It has formal and informal dimensions. On the formal level, it is manifest in the various deals involving governments or public companies, for example, Gazprom and national gas utilities such as Srbijagas, MER (North Macedonia), Gas-Res (Republika Srpska), etc. Informally, Moscow’s influence works through private investors which, though legally distinct from the Russian state, are nonetheless dependent on its good graces and therefore susceptible to political pressure. As observed by Bobo Lo (2015, p. 28), “[i]n many instances, [Russian investors’] motivations are principally commercial. But it would be naïve to disregard the geopolitical dividend. While Russian companies are not mere instruments of the Kremlin, their participation in these often fragile economies can and does serve wider purposes”. A case in point is Lukoil, which is present in Serbia, North Macedonia and Montenegro, where its filling stations are supplied from the Neftochim refinery near the Bulgarian Black Sea port of Burgas (see Table 9.2). There are a plethora of Russian investors in sectors such as real estate, tourism and banking, some of them connected to the Kremlin and the upper echelons of Russian politics and business.

Russia 195 Russian capital often enters the region through third countries, some of which are EU members. To quote from an in-depth study of Russia’s footprint in the North Macedonian economy, one example is “the Russian mining company Solway, which operates a lead, zinc and copper mine in North Macedonia, but is officially registered in Switzerland. Another is a large Russian power plant operator, TKG, which owns a joint-venture, the TE-TO Combined Cycle Heat and Power Plant near Skopje, through a Cypriot offshore intermediary” (Center for the Study of Democracy, 2018a, p. 3). Sberbank6 and VTB, which lent €1.3bn to Agrokor, Croatia’s largest company with a presence across former Yugoslavia (e.g., in Bosnia and Serbia), did so via their subsidiaries in Austria (Samorukov, 2017a; Center for the Study of Democracy, 2018b). Through its Luxembourg branch, Sberbank provided a €4m loan to Haden S.A., a company that then bought shares in Bosnalijek, a large pharmaceutical company in Bosnia (in the Bosniak and Croatdominated Federation of Bosnia and Herzegovina). However, the loan was not declared to the State Investigative and Protection Agency (SIPA) whose task is to tackle money laundering and corruption (Center for Investigative Reporting, 2016). In a nutshell, European integration and the economic interdependence it catalyzes therefore has been as much of a challenge to Russian business and official foreign policy as an opportunity. Economic links binding the Western Balkans, Russia and the EU are a power asset in the hands of Russian foreign policy, which, as is well known, tends to blur the boundary between formal and informal and state/non-state. Though Russia’s footprint pales in comparison to the EU’s, it has political consequences. As a report by the U.S-based Center for Strategic and International Studies notes, “Russian companies in [Central and Eastern Europe] have tended to be concentrated in a few strategic economic sectors, such as energy and fuel processing and trading, whereas EU countries have a more diversified investment portfolio that spans different manufacturing subsectors” (Conley et  al., 2016, p. 11). The oil and gas sector is a case in point. Russia accounts for the bulk of deliveries of gas to Bosnia, Serbia and North Macedonia, and is a significant supplier of crude oil to Serbia (see Table  9.1). In addition, Russian oil companies have a solid foothold in refining, wholesale and retail (Table 9.2). Russia benefits from propitious local conditions. To conduct business in the Balkans, its companies have cultivated intimate ties with actors in the region where

Table 9.1 Import dependence on Russia (percentage of domestic consumption, 2015)

Bosnia Croatia North Macedonia Serbia Source: International Energy Agency, www.iea.org

Gas

Crude oil

100% 0% 100% 80%

no data 31% 0% 70%

196  Dimitar Bechev Table 9.2 Russian oil companies in the Western Balkans and Croatia Bosnia and Herzegovina

Zarubezhneft Brod (refinery) (NeftegazInkor) Modriča (motor oil NIS/Gazprom Neft refinery) Banjaluka Petrol (trade) Gazprom Petrol Croatia LUKoil LUKoil Croatia (trade) North Macedonia LUKoil LUKoil Macedonia (trade) Montenegro LUKoil Lukoil Montenegro (trade) Serbia Gazprom Neft Naftna Industrija Srbije LUKoil (NIS) – refineries at Pančevo, Novi Sad, filling stations LUKoil Serbia (trade)

100% (refining) 60%

7% (filling stations) 15% (filling stations) 100% (refining), 30% (filling stations) 11% (filling stations)

Sources: LUKoil, NIS, Zarubezhpetrol websites

corruption, state capture and the deficient rule of law are a common occurrence. For instance, as long as public energy companies in the Balkans are mismanaged and turned into political fiefdoms, there is always scope for the Russian business actors (acting independently or in coordination with the Kremlin) to insert themselves into local corruption schemes. Srbijagas, the national gas company, has long been the preserve of the Socialist Party of Serbia (SPS), a coalition partner of Vučić’s Serbian Progressive Party (SNS). As elsewhere in Eastern Europe, gas sales to Serbia are carried through opaque intermediate business entities raising suspicions of side payments and kickbacks. In Bosnia’s Republika Srpska, the sale of the only local refinery to a Russian bidder, Zarubezhneft, without a tender in 2007 has also been a matter of controversy. It was overseen personally by Milorad Dodik (at that time serving as prime minister (Reuters, 2007). Republika Srpska is where Russian economic presence is at its peak. Thanks to close political connections with the leadership in Banja Luka, Russia is now the largest investor in the entity (€547 million over the period 2005–2016). Five Russian-owned companies (energy and banking) account for fully 42 percent of the revenue of all foreign business. In April 2014, cash-strapped Republika Srpska negotiated direct budgetary support from Moscow to the tune of €270 million, at a time when the joint state of Bosnia and Herzegovina was struggling to secure a conditions-heavy loan from the IMF. However, the Russian transfer fell short of the €500–700 million President Milorad Dodik had promised. Attempts to secure funding from Russian banks fell through (Center for the Study of Democracy, 2018b).7 Disruption The most visible part of Russian influence in the Balkans concerns disruption/ direct interference in domestic politics. As with the economy, there are both formal and informal channels that come into play. On the formal side, what comes to

Russia 197 the forefront are the statements and actions of Russia’s MFA. Though the Foreign Ministry is not the most influential department in the Russian government, and certainly much less consequential than various security agencies such as the Federal Security Service (FSB), the military intelligence (GRU) or big energy firms headed by personalities closer to the center of power, pronouncements by Sergei Lavrov, the spokesperson Maria Zakharova, or other officials, appeal to the public in parts of the region. The same is true of Russian parliamentarians cultivating links with sister parties in the Balkans. In most cases, they do not set official policy, but their radical rhetoric has direct resonance in Serbia, Republika Srpska, Montenegro and North Macedonia. Informal actors and networks, whether acting with a direct mandate from the Kremlin or the Russian security agencies or freelancing with the goal of advancing what they see as Moscow’s interests, probably play an even more significant role. Oligarch Konstantin Malofeev furnishes a good example. He sponsored figures such as Igor Girkin (known by his nom de guerre ‘Strelkov’ or Shooter), a nationalist and veteran from the war in Bosnia who became prominent in Crimea and later emerged as a leader of the revolt in Eastern Ukraine in the spring of 2014. Malofeev’s associates are thought to be well connected to politicians and nationalist groups in former Yugoslavia and elsewhere in the Balkans (Grozev, 2017). Under the banner of Orthodox unity and the defense of conservative values, they have been battling against Western influence in the region.8 From the perspective of the Kremlin and the Russian state, more broadly, ‘outsourcing’ the Balkans to such informal actors is beneficial as it ensures “plausible deniability” (Galeotti, 2017). There have been many examples of how Russia exploits the fissures and conflicts of polarizing politics across the Balkans. Russia became involved in the acute crisis in North Macedonia between February 2015 and May 2017. Moscow slammed the protests that swept through the capital Skopje, galvanized by revelations of elite corruption and abuse of power by the center-right government of Nikola Gruevski, as yet another incidence of a Western-backed colored revolution against the legitimate authorities. The MFA blamed the West for conspiring to destabilize the Balkans and pushing it into the abyss of ethnic conflict. It echoed Gruevski’s arguments that the EU and U.S. were colluding with or providing cover for radicalized Albanians whose demands for greater cultural and linguistic rights were laying the groundwork for the partition and annihilation of the state. Foreign Minister Sergei Lavrov accused Albania and Bulgaria of plotting to carve up North Macedonia, referring to a conspiracy theory aired by the TV news broadcaster RT, controlled by the Russian government (EurActiv, 2015). Russia has been playing the spoiler in Bosnia as well (Mujanović, 2017). In September 2016, Republika Srpska carried out a referendum to keep its “national holiday” in defiance of both the West and the state-level Constitutional Court. On the day itself (9 January 2017, the feast of St. Stephen), the entity’s capital Banja Luka witnessed a military parade, bringing back the painful memories of the 1990s war (Mujanović, 2016). A year later, in January 2018, reports emerged of a

198  Dimitar Bechev Russian-trained paramilitary force named Serbian Honor (Srpska Čast), linked to Dodik, which allegedly had taken part in the ‘national holiday’ parade (Avdić, 2018). Throughout these episodes, Russia has stood by Dodik’s side, blocking efforts to censure him at the Peace Implementation Council’s (the group of countries overseeing the implementation of Dayton) Steering Board. Dodik, for his part, has used every opportunity to showcase close personal ties with Putin, paying a visit to the Kremlin on the eve of the referendum. He has also cooperated with Russian nationalists such as the circle around “the Orthodox oligarch” Malofeev (Grozev, 2017). Russia has continued meddling in Kosovo. It suffered a setback in 2010 when Serbia took the decision to shift towards the EU as a mediator between Belgrade and Prishtina (Economides and Ker-Lindsay, 2015). That happened after the International Court of Justice (ICJ) issued an advisory opinion ruling that the 2008 unilateral declaration of independence had not violated international law. The ICJ case resulted from a joint Serbian-Russian initiative which, ultimately, proved counterproductive. But Russia is in a position to take advantage of the recurrent crises between Belgrade and Prishtina, despite the ‘normalization’ talks overseen by the EU since 2013. In January 2017, the Kosovo President Hashim Thaçi accused Serbia of plotting “a Crimean scenario” in Serb-majority municipalities in the North (Bytyçi, 2017). The remark was occasioned by a Russiandonated train painted in the Serbian colors and Christian Orthodox symbols, carrying the slogan “Kosovo is Serbia” in 20 languages. The Kosovo authorities stopped the train at the border, having previously opposed the opening of a regular line between Belgrade and Kosovska Mitrovica. Kosovo authorities point to Russian activism as a reason to transform the Kosovo Security Force into an army. That would no doubt trigger a spat with Serbia and undermine the EU’s effort to reach a settlement, which is also backed by the US. Another pillar in Russia’s policy is vehement opposition to NATO enlargement in former Yugoslavia. Montenegro, a country where Russian investment has played a prominent role since the 1990s, has been at the epicenter of the conflict. The Kremlin’s loyalist media and the Russian MFA backed anti-government protests in October 2015 as thousands rallied in the capital Podgorica against NATO membership and high-level corruption. The crisis continued into 2016. On the eve of the parliamentary elections in October, authorities announced that they had foiled a plot to overthrow the government, assassinate Prime Minister Milo Djukanović and derail Montenegro’s entry into the Atlantic Alliance. The alleged conspiracy was led, according to the prosecutors, by rogue security officers from Serbia, instructed by the GRU, Russia’s military intelligence, and in contact with the anti-NATO opposition. In the immediate aftermath of these revelations, Nikolai Patrushev, head of the Russian Federation’s Security Council and former director of FSB, rushed to Belgrade to hold urgent talks with Prime Minister Aleksandar Vučić, whose life had also, according to allegations, been at risk (Borger, 2016). In April 2017, the Montenegrin Special Prosecutor charged 14 individuals, including 9 citizens of Serbia and 2 of Russia, alleged GRU operatives, in connection to the coup. Indicting Andrija Mandić and Milan Knežević, the pro-Russian leaders of the opposition Democratic Bloc, raised eyebrows. They described the

Russia 199 trial as an effort to settle scores with critics of the regime (BalkanInsight, 2017c). There have been questions surrounding the events on 16 October (the day of the parliamentary elections), in particular the Montenegrin state regulatory body’s order to telecom companies to disable popular messaging applications such as Viber and WhatsApp and the attacks against the website of a prominent poll monitoring NGO (GlobalVoices, 2016). Moscow’s disruptive impact has a lot to do with the ability to win hearts and minds. Russia and Vladimir Putin are hugely popular in Western Balkan societies with Orthodox Christian majorities – Serbia and Republika Srpska, North Macedonia, and Montenegro. That is a fact registered by numerous sociological surveys over the years. Russia cultivates the image of a historical ally and protector of its Balkan brethren against the twin perils of the arrogant West and radical Islam. Russian ‘soft power’ is a function of a negative attitude to the West, rather than the genuine attraction of Russian culture, society, or domestic institutions. Moscow’s policies tap into indigenous resentments dating back to the Yugoslav wars and the early post-communist transition of the 1990s. The EU has also become a target, particularly in the past several years. It is faulted for the economic dislocation experienced in the region since the global financial crisis, for the imposition of liberal values (especially on sensitive matters such as the rights of ethnic and sexual minorities), as well as for the influx of refugees. Russia, on the other hand, casts itself as a champion of traditionalism and a bulwark against the encroachment by the West of sacrosanct norms of national sovereignty. Orthodox churches in the Balkans have been a reliable ally in Russia’s quest. In 2018, the Serbian Orthodox Church, for instance, aligned with its Russian counterpart in resisting the autocephaly of the Ukrainian church recognized by the Ecumenical Patriarchate in Constantinople. In this instance, Serbian synod draws a parallel with the jurisdiction dispute with breakaway churches in Montenegro and North Macedonia, both unrecognized by other Orthodox patriarchates. However, there is a caveat. Sociological data from Serbia indicate that young people are supportive of an alliance with Moscow but still oriented towards the West. Thus, they are much more likely to travel, work or study in Western Europe than in Russia (TNS Medium Gallup, 2014). Russian language and popular culture have limited traction, despite the various public diplomacy and cultural cooperation initiatives undertaken over the years. Secondly, Russia’s alignment with Serbian, and to a lesser extent Macedonian, nationalism makes it unpopular amongst Muslim-majority communities, including the Bosniaks and the Kosovar Albanians. Montenegro is a special case because the attitude to Russia correlates with the pro- and anti-NATO cleavage as well as the polarized views of the identity of the Montenegrins – as an extension of the greater Serb nation or a historically separate ethnic community (Džankić, 2014).

Conclusion Russia plays a prominent role in the Balkans, but its influence is often exaggerated. It is in a position to play the spoiler and maintain its image as a European and

200  Dimitar Bechev global power. However, it lacks the ability (and, arguably, the will) to establish itself as a hegemon. Despite heated rhetoric, Montenegro’s accession to NATO in June 2017 did not trigger serious retaliatory measures (not even the introduction of visas). The balance of power in the region clearly does not favor Moscow. Russia trails far behind the EU, which still accounts for up to two-thirds of Balkan trade as well as the bulk of investment. In terms of its resources and material power, Moscow is hardly America’s peer either, except for its nuclear arsenal, which is not easily translatable into direct leverage in a regional setting. Russia is a country with a shrinking population, whose GDP (in nominal terms) is lower than those of middle powers such as Canada or Italy. Its long-term goal is to mend the balance by restraining the U.S. and its allies through various means, including exploiting weak points in the Western sphere of influence. That is why Russia projects influence across the EU’s periphery. In the Balkans, it plays to receptive audiences who often hold past grudges against Western powers such as the U.S. and Germany. Even more importantly, Moscow counts on multiple local partners and fellow travelers. More often than not, they play a double game: cooperating with Russia while profiting from links with the West. So long as this behavior helps dilute and thwart the policies of the EU and the U.S., it serves Russia’s interests. In a strange way, critics of the Kremlin are often complicit. By talking up Russia, they are unwittingly doing Putin a favor. In the collective imagination, Russia stands as an equal to the West. This is no mean feat.

Notes 1 In contrast to the much-publicized episode, in March 1999, when Evgeny Primakov, then prime minister, ordered his airplane, bound for Washington, D.C., to make a U-turn in the middle of the Atlantic in protest against the NATO bombing campaign against Serbia. By the end of the war, Russia was back at the table, cooperating with the West in finding a diplomatic solution (Bechev, 2017, Chapter 1; Headley, 2008, Chapter 12). 2 “Russia aims to develop comprehensive pragmatic and equitable cooperation with Southeast European countries. The Balkan region is of great strategic importance to Russia, including its role as a major transportation and infrastructure hub used for supplying gas and oil to European countries”. However, the latest version of the Foreign Policy Concept (November 2016) has excluded the above paragraph, which featured in the 2013 version it superseded. 3 The Southern Gas Corridor is now turning into a reality thanks to the Transanatolian Pipeline (TANAP) and its extension to Italy, via Greece and Albania, the Transadriatic Pipeline (TAP). In its initial phase, the route will ship 10 bcm of natural gas extracted from the Shah Deniz field off Azerbaijan’s Caspian coast. 4 It should be noted, however, that Balkan countries consume limited volumes of natural gas and, in some cases (Kosovo and Montenegro), none at all. Coal and renewables form the backbone of the local energy systems. 5 Kerry in response to a question by Sen. Christopher S. Murphy (D- Connecticut). See Congressional Quarterly Transcriptions 2015. 6 Sberbank, the largest bank in Russia and Eastern Europe, is majority owned by the Russian Federation’s Central Bank. In 2011, it acquired Austria’s Volksbank and as a result took over its wide network of subsidiaries in the former Yugoslavia (Bosnia and Herzegovina, Serbia, Croatia, Slovenia) and Central and Eastern Europe.

Russia 201 7 Dodik caused controversy in 2015 when it transpired that another US$300 million loan he had secured at preferential conditions led to a murky U.S.-based fund managed by a Russian Federation national (BalkanInsight, 2015). 8 Another prominent figure  is Ret. Gen. Leonid Reshetnikov, who for a period of time headed the Russian Institute for Strategic Research (RISI), a think-tank attached to the president’s office. Having completed his doctorate in Bulgaria in the 1970s and being fluent in the language, Reshetnikov was a permanent fixture in various nationalist and pro-Russian media outlets in both former Yugoslavia and Bulgaria. He went into retirement in November 2016, shortly after the alleged coup attempt in Montenegro.

References Allison, Roy, 2013. Russia, the West and Military Intervention. Oxford: Oxford University Press. Antonenko, Oksana, 1999. Russia, NATO and European Security After Kosovo. Survival, 41 (4), (Winter), 124–144. Avdić, Avdo, 2018. Uz pomoć ruskih I  srbijanskih specijalaca Milorad Dodik formira paravojne jedinice u Republici Srpskoj! [With the Help of Russian and Serbian Special Forces Milorad Dodik Is Forming Paramilitary Units in Republika Srpska], Žurnal, 12 January. www.zurnal.info/novost/20914/milorad-dodik-formira-paravojne-jedinice-urepublici-srpskoj. Baev, Pavel K., and Øverland, Indra, 2010. The South Stream Versus Nabucco Pipeline Race: Geopolitical and Economic (ir)rationales and Political Stakes in Mega-Projects. International Affairs, 86 (5) (September), 1075–1090. BalkanInsight, 2015. Bosnian Leader Under Fire Over Loan, 16 October. www.balkaninsight. com/en/article/new-loan-for-bosnian-serb-entity-triggers-controversy-10-16-2015. BalkanInsight, 2017a. Serbian Officials Divided on Foreign Policy ‘Balancing Act’, 24 October. www.balkaninsight.com/en/article/serbian-officials-divided-over-yee-statement10-24-2017. BalkanInsight, 2017b, Russia ‘Using Serbia to Destroy Europe’, Ukraine Ambassador, 1 November. www.balkaninsight.com/en/article/russia-using-serbia-to-destroy-europeukraine-ambassador-10-31-2017. BalkanInsight, 2017c. Trial Due to Open Over Montenegro Coup Plot, 4 May 2017. www. balkaninsight.com/en/article/trial-to-open-in-montenegro-s-coup-case-05-03-2017-1. Bechev, Dimitar, 2017. Rival Power: Russia in Southeast Europe. New Haven: Yale University Press. Bershidsky, Leonid, 2017. Russia Re-Enacts the Great Game in the Balkans. Bloomberg Opinion, 19 January. www.bloomberg.com/view/articles/2017-01-19/russia-re-enactsthe-great-game-in-the-balkans. Blank, Stephen, and Kim, Younkyoo, 2014. Moscow vs. Brussels: Rival Integration Projects in the Balkans. Mediterranean Quarterly, 25 (2) (Spring), 61–82. Borger, Julian, 2016. Serbia Deports Russians Suspected of Plotting Montenegro Coup. The Guardian, 11 November. With Additional Reporting by Andrew MacDowall and Shaun Walker. Božinovski, Igor, 2016. Russia to donate MiG-29s, T-72s to Serbia. IHS Jane’s Defence Weekly, 22 December. Bugajski, Janusz, 2008. Expanding Eurasia: Russia’s European Ambitions. Washington, DC: CSIS.

202  Dimitar Bechev Bugajski, Janusz, and Assenova, Margarita, 2016. Eurasian Disunion: Russia’s Vulnerable Flanks. Washington, DC: Jamestown Foundation. Bugajski, Janusz, and Doran, Peter, 2016. Black Sea Rising: Russia’s Strategy in Southeast Europe. Report. Center for European Policy Analysis, Washington, DC, February. Bytyçi, Fatos, 2017. Serbia Wants to Annex Part of Kosovo Using ‘Crimea model’: President. Reuters, 16 January. www.reuters.com/article/us-serbia-kosovo-president/serbiawants-to-annex-part-of-kosovo-using-crimea-model-president-idUSKBN15022Y. Center for Investigative Reporting, 2016. Fishy Transactions from Russia via Sberbank. Sarajevo, 14 September. www.cin.ba/en/sberbanka-za-sumnjive-transakcije-iz-rusije/. Center for the Study of Democracy, 2018a. Assessing Russia’s Economic Footprint in Macedonia. Policy Brief 71, January. www.csd.bg/artShow.php?id=18116. Center for the Study of Democracy, 2018b. Russia’s Economic Footprint in Bosnia. Unpublished Draft. Center for the Study of Democracy, 2018c. Russia’s Economic Footprint in Montenegro. Unpublished Draft. Congressional Quarterly Transcriptions, 2015, Sen. Thad Cochran Holds a Hearing on the State Department Budget Request for fiscal year 2016, Congressional Quarterly Transcriptions, 24 February 2015. Conley, Heather et  al., 2016. Kremlin’s Playbook: Understanding Russian Influence in Central and Eastern Europe. Report. CSIS and the Center for the Study of Democracy (Sofia), October. Djurdjić, Milena, 2017. US Sees Russia’s ‘Humanitarian Center’ in Serbia as Spy Outpost. Voice of America, 15 June. www.voanews.com/a/united-states-sees-russia-humanitariancenter-serbia-spy-outpost/3902402.html. Džankić, Jelena, 2014. Reconstructing the Meaning of Being ‘Montenegrin’. Slavic Review, 73 (2) (Summer), 347–371. Economides, Spyros, and James Ker-Lindsay, 2015. ‘Pre-Accession Europeanization’: The Case of Serbia and Kosovo. Journal of Common Market Studies, 53 (5) (September), 1027–1044. EUObserver, 2017. Mogherini: Balkans Becoming Geopolitical Chessboard, 7 March. https://euobserver.com/tickers/137138. EurActiv, 2015. Bulgaria Rejects Russian Claim That It Wants to Dismember Macedonia, 21 May. www.euractiv.com/section/global-europe/news/bulgaria-rejects-russianclaim-that-it-wants-to-dismember-macedonia/. Galeotti, Mark, 2017. Controlling Chaos: How Russia Manages Its Political War in Europe. Policy Brief. European Council on Foreign Relations, September. Gower, Jackie, 2013. Slovenia. In: David, Maxine, Gower, Jackie, and Haukkala, Hiski (eds.), National Perspectives on Russia: European Foreign Policy in the Making? London: Routledge, pp. 222–231. Grozev, Christo, 2017. The Kremlin’s Balkan Gambit: Part I. BellingCat, 4 March. www. bellingcat.com/news/uk-and-europe/2017/03/04/kremlins-balkan-gambit-part/. Gus’kova, Elena, 2001. Istoriya yugoslavskogo krizisa (1990–2000) [History of the Yugoslav Crisis]. Moscow: Russkii natsional’nyi fond. Headley, James, 2008. Russia and the Balkans. Foreign Policy from Yeltsin to Putin. London: Hurst. Högselius, Per, 2013. Red Gas, Russia and the Origins of European Energy Dependence. Basingstoke: Palgrave Macmillan. Jackson, Mike, 2007. Soldier: The Autobiography. London: Bantam. Ker-Lindsay, James, 2011. Kosovo: The Path to Contested Statehood in the Balkans. London: I.B. Tauris.

Russia 203 Krastev, Ivan, 2015. The Balkans Are the Soft Underbelly of Europe. Financial Times, 15 January. www.ft.com/content/2287ba66-8489-11e4-bae9-00144feabdc0. Levitin, Oleg, 2000. Inside Moscow’s Kosovo Muddle. Survival, 42 (1) (Spring), 130–140. Lo, Bobo, 2015. Russia and the New World Disorder. Washington, DC: Brookings Institution. Marini, Adelina, 2016. Russian Money Creeping into Croatia. EUInside, 14 July. www. euinside.eu/en/analyses/russian-money-creeping-into-croatia. Ministry of Foreign Affairs of the Russian Federation, 2013. Concept of the Foreign Policy of the Russian Federation, 18 February. Mujanović, Jasmin, 2016. Republika Srpska’s Referendum: A  Prelude to a Nationalist Landslide in the Bosnian Elections, European Politics and Policy Blog, London School of Economics and Political Science, 26 September. http://blogs.lse.ac.uk/ europpblog/2016/09/26/republika-srpska-referendum/. Mujanović, Jasmin, 2017. Russia’s Bosnia Gambit. Intrigue in the Balkans. Foreign Affairs, 6 September. www.foreignaffairs.com/articles/bosnia-herzegovina/2017-09-06/ russias-bosnia-gambit. NATO, 2003. Russian Troops Leave KFOR. NATO Update, 2 July. www.nato.int/docu/ update/2003/07-july/e0702a.htm. Nikiforov, Konstantin, 1999. Mezhdu Kremlem i Respublikoi Serbskoi [Between the Kremlin and Republika Srpska]. Moscow: Institute of Slavic Studies, Russian Academy of Sciences. Pomerantsev, Peter, and Weiss, Michael, 2014. The Menace of Unreality: How the Kremlin Weaponizes Information, Culture and Money. Report. New York: Institute of Modern Russia. Reljić, Dušan, 2017. The Impact of Russia. In: Lange, Sabina, Nechev, Zoran, and Trauner, Florian (eds.), Resilience in the Western Balkans, Report No 36, EU Institute for Security Studies, August, pp. 43–51. Reuters, 2007. Russia Buys Bosnia Oil Industries for 121 mln euros, 2 February. Romanenko, Sergei, 2002. Yugoslavia. Rossiya i ‘slavyanskaya ideya’. Vtoraya polovia XIX – nachalo XXI veka [Yugoslavia, Russia and the ‘Slavic Idea’. Second Half of 19th c. – Beginning of 21st c]. Moscow: Institut Publichnoi Politiki. Samorukov, Maxim, 2017a. Croatia: Moscow’s New Ally, or a Brief Fling? Commentary Carnegie Moscow, 27 October. http://carnegie.ru/commentary/73562. Samorukov, Maxim, 2017b. Iillyuziya blizosti: ambitsii i vozmozhnosti Rossi na Zapadnykh Balkanakh [Illusion of Closeness: Russia’s Ambitions and Capabilities in the Western Balkans. Carnegie Moscow, 12 December. http://carnegie.ru/2017/12/12/ ru-pub-74975, English-Language Summary, Russia’s Tactics in the Western Balkans, 2017. Carnegie Europe, 3 November. http://carnegieeurope.eu/strategiceurope/74612. Schindler, John R., 2017. President Trump’s First Foreign Policy Crisis: Balkan War Drums Beat Again. The Observer, 25 January. http://observer.com/2017/01/ nato-deploying-troops-poland-baltics-vladimir-putin/. Simić, Predrag, 2001. Russia and the Conflicts in the Former Yugoslavia. Journal of Southeast European and Black Sea Studies, 1 (3) (Summer), 95–114. Simonov, Konstantin, 2009. Russian Energy Interests in South-Eastern Europe. In: Energy in the Southeast Europe Monitoring Russia Serbia Relations Project Sixth Report. Belgrade: ISAC Fund, pp. 31–41. Stent, Angela, 2019. Putin’s World: Russia Against the West and with the Rest. New York: Twelve. Stern, Jonathan, Pirani, Simon, and Yafimava, Katja, 2015. Does the Cancellation of South Stream Signal a Fundamental Reorientation of Russian Gas Export Policy? Oxford Energy Comment. The Oxford Institute for Energy Studies, January. www.oxfordenergy.

204  Dimitar Bechev org/wpcms/wp-content/uploads/2015/01/Does-cancellation-of-South-Stream-signal-afundamental-reorientation-of-Russian-gas-export-policy-GPC-5.pdf. Szpala, Marta, 2014. Russia and Serbia – Soft Power and Hard Interests, Commentary. Center for Eastern Studies (OSW) Warsaw, 29 October. www.osw.waw.pl/en/publikacje/ osw-commentary/2014-10-29/russia-serbia-soft-power-and-hard-interests. Talbott, Strobe, 2002. The Russia Hand: A Memoir of Presidential Diplomacy. New York: Random House. TNS Medium Gallup, 2014. Public Opinion on the EU and European Integration, February. www.europa.rs/upload/Opinion%20poll%20results%20for%20press%20confer ence%20FIN%20ENG.pptx. Tran, Mark, 1999. ‘I’m Not Going to Start Third World War for You,’ Jackson Told Clark. Guardian, 2 August. www.theguardian.com/world/1999/aug/02/balkans3. Trenin, Dmitri, 2011. Postimperium: A Eurasian Story. Washington, DC: Carnegie Endowment for International Peace. Tsygankov, Andrei, 2016. Russia’s Foreign Policy: Change and Continuity in National Identity, 4th edition. Lanham, MD: Rowman and Littlefield. Welt am Sonntag, 2014. Würden Sie Krieg mit Russland führen, Frau Merkel? [Will You Lead a War with Russia, Ms Merkel?], 7 December. Wilson, Damon, Damir Marušić, and Sarah, Bedenbaugh, 2017. US Strategy in the Balkans. Report. Atlantic Council, Washington, DC, November 2017.

10 China A new geo-economic approach to the Balkans Anastas Vangeli

The Western Balkans and China are examples of diverging (post-)socialist trajectories. After three and a half decades of socialist market reforms, today China is the second largest global economy, the world’s largest exporter, a leading global investor, and the most alluring market for foreign producers. It is the main engine of the global economy, expected to contribute more than a third of the global GDP growth in the period 2017–2019 (Desjardins, 2017). The countries of the Western Balkans, on the other hand, after two and a half decades of unsuccessful neoliberal reforms, are by now cemented onto the European periphery. Their unfavorable structural position within the European economy has been a major impediment for their development and growth. Forecasting their future development, Sanfey and Milatovic offer three scenarios: i) if the Western Balkan countries manage to achieve pre-crisis growth rates, the region will economically catch up with the EU average in 2053; ii) if they grow at the average rates in the period 2001–2016, they will catch up in 2078; and iii) if they maintain the current, post-crisis growth rates, this would happen only in 2220 (Sanfey and Milatovic, 2018, p. 5). After 1989, while China was developing a global outlook, the Western Balkan countries looked exclusively towards the West. Their foreign policies prioritized accession to the European Union (and all of them except Serbia also plan to or have already joined NATO). Efforts for closer cooperation with the rest of the world (including China) have, until recently, been few and far between. With the exception of FR Yugoslavia under Milošević, who pursued, but did not manage to establish, more tangible relations with China, Sino–Balkan relations until recently have been negligible. Nevertheless, the Western Balkan countries have an intertwined fate with the China, as China is the most significant economic partner of the EU, which in turn is the most significant economic partner of the Western Balkans. China is the largest trading partner of Germany (Wagner and Nienaber, 2017); in total, the EU and China trade more than one billion euros daily; by 2016 China had become a net investor in the EU, with the majority of its investments going into Western European countries. While frictions do exist, and EU politicians sometimes frame China as a threat, European companies and local and regional governments increasingly see cooperation with China as a precondition for prosperity. Yet, notwithstanding these developments, it was China that recently ‘rediscovered’ the region, before the Western Balkan countries embraced the significance of China.

206  Anastas Vangeli The new linkages between China and the Balkans are linked to the former’s quest for new economic opportunities in the post-crisis era. As part of its going out China has identified 16 post-socialist countries in the broader region of Central, East and Southeast Europe (CESEE) as potential partners with shared interests.1 Using the great intra-European imbalance that characterizes the Sino–European relationship as a pretext (more than 90 percent of China’s economic exchange is with the EU15), in the aftermath of the global financial crisis China approached the 16 CESEE countries with an ambitious regional platform aimed at deepening policy coordination on key aspects of economic cooperation, and followed up with a global vision of the ‘Belt and Road’ initiative in which CESEE and the Western Balkans play an important role. Since 2009, the interaction between Beijing and the Western Balkan countries (all except Kosovo, which China does not recognize) has grown dramatically. Leaders on both sides claim that the relations between China and CESEE, and by extension the WB5 (Albania, Bosnia and Herzegovina, Montenegro, North Macedonia and Serbia), are now at the highest level in history. In the process, China positioned itself as a ‘charismatic’ actor and a ‘spokesperson’ (Williams, 2013) of the new regional cooperation, promoting a pragmatic approach. The Western Balkan countries gradually developed their own idiosyncratic understanding of China, within the limits of their resources. This new interaction has managed to produce some material outcomes, but has also attracted the attention of a number of actors in the region who either see China as a threat, or as an opportunity, with little nuance in between (Pavlićević, 2018b). As an emerging world power, China establishes linkages that serve as mediums to (re)shape the context of the countries involved. Its intentions and behavior stem from its distinctive political and economic trajectory and the way it is intertwined with global developments; this is the context in which China’s global vision implicates the Western Balkan region. This chapter therefore proceeds as follows: it first contextualizes the rise of China; it then discusses the importance of the Western Balkans in China’s global vision in detail; it then turns to overviewing key policies and the outcomes and challenges that stem from them; and it concludes with a discussion on the potential impact of China’s linkages with the Western Balkans for the region’s European future. The article builds on the existing literature in the field and also a number of interactions with Chinese, the Western Balkans, CESEE and EU representatives in the period 2013–2018.

Understanding rising China China is one of the few countries that remain under communist rule, which has prospered since 1978 by pursuing a bold market reformist path, unleashing productive forces with the goal of becoming richer and integrating into the global economy, and backing these processes up by retaining the state’s leading role in the economy – thereby devising a model referred to as “state neoliberalism” (So and Chu, 2015, pp. 56–114). After achieving a ‘miraculous’ economic growth of

China 207 10 percent for over three decades, China today depends on the ability to adjust to a ‘new normal’ of slower growth at 6.5 percent, and the imperative of refashioning its position in an unstable post-crisis global economic environment. As a result, under the leadership of Xi Jinping, China underwent a substantial change in its international posture, from keeping a low profile and hiding its capacity, to a behavior defined as “striving for achievement” (Yan, 2014). One overarching principle of China’s global strategy today is that, unlike the pre-Xi era, when China largely pursued short-term profits, it now pursues substantial long-term goals concerning the architecture and normative grounding of the global economic order. This is based on the changing conditions of its own economy and society, the change in global circumstances, and the hypothesis of interdependence (or ‘common destiny’), which is based not on ideological beliefs, but rather on the fact that China could only rise by becoming deeply embedded in global trade and investment networks. In practice, while for roughly three decades after 1978 it perfected its role as a successful ‘game player’, in the last few years China has assumed the role of a ‘game maker’ (Qiu, 2015). This includes the construction of new international and financial institutions, as well as undertaking bold initiatives for economic cooperation in various parts of the world – the crucial one being the ‘Belt and Road Initiative’ (BRI). These China-led cooperation ventures do not openly confront the current global order, but rather aim to fill gaps and address the shortcomings of existing platforms and processes. More importantly, through these ventures China aims to unlock (and co-benefit from) the untapped potential not only within but also beyond the borders of China, primarily in developing countries, by following the pattern of thinking and practice of its own experience after 1978: resolute state-led economic development, pursuing connectivity and linkages in all forms and in all directions – and increasingly introducing principles of sustainability. Emblematic of this emerging Chinese paradigm has been the promotion of physical connectivity via infrastructure projects.2 However, in practice, its cooperation initiatives span across a vast array of policy areas. At the same time, while promoting state-centered, non-interventionist discourse, a newly confident and ambitious China now also openly offers its socialist wisdom to other developing countries in the world (Gitter, 2017). Thus, as an external actor in the Balkans, China has a distinctive vision, operates on a different logic, and uses different instruments compared to other actors – both those from the West and non-Western actors such as Russia, Turkey or the Gulf states. China’s approach towards the region therefore concerns the context rather than the conduct of the countries in the region (see Introduction to this Volume). With the inclusion of the Balkan countries in the BRI vision, and also in the 16 + 1 mechanism for cooperation between China and CESEE, China positions itself as an active stakeholder in the region’s economic development while following the general principles that underpin its foreign policy: despite the asymmetry in size, it engages with the Balkan countries on an equal footing, with full respect for their sovereignty and their chosen path of development, and with a commitment to non-interference in internal affairs.

208  Anastas Vangeli

Sino–Balkan linkages With the end of the Cold War, China saw an opportunity opening for developing closer relations with the post-socialist countries in Europe, but due to the particular historic circumstances it adopted a reserved approach towards the region (Tubilewicz, 1998). Uneasy about the dissolution of the SFR Yugoslavia (which, in the 1980s, China had seen as a role model of socialist market development), and while prioritizing its relations with FR Yugoslavia (later Serbia and Montenegro), China recognized all of the new independent republics. Nevertheless, relations were primarily ceremonial; China also pursued some development aid projects in the region (such as the Kozjak Dam in North Macedonia). In general, in the 1990s and early 2000s the Balkans had no significant place on the Chinese agenda, nor did China have important linkages in the region. Two events dominated China–Balkans relations in the 1990s: the strike on the Chinese embassy in Belgrade during the NATO bombing of FR Yugoslavia in 1999 (with China having heavily opposed the military operation as a breach of international law); and second, the recognition of Taiwan and the severing of relations with Beijing by North Macedonia in 2000 (which led to China voting against the prolongation of the UN peace troops in the country in the UN Security Council). The Belgrade embassy bombing coincided with the newly intensified Sino–U.S. frictions following the Third Taiwan Strait Crisis of the mid-1990s. Out of the bombing, a new Chinese anti-American sentiment was born (Gries, 2005). Related to this was the recognition of Taiwan by North Macedonia as part of a broader charm offensive led by Taipei to win allies in post-socialist Europe (Tubilewicz, 2007, pp. 134–155). Ever since, China has become much more pro-active and ambitious in its foreign affairs, which has also been reflected in its relations with the Balkans. After establishing the Strategic Partnership with the European Union in 2003, coming into the spotlight in the aftermath of the global financial crisis in 2008, and creating new mechanisms and platforms for international cooperation in the last few years, China today has an elaborate approach to the Balkans. In practice, it has developed a ‘multi-channel’ diplomacy with the five countries, each of them carrying its own logic and having different implications. The three channels or mediums for interaction are: i) the bilateral relations between China and the individual Balkan countries; ii) the mechanism for cooperation between China and the countries of Central, East and Southeast Europe (16 + 1); iii) the Belt and Road Initiative (BRI).3 They are analyzed below by the principle of zooming in from the global level, which provides the narrative (BRI), to the bilateral level, where the practice takes place.

Belt and road Bringing together a number of old and new elements (Pantucci, 2016) in China’s foreign policy, formally announced in 2013 and codified in the Constitution of the CPC in 2017, the BRI is framed as a Chinese open-ended ‘proposal’ for a new form

China 209 of global economic cooperation. With the BRI, China exercises “connective leadership” (Andornino, 2017), based on the idea of creating a global, inter-connected (in terms of economic linkages and infrastructure, but also institutions and culture) global economic community comprised of sovereign ­development-oriented states that will put their ideological and other differences aside. In the process, China wants to inspire them and ensure that it can play a part in their development, while also benefiting from the cooperation itself (defined as a ‘win-win’ approach). At the same time, the BRI, while led by China, is explicitly framed as a call for joint action despite the obvious asymmetry between China and any other partner country. The Balkans matter for the BRI for structural and geographical reasons. First, while truly global in scope, the BRI is primarily a medium for establishing linkages between those that overall did not fare well under market neoliberal globalization: China’s Western inland provinces (much poorer than the Eastern coastal ones), and post-socialist, post-conflict and post-colonial countries, as well as advanced economies which suffered from the global financial crisis (e.g., Greece). Hence, it is labeled a proposal for a new, ‘inclusive’ form of globalization (Liu and Dunford, 2016). The Balkan countries, some of Europe’s poorest and least developed, fit well into this narrative. Second, the BRI rests on a particular functionalist regional logic, with six economic corridors that will comprise the Silk Road Economic Belt being envisioned: the New Eurasian Landbridge, the China–Mongolia–Russia Corridor, the China– Central Asia–West Asia Corridor, the China–Indochina Peninsula Corridor, the China–Pakistan Economic Corridor and the Bangladesh–China–India–Myanmar Corridor. They are to be accompanied by a Maritime Silk Road that will connect ports from the Indian Ocean to the Mediterranean – but also to the North Sea and the Arctic. The Balkan Peninsula lies at the intersection of the New Eurasian Landbridge and the Maritime Silk Road, which also envisions restoration of the Wider Mediterranean as a space of economic activity.4 The land-sea intersection is of particular importance as China emphasizes the importance of intermodal connectivity. Hence, the landmark project in the region is the “China–Europe LandSea Express” passage, aiming to improve the Piraeus port to Budapest rail link (Vangeli, 2016). In the process, China does not see the Balkans only as merely a transit zone, but rather as a region where there is a lot of potential to restore old and create new production capacities. Through the BRI, China ultimately reframes the Balkans as part of the Global South, and part of the new trans-continental economic corridors. The implications are not discursive – they concern the policy context in which governments in the region operate.

16 + 1 The BRI vision is translated on the regional level via the ‘16 + 1’ channel for cooperation (Vangeli, 2017b). 16 + 1 is an experimental, institutionalized set of linkages that, in addition to the Balkan countries, involves eleven other post-socialist

210  Anastas Vangeli countries (all of them EU member states), while Greece, Austria and Belarus, but also the EU, the EBRD and other actors, are observers. The 16 + 1 channel was established in 2009 during Xi’s trip to Bulgaria, Romania and Hungary as vice president (People’s Daily, 2009). A  preparatory summit was held in 2011 in Budapest. The first official meeting of the heads of the governments was held in Warsaw in 2012, where the platform was officially established by announcing “China’s Twelve Measures for Promoting Friendly Cooperation with Central and Eastern European Countries” (Ministry of Foreign Affairs of the People’s Republic of China, 2012). Ever since, China convened annual summits of heads of governments (held in Bucharest, Belgrade, Suzhou, Riga and Budapest), regular monthly meetings of the ambassadors of the 16 countries in Beijing with the 16 + 1 Secretariat at the Chinese Ministry of Foreign Affairs, regular quarterly meetings between specially appointed national coordinators for 16 + 1 and the Secretariat, and initiated a number of dialogues across all levels of government and various policy areas. China considers CESEE countries of special significance due to their shared socialist past (Zhang, 2014). The 16 + 1 channel is also framed as an opportunity for China and CESEE to ‘catch up’ after the lost years following 1989. In practice, 16 + 1 has served to streamline China’s contacts with the sixteen countries, facilitate policy coordination, and promote the idea of regional economic development and the creation of a regional economy of scale. It provides a venue for discussing new possibilities for economic cooperation and ‘unlocking’ the potential for growth in CESEE. Formally predating the BRI, 16 + 1 also plays an important role as a ‘laboratory’ for China’s flagship Initiative (Vangeli, 2017a). It is thus a core medium through which the change in context is dialogically co-produced by both China and the participant countries.

Bilateral relations While the BRI provides global vision, and 16 + 1 constitutes a regional framework for applying that vision on the regional level, the most substantial cooperation and the implementation of the global vision occurs at the level of bilateral linkages between the individual Western Balkan countries and China. The vision of the BRI is formalized through individual memorandums of understanding (MoUs) and other documents signed by heads of government (all of the WB5 countries have signed BRI MoUs with China). All forms of cooperation, including business, culture and even people-to-people exchange, are carried out with the mediation of the state institutions. An important part of the cooperation is the positive memory of the shared communist past – both in terms of its cultural significance and its political meaning. On the state-to-state level, there is a visible variation of China’s relationship with the individual Western Balkan countries. Serbia, the largest economy in the region and the main successor of SFR Yugoslavia, which China regarded not only as a close friend but as a model to follow in the 1980s, has the most developed relationship with China. Serbia also draws on the legacy of the 1990s, when, unlike other post-socialist countries that distanced themselves from China on ideological grounds, its predecessor FR Yugoslavia had warm political relations with Beijing.

China 211 Today, Serbia is a “strategic partner” of China, meaning that the interactions take place at the highest level, and that Serbia is a comparatively more favored destination for Chinese projects. Bosnia – in China known as the “Country of Walter”, as the famous Yugoslav movie Walter Defends Sarajevo is considered an “important collective memory” in Chinese state media (Wang, 2014), hosts several projects in energy infrastructure and is second only to Serbia in terms of attracting Chinese investments. Albania and Montenegro, despite the disparity in size, are considered important because of the potential for land-sea connections. Albania’s Maoist past and the period of alliance with China is often mentioned in endearing way. Montenegro, despite being the smallest country in the region, hosts the largest project, the Bar–Boljare highway. North Macedonia is a crucial link in the Europe–China Land-Sea Express, but is also the most problematic one: in recent years relations have been overshadowed by the country’s political crisis, which also involved a corruption scandal and a lack of diligence in the construction of the Kicevo-Ohrid highway, funded by the Chinese ExIm Bank. As the project has become politicized, Sino–Macedonian relations have cooled off. Importantly, China does not officially recognize Kosovo, and therefore has no formal bilateral relations with it, although some commercial linkages do exist. In principle, China was opposed to the secession of Kosovo due to strict adherence to the five principles of peaceful coexistence, as well as its own ‘core interests’ – Tibet, Taiwan and the South China Sea. In practice, it has followed UNSC Resolution 1244 as a legal basis for Serbia and Kosovo to settle their disputes, and calls for restoration of the Belgrade–Prishtina dialogue and the finding of a solution in partnership with the UN (Xinhua, 2017).

Shaping a new context Building a favorable political climate The core of the Western Balkan countries’ relations with China is the constant conceptualization and negotiation of economic deals; however, the creation of a positive environment and circumstances conducive to better economic cooperation are important preconditions for this. China’s pro-active approach towards the Balkans led to increased interaction on all levels. In a landmark moment for Sino– Balkan relations, in 2016 President Xi visited Belgrade and Smederevo, where the Chinese SOE HeSteel had acquired the Smederevo steel mill, a project considered emblematic for China’s production capacity cooperation abroad (Sekularac, 2016). At the landmark Belt and Road Forum for International Cooperation, held in Beijing in May 2017, all of the Western Balkan countries except North Macedonia signed various agreements with the Chinese government (China Daily, 2017). Aleksandar Vucic, then prime minister of Serbia, was among the more than 30 heads of governments, states and international organizations to attend the Forum (the other countries sent lower-level representatives). Meetings between lower-level government officials now take place regularly. There are also occasional exchanges at the level of the military, though this is an area in which China does not have a particular presence in the region.

Albania

BiH

North Macedonia

Montenegro

Source: Author

Friendly relations and Friendly Friendly Friendly cooperation, traditional relations and relations and relations and friendship cooperation cooperation cooperation Institutions hosted under N/A N/A Hosts 16 + 1 N/A in 16 + 1 Secretariat for Cultural cooperation Has signed memorandum Yes Yes Yes Yes for BRI Number of mentions in 4 3 N/A 2 the Deliverables of the BRI forum Visa-free regime N/A Started in 2018 In progress Simplified procedures in place Confucius institutes 1 1 1 1

Status in Chinese diplomacy

 

Nonrecognition

Kosovo

N/A N/A 0

7 Started in 2017 2

Announced that it will host N/A 16 + 1 Transportation Infrastructure Cooperation Union Yes N/A

Comprehensive strategic partnership

Serbia

Table 10.1 Summary of the political and cultural relations and linkages between China and the Western Balkan countries

China 213 One distinct characteristic of 16 + 1 has been the creation of a dispersed network of coordinating institutions in charge of streamlining the cooperation between all the countries involved, two of which are (to be) hosted by the Balkan countries: in 2018, the 16 + 1 Secretariat for Cultural Cooperation was launched in North Macedonia, while Serbia is expected to host the 16 + 1 Transportation Infrastructure Cooperation Union in the near future. The WB has also gained international significance during high-level diplomatic events: Belgrade hosted the summit of heads of governments in 2014, Novi Sad hosted the 16 + 1 Higher Education Policy Dialogue in 2017, and Skopje is hosting the 16 + 1 High-Level Think Tank Symposium in 2018. The most visible achievement is the cooperation in various fields related to “people-to-people” linkages (Vangeli, 2018): cultural and educational cooperation as well as think-tank cooperation. Of special importance is the establishment of a visa-free travel regime between Serbia and China in 2017, and between Bosnia and Herzegovina and China in 2018, with North Macedonia announcing such a measure in 2018 and Montenegrin officials contemplating the same while having already simplified the visa requirements for Chinese citizens. The visa-free regime has instantly made the Balkan countries a much more appealing destination for Chinese tourists. After the abolition of visas, in 2017 Serbia saw a 173 percent increase in the number of Chinese tourists compared to 2016; while after the simplification of the visa procedure, Montenegro saw an increase of 90 percent (Beta/AFP, 2018). All of the Balkan countries now host Confucius Institutes, which teach Chinese language and culture (although there are comparatively significantly fewer Chinese speakers in the Balkans than in the EU); while under the 16 + 1 educational program, the languages of the Balkan countries are now taught in China as well. Western Balkan institutions and scholars are getting involved in various international networks established by Chinese institutions, take part in Chinese-initiated and partially financed research projects in the region, and frequently participate in conferences and gatherings in China; a growing number of events on China have also been hosted in the region. On the political level, the increasing pace and scope of interaction with China remains a challenge for the Western Balkan countries, as they have limited resources to develop their foreign policies and insufficient knowledge and expertise of China and global politics. Cooperation with China for the Balkan countries today means not only engaging with the Ministry of Foreign Affairs in Beijing, but rather engaging with a number of Chinese actors – that is, different ministries, agencies, party organs, SOEs, local governments from all over China and universities – on various levels of communication and across a myriad of policy sectors. At the same time, however, given the regional design of Chinese initiatives, it also means interaction not only with China but with another 15 countries in the case of 16 + 1, and with dozens of others in the context of the BRI. Moreover, China is a faster learner that the Western Balkan countries. Through continuous investment in people-to-people exchange, and in particular thinktank linkages, China managed to quickly fill in its gaps in the study of CESEE.

214  Anastas Vangeli At 16 + 1 events Chinese representatives are the only ones in the room with holistic knowledge of all of the 16 countries. At the same time, there have been marginal improvements in the state of Balkan Sinology, or in the intra-WB and intra-CESEE cooperation on China. As a result, while interaction with China certainly has an impact on the thinking and behavior of the actors involved in the cooperation, the most tangible outcomes are so far only visible on the level of attitudes, while the policy record is mixed.

Economic cooperation The economic cooperation China promotes in the CESEE and the Western Balkans is similar to various forms of China’s South-South cooperation (Kowalski, 2017), underpinned by a context of sympathy and solidarity (for instance, when dealing with the U.S. or Western Europe, there is more of a spirit of sparring with an equal). This means that China is willing to adjust to the priorities and economic strategies of the Western Balkan national governments. The question then is the extent to which the Western Balkan countries themselves are prepared for this type of economic cooperation. In practice, among developing countries, depending on how governments approach China, there is a good chance for ‘win-win’ outcomes (Weisbrod and Whalley, 2011; Dreher et al., 2017). However, besides expertise on dealing with China, this also requires a bold development vision and overcoming the transitional orthodoxy of the separation of politics and economy. So far, China has managed to only partially unlock the potential for more robust economic relations with the Western Balkans. For instance, after a dip in 2008– 2009, bilateral trade between the two sides was restored to the pre-crisis level by 2016, but did not manage to significantly grow further, making the Balkan countries an exception to the overall Sino–European trade, which has kept on growing in the post-crisis years. At the same time, there is a staggering trade imbalance in China’s favor, which is a combined outcome of economic structure, regulation, policy and strategy, and is something that is not only a characteristic of their relations with China, but rather the overall economic profile of the Western Balkan countries. Moreover, the Balkan countries’ major exports to China are raw materials, and only a negligible amount comes from products with added value (see Table 10.2). This speaks of the Balkan countries’ low position in global value chains and of their inabilities to capitalize on the opportunities they have in terms of accessing the burgeoning Chinese market or to develop production capacity cooperation with Chinese partners. The top spot on the Western Balkan countries’ economic wish lists are foreign direct investments (especially greenfield or brownfield investments). So far, despite the increase in Chinese investments in the region, the numbers are miniscule in comparison with China’s global investments. In the period 2009–2015, the stock of Chinese investment increased almost fourfold, mainly due to Chinese investments in Serbia (see Table 10.3); importantly, however, the investments that are planned through 16 + 1 are still to materialize, so this number is set to increase

China 215 Table 10.2  Western Balkan–China trade composition Country

Main Chinese exports (2014)

Main Balkan exports (2014)

Albania

Machines & Electronics (27%), Textiles (17%), Metals & Metal Products (13%) Machines & Electronics (46%), Metals & Metal Products (13%)

Chromium Ore (79%), Copper Ore (11%)

Bosnia and Herzegovina North Macedonia Montenegro Serbia

Machines & Electronics (49%), Textiles (15%) Machines & Electronics (42%), Textiles (14%) Machines & Electronics (45%)

Textiles (31%), Wood Products (29%), Footwear & Headwear (13%) Ferroalloys (83%) Precious Metal Ore (63%), Zinc Ore (17%), Lead Ore (15%) Iron Ore (39%), Lead Ore (10%)

Source: MIT observatory on economic complexity/Vangeli, 2017b

Table 10.3  Chinese investment (stock) in the Western Balkans OFDI Destination

2009

2015

Increase 2009–15 (%)

Albania Bosnia and Herzegovina North Macedonia Montenegro Serbia Total

4.4 5.9 0.2 0.3 2.7 13.5

7.0 7.8 2.1 0.3 49.8 67

60 31 955 0 1,758 396

Source: Pavlićević (2018a). Units: US$ million

in the future. Of all potential Chinese investments, those that fall under the framework of production capacity cooperation are most promising for Western Balkan economic development. Unlike the traditional economic partners, Chinese actors are less risk averse; they also have interest and experience in acquiring and repurposing ‘rusty’ and failing production capacities. So far, a prime example has been the Smederevo steel mill, which after the acquisition by HeSteel has greatly increased its output. In September 2018, Serbia and China announced a number of new projects, including both Chinese investments in existing capacities and the construction of new ones. While production capacity cooperation may play an increasing role in the future, so far the most recognizable feature of China’s economic presence in the Western Balkans are the ‘tied’ loans allocated by Chinese financial institutions for the construction of large infrastructure projects. In this sense, these projects are investments made by the host governments, in partnership with China. Through 16 + 1, Chinese state and developmental banks offer special credit lines for financing and co-financing infrastructure projects, which are particularly useful for the Balkan states as they are not members of the EU and therefore have more legal options to pursue them. Unlike the EU members, the Balkan countries

216  Anastas Vangeli have worse conditions in terms of access to international financial markets, making Chinese funding an attractive option. The Chinese option is especially useful for projects that are of national importance, but are avoided by Western donors. Some of these financial resources are used to finance the construction of infrastructure projects by Chinese SOEs in all of the Western Balkan countries, which amount to a significant share of the total economic activity in those countries. The major projects are listed in Table 10.4. The Chinese loans for infrastructure projects have low interest rates and foresee repayment over a period of decades. However, they raise several concerns, as infrastructure projects take a long time to construct, and an even longer time to fully pay off (Jakobowski and Kaczmarski, 2017). The loans taken for infrastructure projects in the cases of small economies may push the overall debt level significantly higher. These projects are usually driven through special legislation, and as such they are not subject to transparent bidding. Depending on local practices, problems such as a lack of due diligence by local partners and corruption may emerge, both of which were for instance seen in the infamous case of the Kichevo–Ohrid highway in North Macedonia.5 Finally, without proper vision and understanding of how the new infrastructure will generate added value, the payoff may have delays too. Hence, in developing their economic cooperation with China, the Western Balkan countries need an elaborate strategy that would consider all these aspects in order to maximize their benefit and avoid negative consequences. China’s own developmental experience rests on the premise that “if you want to get rich, build the roads first” (Chen, 2016). Investing substantial resources and sometimes getting into debt is required to ensure that the country has developed infrastructure; this is what the Chinese call “borrowing from the future”. This foresees a bold and somewhat hazardous attitude towards capital projects – unless one takes the risk to build major projects, they cannot succeed. Such attitude by state actors is unacceptable in the market neoliberal way of thinking, which seeks to constrain governments, whereby projects need to follow a strictly commercial logic – if one cannot afford or financially justify a road, they should not build it. However, China now offers opportunities that help transcend this logic, extending the universe of what is possible and doable. A case in point is the Bar–Boljare highway in Montenegro – a project that is considered of great importance for the Montenegrin government, but avoided by Western financial institutions due to the perceived financial and other risks – which was financed by China’s ExIm Bank. The deal significantly increased the Montenegro’s sovereign debt (Grgić, 2017). It was realized not through public tenders, but by special legislation driven precisely by political will and the prioritization of certain projects of national interest – for instance, the construction of the Bar–Boljare highway is seen as a prerequisite for unlocking Montenegro’s potential for economic growth. While this would be impossible to accomplish in an EU member state, it works for now in the Western Balkans as the EU has no legal mechanisms to sanction them (it does, however, have political instruments). For now, this has raised a lot of concerns in the West. However, this is a long-term development – whether the benefits of such an

Note: non-exhaustive list.

Source: EBRD, Pavlićević, 2018a and author’s research.

Serbia North Macedonia

Sections of the European highway XI (to Montenegro) Kichevo–Ohrid and Miladinovci–Shtip highways

Blue Corridor Albanian Section Banja Luka–Split motorway (section in Republika Srpska) 450-MW unit at Tuzla thermal power plant 350-MW Banovici thermal power plant 300-MW Stanari thermal power plant Section of the European motorway XI Renewal of ship fleet Danube bridge Kostolac Phase I 350MW unit at the Kostolac thermal power plant Belgrade–Budapest high-speed railway link

Albania B&H

B&H B&H B&H Montenegro Montenegro Serbia Serbia Serbia Serbia

Project

Country

€786mn €400mn €350mn €809mn €100mn €170mn €130.5mn €700mn €800mn in Serbia (out of the total €1.5bn) €900mn €580mn

Unknown €600mn

Value

Credit Credit

Unknown Credit, 30-year concession Credit Credit (85%) Credit Credit Credit Credit Credit Credit Credit

Financial terms

Table 10.4 Large-scale infrastructure projects in the Western Balkans in cooperation with China

Under construction Under construction

Works to begin in 2018 Works to begin in 2018 Completed Advanced stages Completed Completed Under construction Under construction Works to begin in 2018

Feasibility study Planning

Status

7

8

27

n/a 16

% GDP

218  Anastas Vangeli approach will outweigh the costs remains to be seen. In the case of Montenegro, one condition for success is the completion of the highway; the other is making use of it – for which a national strategy is needed.

Normative aspects As an international actor, China upholds the ideal of national sovereignty and its relationship with the partner countries is based on the principle of non-­ interference in each other’s affairs. This foresees the right of states to choose their own national path of development (Li et al., 2010, pp. 303–304), based on their structural and cultural circumstances, which in turn implies that no universal solutions exist, and policies cannot be copied and pasted from one country into another. China pledges to respect the policy choices of others and not to impose any normative conditionality onto them, but it reserves the right to offer the example of its economic success and the wisdom stemming from “socialism with Chinese characteristics”. Given its political and economic power, and the narrative of its economic ‘miracle’ (and the Western fascination with it), China is poised to impact the thinking of others about economic development and cooperation and inspire a divergence from the neoliberal path prescribed by the Western institutions such as the IMF or the EU, through the process of policy coordination and alignment of development agendas, two principles of China’s cooperation under the BRI and the 16 + 1 format. Exercising symbolic power, China inspires alternative narratives about the identity and position of CESEE and the Western Balkans in the world economic system, and of their historical trajectories (Vangeli, 2018). The seemingly innocuous discourse provides the grounds for a more substantial process of dissemination of particular policy principles. On the policy level, the Sino–Balkan linkages (in)directly transmit China’s own thinking and practice (i.e., state-led economic development), especially in the context of the BRI and 16 + 1. Often, the process of policy coordination seems less normative, and more oriented towards pragmatic objectives.6 However, beyond the pragmatism there is a particular normative constellation: boosting economic development is the shared priority of all parties involved and all their actions need to lead towards this goal; in developing the economy, the visible hand of the state needs to supplement or even supplant the invisible hand of the market; countries have the right to experiment and pursue idiosyncratic developmental paths without following any blueprint; if there is political will, then there will be a way to implement a particular project; and so on. This is reflected not only in rhetoric, but also in practice: governments negotiate business and projects are implemented via special legislation. While supplying an alternative approach to development cooperation, the ideational impact of China is also enabled by the demand for new ideas and more efficient practices in the aftermath of the global financial crisis. In some cases, this process has a normative logic, whereby actors genuinely believe in the legitimacy of the Chinese way; in others, it is a utilitarian one – actors believe in its efficiency

China 219 or simply see it as an economic opportunity for themselves. At times, actors may also embrace new concepts and ideas simply because of the lack of information, their inherent biases and imperfections in their work – that is, bounded rationality. Anecdotal evidence suggests that the more experience one has with China, the more open one will be towards taking lessons from it – but at the same time, more selective in what they learn from China. Many of the processes of ideational flows and change occur simply via routinized interaction within China-led platforms. Last but not least, political opportunism can also play a role. Prominent Balkan politicians, including presidents Aleksandar Vucić of Serbia and Gjorge Ivanov of North Macedonia, have at times voiced accolades for China’s achievements and its practices, but this may have served the purpose of building a better rapport with the Chinese counterparts rather than being evidence of Western Balkan countries embracing the Chinese way. At the same time, China has quietly encouraged changes in thinking and practice. While not enforcing any rules or standards on countries participating in 16 + 1 or the BRI, Chinese think-tankers have pinpoint the policy bottlenecks of cooperation (Chen and Yang, 2016). China considers economic cooperation a two-way street, and considers the inefficiency, lack of institutional memory and lack of economic strategy of the Western Balkans (and other) countries to be an obstacle to its own goals. Critical Chinese voices sometimes suggest that China should use its leverage and successful experience in animating (but not imposing) reforms conducive to the overall improvement of the domestic structure and performance in host countries, and by extension, increase the chances for the Chinese vision to succeed. This, however, paradoxically points to the limitations of China’s impact – the lack of responsibility, competence, diligence and capacity to absorb any influence on governance that plague the Western Balkan governments, that complicate their EU reform agendas, and their domestic governance agenda as well. In that sense, while China certainly inspires a cognitive shift, regardless of the potential implications should this shift advance, these are processes that, for now, resonate within a limited circle of individuals within the public administration and the scholarly community.

Concluding remarks: China and the European future of the Balkans As a foreign policy actor in the region, China has established linkages that seek to redefine “the parameters of what is socially, politically and economically possible” for the Balkan countries (Hay, as cited in the Introduction of this volume). With the BRI, China has introduced to the Balkan countries a new geo-economic imagination of a trans-continental scale, and through 16 + 1 it has enacted this vision at the regional level. The new context than also affected the policy behavior, as seen on the bilateral level. China’s growing involvement in the Western Balkans, while initially overlooked, has over time become a subject of scrutiny by external actors, in particular the EU and its member states. The EU has been particularly skeptical of China’s

220  Anastas Vangeli agenda in the region. However, there are different lines of argumentation as to why China–Western Balkan relations are seen as a questionable development, which reveal not only the various layers of China’s policy towards the region, but also a number of intra-European quagmires when it comes to the future of the Western Balkan countries (and Europe itself ). The primary line of concern stems from the fear of China compromising the economic interests of Western European stakeholders in the Western Balkans. The intensification of Sino–Balkan cooperation happens at a time when a number of actors in the EU feel threatened by China’s global economic ambitions at a time when Europe is still coping with the effects from the multiple crises. Germany and other countries in the EU have responded to the new record wave of Chinese investments in Europe by depicting it as a security threat. They consider the Western Balkans to be an extended economic space, often called their ‘backyard’, effectively making China an economic ‘trespasser’. China is seen as potentially taking business opportunities away from Europeans or working to intercept European (especially German) companies’ supply chains that pass through CESEE (Pepe, 2017), including the Western Balkans. The Chinese vision of establishing new corridors in the Western Balkans, in particular the Piraeus–Budapest highspeed rail, is seen as potentially challenging, rather than complementing, the already established transportation routes via Western European hubs such as Rotterdam (van der Putten, 2014). This feeds into underlying trends not only in European–Chinese (and in particular German–Chinese) economic rivalry, but also the trends of intra-European economic competition more generally. Politically, the fact that China somewhat circumvented not only Brussels, but also Berlin and Paris, while establishing a regional platform for cooperation with CESEE, raised further suspicions and exacerbated the EU’s insecurities when it comes to achieving a common stance on China. Historically, EU member states have tended to adopt a pragmatic stance on China, driven by national interest, overlooking Brussels and diverging from the official EU line (Godement et al., 2011), which is still seen as a challenge today. Should the Western Balkan countries develop an idiosyncratic stance on China independently of the EU, they will contribute to the ongoing pluralization, or rather bifurcation, of European perspectives on China. However, Balkan leaders have recently reaffirmed that, in pursuing relations with China, they take the EU position into account. For the EU, this potentially extends the challenge of China to the domain of enlargement as well. The EU now openly raises concerns that China may threaten the reform agenda in the region and turn the WB5 countries into ‘Trojan horses’ (Heath and Gray, 2018). The concerns are normative in nature. While the EU greatly values a market-based, technocratic approach to economic development, and public expenditures based on transparency and accountability, China promotes economic growth first, achieved through political will and the strong arm of the state. At times of growing illiberal tendencies within the whole of Europe, and in the Western Balkans, a potent, pro-active socialist country that has never accepted the Western ways, that promotes a vision based on the successes of its own model, is additionally seen as a threat, especially in a region that is framed

China 221 as a crossroads between external actors. This line of thinking can also be exacerbated by voices who (erroneously) try to put China and Russia in the same box of ‘autocracy promotion’. With all the EU’s mounting skepticism regarding Balkans–China relations, the question is whether a constructive, cooperative and complementary approach between China and the EU can unfold in the Western Balkans. Given the fact that the EU and China are locked into long-term economic interdependence, they also need to adopt a cooperative framework on the Western Balkans, despite their differences. Europe would not be what it is today without having taken part in the Chinese economic ‘miracle’ (and conversely, China would not have been where it is without Europe). China also played an important role in managing the Eurozone crisis and was the first non-EU country to announce a contribution to the Juncker Plan. Economic complementarities between China and the Western Balkans are not an anomaly, but rather a logical step forward in overall China– Europe relations. The most significant predicament for the Western Balkan region is that its countries are in a dire economic condition and need to pool together both what the EU and China offer in order to even have a possibility of achieving the necessary growth target and catching up with the rest of the continent. As Flessenkemper and Reljic (2017) remind us, the EU agenda in the Western Balkans itself has been complicit in economic failures in the region. In this sense, China has arrived in the region at the right time, with a clear results-oriented agenda, offering what the Western Balkan countries need – capital, infrastructure and global economic vision. It has recognized the Western Balkan countries as equals and put them on the same table as EU member countries. Thus, a zerosum competitive constellation in the region between the EU and China is not in the best interests of the Western Balkan countries. The prospects of EU–China cooperation in the Western Balkans, on the other hand, offer not only to benefit the region economically, but also to assign it a new meaning in global politics as a region where big powers come to cooperate – the prerequisite for this, of course, being a bold and imaginative action by the Western Balkan governments themselves in the first place.

Notes 1 These countries are: Albania, Bosnia and Herzegovina, Bulgaria, Croatia, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, North Macedonia, Montenegro, Poland, Romania, Serbia, Slovakia and Slovenia. As of 2019, Greece is set to join the format, which will make it 17+1. 2 China has championed the construction of roads and high-speed railways, thus restoring the well-known development adages, but also ascribing infrastructure projects and connectivity with a particular symbolic capital. Today, China boasts the largest high-speed rail network in the world, larger than the high-speed rail networks of the rest of the world combined. 3 According to the Chinese perspective, whenever the WB countries join the EU, there will be an additional fourth formal channel of communication, at the level of China-EU relations. The EU, in fact, already prominently features in the Sino-Balkan policy communication, as Chinese policymakers are well aware of the importance of the EU in and for the region. This is also an attempt to assuage the concerns of the EU regarding China.

222  Anastas Vangeli 4 One of the many BRI projects in the region is the enlargement of the Suez Canal, a majority-Chinese funded project; China has also acquired the port of Djibouti at the southern end of the Red Sea. 5 The Kichevo–Ohrid highway in North Macedonia was the source of two scandals. First, a leaked wiretap of a conversation between the former Prime Minister Nikola Gruevski and the former Minister of Transport Mile Janakievski suggested abuse of power and bribery in the contract between the government of North Macedonia and the Chinese SOE Sinohydro. Later on, the construction of the highway was delayed due to technical issues, as the Macedonian partner in the project supplied Sinohydro with an outdated study of the terrain, which also led to an increase in the cost of the project (for more details, see Gjorgioska and Vangeli, 2017). 6 For instance, the streamlining of customs policy is considered to be crucial for transnational connectivity (even more important than upgrading of railway tracks). One of the examples of policy coordination in the WB is the creation of a customs policy dialogue between China, Serbia, North Macedonia, Hungary and Greece, that serves to reduce the waiting time.

References Andornino, Giovanni B., 2017. The Belt and Road Initiative in China’s Emerging Grand Strategy of Connective Leadership. China & World Economy, 25 (5), 4–22. https://doi. org/10.1111/cwe.12211. Beta/AFP, 2018. AFP o kineskim turistima: Za 173 odsto ih više u Srbiji. N1 Srbija, 21 January. http://rs.n1info.com/a358445/Lifestyle/Lifestyle/AFP-o-kineskim-turistimaZa-173-odsto-ih-vise-u-Srbiji.html. Chen, Xin, 2016. Connectivity in China and Europe: What Lessons Can Be Learned. In: Andzans, Maris (ed.), Afterthoughts: Riga 2016 International Forum of China and Central and Eastern European Countries. Riga: Latvian Institute of International Affairs, pp. 40–42. Chen, Xin, and Yang, Chengyu, 2016. Quantitative Analysis of China-CEEC Economic and Trade Cooperation. Working Paper on European Studies 10/5. Beijing: Chinese Academy of Social Sciences. China Daily, 2017. List of Deliverables of the Belt and Road Forum for International Cooperation – China. China Daily, May 16. www.chinadaily.com.cn/china/2017-05/16/ content_29359377.htm. Desjardins, Jeff, 2017. These Are the Countries Contributing Most to Global Growth. World Economic Forum, 30 October. www.weforum.org/agenda/2017/10/these-countriesare-leading-the-way-on-growth/. Dreher, Axel, Fuchs, Andreas, Parks, Bradley, Strange, Austin, and Tierney, Michael, 2017. Aid, China, and Growth: Evidence from a New Global Development Finance Dataset. SSRN Scholarly Paper ID 3051044. Rochester, NY: Social Science Research Network. https://papers.ssrn.com/abstract=3051044. Flessenkemper, Tobias, and Reljic, Dusan, 2017. EU Enlargement: A Six Percent Target for the Western Balkans. SWP – German Institute for International and Security Affairs, 27 June. www.swp-berlin.org/en/point-of-view/eu-enlargement-a-six-percent-target-forthe-western-balkans/. Gitter, David, 2017. China Sells Socialism to the Developing World. The Diplomat, 28 October. https://thediplomat.com/2017/10/china-sells-socialism-to-the-developing-world/. Gjorgioska, Adela, and Vangeli, Anastas, 2017. A Battle of Perceptions: The Social Representations of the BRI and the ‘16 + 1’ in Macedonia. Working Paper, January.

China 223 Budapest: China-CEE Institute. https://china-cee.eu/wp-content/uploads/2018/02/Work_ paper201701.pdf. Godement, François, Parello-Plesner, Jonas, and Richard, Alice, 2011. The Scramble for Europe. Policy Brief. London: European Council on Foreign Relations. www.ecfr.eu/ page/-/ECFR37_Scramble_For_Europe_AW_v4.pdf. Grgić, Mladen, 2017. Chinese Infrastructural Investments in the Balkans: Political Implications of the Highway Project in Montenegro. Territory, Politics, Governance, (August), 1–19. https://doi.org/10.1080/21622671.2017.1359106. Gries, Peter Hays, 2005. China’s New Nationalism: Pride, Politics, and Diplomacy. First paperback print. A Philip E. Lilienthal Book. Berkeley, CA: University of California Press. Heath, Ryan, and Gray, Peter, 2018. Beware Chinese Trojan Horses in the Balkans, EU Warns. Politico EU, 27 July. www.politico.eu/article/johannes-hahn-beware-chinesetrojan-horses-in-the-balkans-eu-warns-enlargement-politico-podcast/. Jakobowski, Jakub, and Kaczmarski, Marcin, 2017. Beijing’s Mistaken Offer: The ‘16 + 1’and China’s Policy Towards the European Union. OSW Commentary 250. Warsaw: Osrodek Studiow Wschodnich. www.osw.waw.pl/en/publikacje/osw-commentary/2017-09-15/ beijings-mistaken-offer-161-and-chinas-policy-towards-european. Kowalski, Bartosz, 2017. China’s Foreign Policy Towards Central and Eastern Europe: The ‘16 + 1’ Format in the South – South Cooperation Perspective. Cases of the Czech Republic and Hungary. Cambridge Journal of Eurasian Studies, 1 (April). https://doi. org/10.22261/7R65ZH. Li, Xin, Kjeld Erik Brødsgaard, and Michael Jacobsen, 2010. Redefining Beijing Consensus: Ten Economic Principles. China Economic Journal, 2 (3), 297–311. https://doi. org/10.1080/17538960903529535. Liu, Weidong, and Dunford, Michael, 2016. Inclusive Globalization: Unpacking China’s Belt and Road Initiative. Area Development and Policy, 1 (3), 323–340. https://doi.org/ 10.1080/23792949.2016.1232598. Ministry of Foreign Affairs of the People’s Republic of China, 2012. China’s Twelve Measures for Promoting Friendly Cooperation with Central and Eastern European Countries. Ministry of Foreign Affairs of the People’s Republic of China. www.fmprc.gov.cn/eng/ topics/wjbispg/t928567.shtml. Pantucci, Raffaello, 2016. How New Is the ‘Belt and Road’? China Policy Institute: Analysis (blog), 7 October. https://cpianalysis.org/2016/10/07/how-new-is-the-belt-and-road/. Pavlićević, Dragan, 2018a. A Power Shift Underway in Europe? China’s Relationship with Central and Eastern Europe under the Belt and Road Initiative. In: Li, Xing (ed.), Mapping China’s ‘One Belt One Road’ Initiative. Cham: Palgrave Macmillan, pp. 249–278. Pavlićević, Dragan, 2018b. ‘China Threat’ and ‘China Opportunity’: Politics of Dreams and Fears in China-CEE Relations. Journal of Contemporary China, 27 (113), 688–702. https://doi.org/10.1080/10670564.2018.1458057. People’s Daily, 2009. Chinese VP Xi Jinping Visits Five European Nations. People’s Daily Online, October. http://english.people.com.cn/90002/98587/. Pepe, Jacopo Maria, 2017. Continental Drift. Germany and China’s Inroads in the ‘German Central Eastern European Manufacturing Core’: Geopolitical Chances and Risks for Europe. ISA International Conference, Hong Kong. http://web.isanet.org/Web/Confer ences/HKU2017-s/Archive/397b4475-f2b4-4731-bcec-c5aa13241a44.pdf. Putten, Frans Paul van der, 2014. Chinese Investment in the Port of Piraeus: The Relevance for the EU and the Netherlands. Clingendael Report. Global Issues and Asia. The Hague: Clingendael. The Netherlands Institute for International Affairs. www.clingen dael.nl/publication/clingendael-report-chinese-investment-port-piraeus.

224  Anastas Vangeli Qiu, Zhibo, 2015. From ‘Game Player’ to ‘Game Maker’: New Features of China’s Foreign Policy. China Brief, 15 (14). www.jamestown.org/programs/chinabrief/single/?tx_ttnews %5Btt_news%5D=44174&cHash=5953f99bd5b663abf2bf57f8e823b7e3. Sanfey, Peter, and Milatovic, Jakov, 2018. The Western Balkans in Transition: Diagnosing the Constraints on the Path to a Sustainable Market Economy. EBRD Report. Sekularac, Ivan, 2016. China’s Xi Sees Serbia as Milestone on New ‘Silk Road’. Reuters, 19 June. www.reuters.com/article/us-serbia-china/chinas-xi-sees-serbia-as-milestone-onnew-silk-road-idUSKCN0Z50DV. So, Alvin Y., and Yin-wah Chu, 2015. The Global Rise of China. Cambridge and Malden, MA: Polity Press. Tubilewicz, Czeslaw, 1998. Comrades No More: Sino-Central European Relations After the Cold War. Problems of Post-Communism, 46 (2), 3–14. Tubilewicz, Czeslaw, 2007. Shopping for Allies: Taiwan and Post-Communist Europe. London and New York: Routledge. Vangeli, Anastas, 2016. The China-Europe Land-Sea Express Line: Significance, Opportunities and Challenges Ahead. In: Ping Huang, and Zuokui Liu (eds.), China-CEEC Cooperation and the ‘Belt and Road Initiative’. China-CEEC Think Tanks Book Series. Beijing: China Social Sciences Press. Vangeli, Anastas, 2017a. 16 + 1 as a Laboratory: Lessons China’s New Relations with CESEE Can Teach Us About the Future of the Belt and Road Initiative. In: Ping Huang, and Zuokui Liu (eds.), How the 16 + 1 Cooperation Promotes the Belt and Road Initiative. Beijing: China Social Sciences Publishing House, pp. 1–15. Vangeli, Anastas, 2017b. China’s Engagement with the Sixteen Countries of Central, East and Southeast Europe Under the Belt and Road Initiative. China  & World Economy, 25 (5), 101–124. https://doi.org/10.1111/cwe.12216. Vangeli, Anastas, 2018. Global China and Symbolic Power: The Case of 16 + 1 Cooperation. Journal of Contemporary China, 27 (113), 674–687. https://doi.org/10.1080/106 70564.2018.1458056. Wagner, Rene, and Nienaber, Michael, 2017. China Steams Past U.S., France to Be Germany’s Biggest Trading Partner. Reuters, 24 February. www.reuters.com/article/ us-germany-economy-trade/china-overtakes-u-s-france-as-germanys-most-importanttrading-partner-idUSKBN1622SO. Wang, Kaihao, 2014. Generation of Chinese Film Goers Took Yugoslav Drama Into Its Heart. China Daily, 18 December. www.chinadaily.com.cn/world/2014livisitkst/2014-12/18/ content_19112061.htm. Weisbrod, Aaron, and Whalley, John, 2011. The Contribution of Chinese FDI to Africa’s Pre Crisis Growth Surge. Cambridge, MA: National Bureau of Economic Research. https://doi.org/10.3386/w17544. Williams, Michael, 2013. Culture: Towards an Understanding of Charisma in International Relations. In: Adler-Nissen, Rebecca (ed.), Bourdieu in International Relations: Rethinking Key Concepts in IR. New York: Routledge. Xinhua, 2017. China Calls for Dialogue on Kosovo Issue. China Daily, 17 August. www. chinadaily.com.cn/world/2017-08/17/content_30724535.htm. Yan, Xuetong, 2014. From Keeping a Low Profile to Striving for Achievement. The Chinese Journal of International Politics, 7 (2), 153–184. https://doi.org/10.1093/cjip/pou027. Zhang, Dan, 2014. Leaders of China, Six Other Countries Exchange Congratulations on 65th Anniversary of Ties. Xinhua News Report. CNTV English. http://english.cntv. cn/2014/10/07/ARTI1412664614193154.shtml.

11 Turkey Forced marriage or marriage of convenience with the Western Balkans? Ahmet Erdi Öztürk and Samim Akgönül This chapter aims to explore the relations between the Western Balkan countries and Turkey under the rule of the Justice and Development Party (Adalet ve Kalkınma Partisi, hereinafter AKP). It also attempts to ascertain the Ankara authorities’ perspective on the Western Balkans since 2002, when the AKP came to power just after its foundation. Various transnational institutions originating from Turkey, such as the Presidency of Religious Affairs (Diyanet), the Turkish Cooperation and Coordination Agency (Türk İşbirliği ve Koordinasyon Ajansı, TİKA) and the Yunus Emre Institute, are scrutinized, as they have been the most active apparatuses of the AKP’s Turkey in the Western Balkans, specifically since the middle of the first decade of the 2000s. Last but not least, it explains the influence and reflections of the struggle between the Gülen Movement1 and the AKP in the Western Balkan countries, because, apart from state sponsored Turkish initiatives, the Gülen Movement was the major Turkish civic initiative in the Western Balkans, at least until 2017. Turkey’s Ottoman heritage forges a strong bond between Turkey and the Balkans which involves culture, language, ethnicity, religion (read: Sunni Islam) and, inevitably, politics, all of which stem from a partially common history. Even though this common heritage has always been taken into account by Turkish authorities in the policy-making processes for the Balkans, the significant interest of Turkish public opinion in the region started with the fall of the Soviet Union and the ascent of Turgut Özal in Turkish politics, first as Prime Minister, and then as President in the early 1990s. In this respect, this period can be identified as the beginning of ‘neo-Ottomanism’, with discourses and policies that primarily targeted the Muslim communities of the Balkans. After the initial rise of ‘interest and awareness’ of Turkish society in the region, the leap forward in the Balkan policies started under the AKP governments. When the party first came to power in 2002, intellectual and popular interest in the role of Turkey in the Balkan Peninsula began to increase. A leading intellectual figure  in the party and the architect of its foreign policy, Ahmet Davutoğlu, who also took the helm of Turkey’s foreign policy in 2009, was a strong proponent of Turkey’s active role in the region. He categorically refuses to define Turkey as a mid-power state for the Western Balkans, and insists on seeing Turkey as a major

226  Ahmet Erdi Öztürk and Samim Akgönül actor for the region. Under these circumstances, the intensification of Turkey’s activities in the region are reflected in academic studies and the issue has been debated around concepts like ‘neo-Ottomanism’, and Davutoğlu’s doctrine of ‘Strategic Depth’ (Stratejik Derinlik), and Turkey’s ‘new’ influence in the Western Balkans under the AKP rule. In this regard, while Tanasković (2012) interpreted AKP’s Balkan policy as a hegemonic and neo-imperialist project, Ekinci (2014) argued that the same policies built a ‘golden age’ in Turkey’s relations with the Balkans, especially the Western part of the peninsula. The two interpretations, ‘neo-imperialism’ and ‘golden age’, are based on different normative grounds and represent different readings of these relations. While Tanasković’s focus on neo-imperialism emphasizes the patronizing attitudes of Turkish policy-makers, Ekinci’s golden age account underlines the ever-increasing economic and diplomatic relations. Yet, both of them mention a new and more visible position for Turkey in the Western Balkans. Scholarly discussion on the role of Turkey in the Balkans is not limited to these arguments. For instance, Öktem (2010, p. 46) claims that Turkish presence under the AKP rule started to increase the visibility of Islam in the Balkans mostly through the rising activities of Turkish institutions, Diyanet and TİKA. In some parts of the Western Balkans, the influence of Turkish Islam increased remarkably via restorations of old Ottoman mosques, sending imams from Diyanet to these mosques, and religion-based collaborations between the Turkish Diyanet and some Muslim umbrella organizations. Yet, this visibility of Turkishness is not limited to religion: Turkish television shows and soap operas have been hugely popular in the region. It is important to note that not all these series are supported by the AKP and/or promote the ideas of the party, but they still have remarkable influence, which indicates that the role of Turkey is not limited to the initiatives of the AKP and its transnational apparatuses. As Bieber and Tzifakis underline in the introduction chapter of this volume, Turkish cultural activities, educational and information linkages with mostly Sunni Islamic groups in the Western Balkans are the other visible activities of the AKP regime. Under these circumstances, the notion of ‘Turkey is back’ has become popular among scholars with the advent of the new millennium. Yet Bechev (2012) runs counter to this very notion, pointing out that Turkey has always played important roles in the region throughout history. However, Ankara has only recently become a competitor in some European capitals due to its multi-layered foreign policy in the Western Balkans under the AKP rule. The readings on Turkey’s proactive policies in the Balkans through a positive lens started to fade away around the year 2013. This was mainly because of Turkey’s domestic political problems, transformations in the state identity and their reflections on foreign policy preferences. Vračić (2016) argues that domestic struggles and the uncertain future of Turkey’s foreign policy choices have been negatively affecting the perception of Turkey in the Western Balkans. Demirtaş (2015, p. 137) underlines four visible limitations of Turkish policies: an excessive focus on religion, ignorance of the perceptions of local actors, exaggeration of its own power, and de-Europeanizing tendencies in its domestic politics.

Turkey 227 In the presence of conflicting ideas on the role of Turkey in the Western Balkans, this chapter aims to put Turkey’s overall foreign policy preferences and their motives into a frame in order to analyze the significance of the Western Balkans in the eyes of the policy-makers in Ankara by considering the historical transformations of relations. In this regard, the chapter begins with an overview of Turkey’s foreign policy and the Balkans’ place in it. Secondly, it explains the main transitions and transformations in domestic and foreign policies under the AKP rule and their implications for the Western Balkans. This part is analyzed with reference to two periods; the first between 2002 and 2011, and the second from 2011 to the present. The year 2011 was chosen as the milestone since the AKP’s authoritarian drift and its diplomatic implications started roughly in this year (Baser and Öztürk, 2017). The chapter, therefore, primarily focuses on the fundamental developments in the relations between Turkey and the Western Balkan countries after 2011 in light of the activities of Diyanet, TİKA and other institutions. The export to the Western Balkans of the conflict between the Gülen Movement and the AKP is also studied within this context.

Turkish foreign policy and the priority level of the Western Balkans until the AKP: a synopsis The Early Republican founders of Turkey established the country’s foreign policy priorities on a fusion of the secular elite’s self-ascribed Western identity with newly prescribed national interests (Yavuz, 1997, p.  23). Therefore, early Republican foreign policy, with its pragmatic orientation, was centered on four enduring principles; westernization, a commitment to a stable international order, strict adherence to the law, and secularism (Öniş and Yılmaz, 2009), at least on visibility. Ethnic or religious affinity was not the organizing principle in the framing of the new foreign policy. With an emphasis to progress within the boundaries of the homeland, Turkey did not ascribe any special meaning to the Balkans in terms of religion and ethnic affinity in its formative years besides the fact that many of its founders were from the Balkans, including Mustafa Kemal Atatürk. The Ankara policy-makers’ priority for the region was stability, and diplomacy was tuned accordingly. The first visible moment of Turkey taking an interest in the Balkans was the first Balkan Pact of 1934 (Bechev, 2012, p. 132) during the single party period (1923–1945). After the end of the single party regime and with the beginning of the Cold War, Turkey turned the wheel of its foreign policy to one particular aim; to be a member of the Western Club (Müftüler-Bac, 1996, p. 53). Yet its security-based and balance-of-power oriented approach preponderated, and Turkey established good relations with Tito’s Yugoslavia as well. Despite having problematic relations with Greece and Bulgaria under the conditions of the Cold War, Turkey continued its political and economic relations with almost all the Balkan states. Sayarı (2000, p. 176) points out that collaborations remained within the constraints of NATO, because, as a member-state, since 1952 Turkey could not pursue totally independent policies towards the Balkans during the Cold War period.

228  Ahmet Erdi Öztürk and Samim Akgönül The initial Turkish foreign policy started to transform into a more identitybased one (ethnic, linguistic and religious, emphasizing timidly the Ottoman past) during Turgut Özal’s period, in the late 1980s. The new approach was based on the concept of neo-Ottomanism, referring to Turkey’s Ottoman-Islamic-Turkic past and aspiration to regional domination (Yavuz, 1998, p. 23). The approach, then, manifested itself in the Balkans, especially, in the aftermath of the Cold War, and Turkey started seeing the Western Balkans as an area of interest and involvement. Turkey played an active diplomatic role during the Bosnian and Kosovo wars, as well as in the subsequent peacekeeping operations (Uzgel, 1998, pp. 403–444). In this regard, one might argue that, throughout the 1980s and 1990s, Turkey became a more active actor in the Western Balkans. The end of the Cold War and the fragmentation of Yugoslavia took relations to a whole new level in 1990s. In this decade the Welfare party representing political Islam, became the biggest coalition partner in the Turkish government. Yet, the Welfare Party could not succeed in altering Turkey’s secular appearance in the Western Balkans, and Diyanet was preferred to downsize the influence of Islamic groups with ‘radical’ doctrines such as Salafism and Wahhabism. In this regard, Diyanet established legal collaborations in the region on a consultancy level and was soon to become the second representatives of Turkey in the region alongside traditional diplomacy. This is may be the beginning of a new era, where the parallel “religious” diplomacy has been established. Therefore, Turkey became a special actor in predominantly Muslim areas such as in Bosnia, Kosovo, Albania, North Macedonia and the Sandzak region in Serbia. Apart from Diyanet and other Turkish diplomatic activities, the Gülen Movement became active in the Western Balkans via schools and foundations in 1990s. For instance, the Gülen Movement opened Gülistan Foundation in Albania in 1993 and Sema Foundation in Bosnia in 1998 to conduct education activities.2 These activities, during at least one decade, offered an education to local elites. Turkey’s more active stance manifested itself in some conflicts of the region in 1990s. For instance, Turkey was the second country after Bulgaria to recognize North Macedonia as an independent country in 1992 and has been standing with the country in the ‘name dispute’ between North Macedonia and Greece. In a similar manner, during the Kosovo War and Pristina’s subsequent quest for independence, Turkey supported Kosovo. Overall, the collaborations between political, financial and civil society actors from Turkey enabled the country to expand its influence in the Western Balkans by the end of 1990s, for the first time since the dissolution of the Ottoman Empire. Yet, a more significant leap in Turkey’s visibility and influence in the region would start with the AKP period.

Turkey’s foreign policy and its reduced role in the Western Balkans under AKP rule until 2011 At the very beginning of the AKP’s journey, the general discourse of the leading cadre was constructed on the expansion of rights and freedoms in domestic politics and aimed to improve relations with both the European Union and neighboring

Turkey 229 countries. Öniş and Yılmaz (2009, p.  9) note that AKP’s initial foreign policy might be summarized as the intense use of soft power tools and creating friendly relations with all neighbors of Turkey. Yet, in the perspective of AKP’s foreign policy developers the concept of ‘neighbor’ extends beyond having a border. It basically implies that Turkey is a central and pivotal country which strategically occupies the core of the Afro-Eurasian area (Davutoğlu, 2007, p. 77–79). Since this perspective started to be implemented by the AKP governments, the Western Balkans reached a higher priority level in Turkish foreign policy. Even though he officially stood at the helm of Turkish foreign policy in 2009, it would be fair to claim that from the very beginning of the AKP period, Ahmet Davutoğlu set the tune for Turkey’s foreign policy. Davutoğlu (2008, pp. 79–81) asserted that the new Turkish foreign policy had five pillars: first, it should establish a balance between security and freedom. Second, it should build a new foreign policy that would create “zero problems with neighbors” and beyond. Third, Turkey should develop economic and political relations with its neighbors and beyond. Fourth, it must implement a multi-dimensional foreign policy, based on the country’s geopolitical position. Fifth, Turkey should employ an intense diplomacy in bilateral and multilateral relations. It goes without saying that the new foreign policy paradigm has had fundamental implication for the Western Balkans. Davutoğlu’s famous book, Strategic Depth: Turkey’s International Position, provided the basis for defining the principles and objectives of Turkey’s new foreign policy, and ultimately shaped Turkey’s approach to the Western Balkans. In this approach, Turkey’s perspective was anchored in the historical Ottoman presence in the region and its cultural implications (Davutoğlu, 2001, p. 321) that have been rebuild in order to serve present interests. Davutoğlu emphasized the importance of Albanian and Bosnian Muslims for Turkey’s interests in the Balkans. According to him, Turkey should support the interests of the Balkan Muslims because the powerful Muslim components in the region would be helpful for the impact of Turkey, not only in the Balkans, but also in all Europe. He explicitly noted that “Bosnia and Herzegovina still has the position of an outstation which can help Turkey to reach the European political and economical resources” (Davutoğlu, 2001 p. 317). For Davutoğlu (2001, p. 318), the Balkans were very important for Turkey’s security and stability. He mentioned that instability in the Western Balkans would have negative effects not only for Turkey but also for all of Europe. Therefore, it has been a historical obligation for Turkey to take the issues of the Balkans into its own hands. In both his public speeches and scholarly articles, Davutoğlu stressed the importance and therefore the effective usage of religion in relations between Turkey and Western Balkan countries. He also emphasized the significant number of ethnic Turks in the Balkans and Turkish citizens originating from Balkan countries (Vračić, 2016, p. 9). In Davutoğlu’s thinking, these people create an organic link between Turkey and the Balkans. Even though these ideas look like a departure from the realist perspective which had been the norm in Turkish foreign policy, it is difficult to ignore that Turkey has performed very well in its foreign policy during the AKP’s first two terms, utilizing the then globally peaceful environment (Öktem

230  Ahmet Erdi Öztürk and Samim Akgönül and Kadıoğlu, 2012, p.  2). It should also be noted that in these first two terms (2002–2011) the Turkish economy experienced stable growth. The inflation rate was reduced to single digits in 2010 and foreign policy investments increased from US$2.8 billion to US$18 billion in 2010 (Kösebalaban, 2011, p. 149). Economic growth and a proactive foreign policy increased Turkey’s visibility and influence in the Western Balkans. The trade volume between Turkey and the Western Balkans increased by 307 percent between 2002 and 2012 (Ekinci, 2014, p. 113). With this mindset, and particularly since 2004, TİKA has become a pioneering Turkish apparatus in the Western Balkans. It started renovating historical Ottoman monuments and building new schools and hospitals in 2004 and has invested over US$18 million in Bosnia and Herzegovina, Albania, North Macedonia and Kosovo (TIKA report, 2004, p. 29). In 2008, Kosovo was at the top of TİKA’s investment list with US$27.32 million, and Bosnia and Herzegovina, North Macedonia, Montenegro, Albania and Serbia found themselves among the top 10 countries that received direct investment from TİKA (TİKA report, 2008, p. 31). Furthermore, between 2004 and 2011 TİKA has opened offices in Bosnia and Herzegovina, Albania, North Macedonia, Serbia and Montenegro with the permission of the host countries. With these offices, according to TİKA’s 2010 report, its activities and their proportional costs are as follows: 45.5 percent was spent in healthcare, 20.49 percent in administrative and civil society expenses, 15.81 percent in education, 14.78 percent in cultural cooperation and restoration, and 3.45 percent in clean water projects in the Balkans (TİKA report, 2010, p.  41). In 2006, Turkey and Albania signed a free-trade agreement and Turkey became the second biggest state-level entrepreneur after Germany in this country. In 2008, Turkey founded TAV, an aviation services company, which started to run the Skopje Airport in North Macedonia. In 2006, the Turkey-backed Üsküp Foundation for Education and Culture established the International Balkan University in Skopje. The International University of Sarajevo had already been founded in 2004 by the Foundation for Education and Development of Sarajevo after the support of the Turkish government. A fundamental aim with opening these universities is to establish long-lasting relations between Turkey and Western Balkan countries (Ekinci, 2014, p. 109). The intensification of investments and the foundation of new institutions indicate that Turkey has particular interests in three countries: Bosnia and Herzegovina, Kosovo and North Macedonia, countries with significant Muslim populations and historical links to the Ottoman period. In this regard, Davutoğlu kept a close rein on Bosnia and Herzegovina from the beginning of his foreign ministry and tried to bring the officials of the country together with those from Serbia and Croatia to resolve existing problems. Moreover, Ahmet Davutoğlu and Abdullah Gül, the former Turkish President, spent significant effort on the official representation of Bosnia and Herzegovina, Montenegro and North Macedonia at international platforms such as NATO. Bosnia’s priority level has also rendered Turkish-Serbian relations critical. During the AKP period, some of the most active and promising diplomats of the Turkish Foreign Ministry were employed at the Turkish embassy in Serbia. For instance, in 2016, there was a change of duty period at the Turkish

Turkey 231 Embassy in Belgrade, when the former ambassador Mehmet Kemal Bozay was appointed as an acting deputy undersecretary, and the spokesperson of the foreign ministry, Tanju Bilgiç, became the Turkish ambassador in Belgrade. One must see that there is clearly a revolving door between diplomatic postings in the Balkans and high-level postings in the Turkish ministry of foreign affairs. As a result of these diplomatic initiatives Turkey managed to bring together the leaders of Serbia and Bosnia and Herzegovina around the same table on 24 April 2010 at the Balkan Summit in Istanbul. After the Summit, the leaders signed the Istanbul Declaration with which they committed to a lasting peace and stability in the region (Türbedar, 2011, p. 4). In addition to this, Turkey has also been working for the international recognition and integration of Kosovo since 2008. The Turkish institution Diyanet has been another active arm of Turkish interests in the region in the first decade of the 2000s. Diyanet’s official presence in any country is based on an invitation from and permission of the host country, and therefore only in North Macedonia and Albania Diyanet has been represented on a consultancy level since the beginning of 2000s. Apart from these countries, Diyanet has different collaboration agreements with Serbia, Kosovo, Bosnia and Montenegro. Under the permanent representation status and limited agreements, Diyanet and the Turkish Diyanet Foundation have been supplying some of the needs of the region’s Muslim communities with components such as Qurans, religious books, imam training programs and the organization of some of the holy festivals (Öztürk, 2016). Since 2005, Diyanet has also been organizing annual meetings with the heads of Muslim umbrella organizations to discuss some of the issues of the region and develop agreements for larger joint projects. One of the biggest projects has been the construction in Tirana of the biggest mosque and Islamic center in all of the Balkans (Öztürk and Sözeri, 2018). The Yunus Emre Institute also acts as another arm of Turkey’s Western Balkan policy. The Institute was established in 2007 and immediately started its activities in the Western Balkans. Even though it mainly aims to promote Turkish language and culture, the activities of the Institute have been perceived as one of the key outputs of Turkey’s soft and/or smart power projects in the region (Kaya and Tecmen, 2011, p. 15). The Institute has many offices in the Western Balkans: three in Bosnia, two in Albania, and one respectively in North Macedonia, Montenegro and Croatia. These offices have been supplying services to the local individuals and groups with demands on Turkish language and culture without any fee. The period between 2002 and 2011 was the time for the Gülen Movement to increase its impact in the Western Balkans. Even though the Movement has already been an active player in the education and media sectors since the late 1990s, closer relations with the AKP governments gave a boost to its activities all over the Western Balkans. The representatives of the Gülen Movement started to refer to the Turkish state in the host countries in the Western Balkans to establish their own initiatives. Secondly, businesspeople affiliated with the Gülen Movement had better opportunities in the region during AKP rule and supported the activities of the Movement in the Western Balkans. In this regard, between 2002 and 2011 the Gülen Movement enlarged its capacity in the region. In Albania, it

232  Ahmet Erdi Öztürk and Samim Akgönül has two universities (Epoka and Bedir), five private schools in the cities of Tirana, Shkodra and Durrës, and five madrassas under the control of the Sema Foundation. In Bosnia and Herzegovina, it runs a university (Burch) and more than 10 private schools. In North Macedonia, the Movement runs five private schools under the name of Yahya Kemal Education Foundation and has been publishing the weekly Zaman newspaper since 2010. In Kosovo, the Gülen Movement runs four private schools. As a consequence, it is fair to argue that with the transnational apparatuses and civil organizations, the AKP governments did a ‘full court press’ in the region and the priority level of the Western Balkans has reached its peak in the first two terms of the AKP. This is reflected in the words of Davutoğlu as follows: “the Balkans are in a new era as a period of restoration, cooperation and construction: restoration in the sense of restoring shared cultural, economic and political ties; cooperation in the sense of developing a new spirit of joint action; and construction in the sense of a way to both overcome the legacy of the past decades and respond to the challenges of the decades to come” (Davutoğlu, 2001, p. 4). With these words, he summarized Turkey’s new foreign policy approach, which was based on being proactive, in line with some fundamental principles such as zero problems with neighbors. It would also be true to say that between 2002 and 2011 Turkey invested more human capital than before in the region in order to develop soft power credentials via some state and non-state actors (Demirtaş, 2015, pp. 132–134). Yet the overall perception of Turkey has started to change after 2011 because of AKP’s backsliding from democracy and its long-lasting aftershocks.

Dimensional changes of the relations between Turkey and the Western Balkans: instrumentalization of religion and exportation of domestic conflicts Since 2011, the Turkish state has been experiencing a process of identity transformation under AKP rule. This transformation aims to morph the country into ‘New Turkey’, as the political elite of the AKP calls it. The New Turkey “appears to be a highly polarized and fragmented society along secular, religious and ethnic lines with a strong leader [Erdoğan] and weak opposition” (Keyman, 2014, p. 21). The first critical junction on the way to the New Turkey was the combination of the Arab Spring and the Gezi Protests and their effects on the mindset of the AKP policy-makers. The peak for the rise of Islamist movements and the fall of dictatorships in the Middle East and North African countries came in 2011. Most of these Islamic movements had similar ideological backgrounds to the AKP’s proIslamic leadership cadre. Therefore, the AKP elites evaluated the situation as an opportunity to shift back their grounds to previous Islamist ideas. In this regard, they started to change the identity of the state, based on Islamism and Ottoman imperial heritage. However, the counter-attempts against the Islamic movements in the Arab world, particularly in Egypt and Tunisia, and the breakout of the Gezi Protests as a reaction to AKP’s pro-Islamist policies created fear in the minds of

Turkey 233 the AKP leadership (Akkoyunlu and Öktem, 2016, pp. 517–518). Therefore, they preferred to be more repressive and patronizing during and after the Gezi Protests, which were nothing more than a cumulative reaction to some of the policy implementations of the AKP, such as restrictions on alcohol (Acar and Uluğ, 2016). The second critical junction was the struggle between the AKP and the Gülen Movement. Even though the AKP and the Gülen Movement belong to different Islamic groups in Turkey, they established an alliance to run a battle against the secular and Kemalist bureaucracy and military at the very beginning of the AKP’s first term. In this civic-political alliance, the Gülen Movement supported the AKP’s policies with its media organs and NGOs both at home and abroad, while the AKP governments provided opportunities for the participants of the Gülen Movement to get positions in the civilian and military bureaucracy, especially in the judiciary and the police forces. This alliance worked against the established Kemalistsecular bureaucracy and rendered it incompetent and ineffective. Yet, in 2012, this alliance started to weaken and an interest-based struggle broke out between the Movement and the Party. In the following course of events, the AKP government put a great deal of effort into rendering the Movement powerless by attacking its educational institutions and media organs as well as its bureaucratic power; the Movement worked to discredit the AKP government via a corruption investigation on an unprecedented scale on 17–25 December 2013, raiding the premises of the family members of four AKP ministers. The investigations made the struggle between former partners public. During the struggle period, 2012–2016, the AKP turned more authoritarian and Islamist with the pretext of fighting against its new enemy, referring to the Gülen Movement’s heavy presence in the bureaucracy (Baser and Öztürk, 2017). The final straw of the struggle was a ­military coup attempt on 15 July 2016. Even though many things are still unknown regarding the failed coup, the AKP government has claimed that the Gülenist components were the main locomotive of the coup (Yavuz and Koç, 2016). As a result of the failed coup, the Government declared a state of emergency which also marked the last stage of the AKP’s authoritarian drift and the annihilation of the Gülen Movement in Turkey. But the struggle between the two allies turned enemies still continues abroad, and one of the battlefields is the Western Balkans. All of these critical junctions and the pro-Islamic and authoritarian downturn of the AKP have created a new state identity for Turkey. In this new identity and structure, Sunni Islam has become the focal point to bolster the regime, which also affected the foreign policy of the state. Even though Erdoğan dismissed Davutoğlu as prime minister in early 2016, his ethno-religious paradigm is still one of the main drivers of Turkish foreign policy. Under this pro-Islamic– authoritarian drift, as Aydın-Düzgit (2016) points out, Turkey, at both discursive and policy levels, has been turning away from the West in general and Europe in particular. Withdrawal from the Western world at the discourse level and the employment of foreign policy as an instrument in domestic politics could be seen as a return to a harsh version of the doctrine of neo-Ottomanism. Yavuz highlights that the AKP’s new understanding of neo-Ottomanism is “anti-Western, Islamist, adventurist and ideological” (Yavuz, 2016, p. 440). We argue that the

234  Ahmet Erdi Öztürk and Samim Akgönül neo-Ottomanism is multi-faced, pragmatic and the term qualifies different attitudes that change according to the context and interlocutor. Sometimes it’s more Turkish than Islamist, sometimes it’s the opposite. Nevertheless, the neo-Ottomanism is also revisionist in two aspects: it rewrites Ottoman history by ‘Turkifying’ and ‘Sunnifying’ it and mourns after the lost lands that were once under Turkish domination. Erdoğan’s formulation of the new Turkish foreign policy is based on his authoritarian tendencies and desire to become the supreme leader of the Muslim world, in Lord’s (2018) words; efforts to become the leader of the Muslim umma. Erdoğan’s efforts to transform the country in line with his leadership model and political ideals were noticed and criticized in relatively early times. For instance, in his Financial Times op-ed, Strauss (2009) argued that the “AKP is re-engaging with territories once ruled by the sultans, from the Balkans to Baghdad, in a drive to return Turkey to a place among the leadership of the Muslim world and the top ranks of international diplomacy”. In this regard, the priority level of the Western Balkans has climbed high for two main reasons. Firstly, the significant numbers of the Muslim population in the Western Balkans has made the region a part of the global umma of whom Erdoğan wants to be the dominant actor through a more Islamized Turkey. Secondly, the transnational nature of the struggle between the Gülen Movement and the AKP has increased the priority level of the Western Balkans in the eyes of diplomats in Ankara. Erdoğan’s Turkey has used multilayered efforts to cripple the Gülen Movement abroad. In this context, the Western Balkans, where the Gülenists are strong, has turned into a battlefield for the top management of Erdoğan’s diplomats and they made use of all the transnational state apparatuses at their disposal despite shrinking economic conditions.3 Starting from 2012, TİKA’s activities and investments have been gradually increasing and diversifying for the Western Balkans. For instance, there is a gradual increase in the investments of TİKA in Albania, Kosovo, Bosnia and Herzegovina, North Macedonia, and Serbia, and all of these countries have been getting more than 2 percent of the TİKA’s overall budget since 2010.4 After TİKA, Yunus Emre Institute and Diyanet have also extended their cultural activities in the Western Balkans. The major motivation behind this can be argued to be competition with the Gülen Movement, which has already been long established in the region. In its 2016 report (p. 13), the Yunus Emre Institute declared that it has been running 13 cultural centers providing free Turkish language courses. In the same year, the Institute organized more than 200 activities to promote Turkish language, culture and history in the Western Balkans. Furthermore, according to the very same report, between 2014 and 2016 Yunus Emre Institute’s Bosnia and Herzegovina branch took the initiative to open Turkology institutions in two local universities: Universitas Studiorum Tuzlaensis and Univerziteta Dzemal Bisedic u Mostaru. Turkey is a country where economic crises are fundamental determinants of the domestic and foreign police situations. The AKP governments, particularly between 2002 and 2008, tried to solve some chronic problems of the Turkish economy. Yet the 2008 global economic recession, the Gezi Protests in 2013,

Turkey 235 the struggle between the Gülen Movement and the AKP, the failed coup attempt and the authoritarian drift have negatively affected the Turkish economy. In other words, the Turkish economy has not really improved since 2009, when the GDP per capita reached around US$10,500 (Aktaş, 2017, pp. 171–183). Despite the shrinking conditions of the Turkish economy, the overall economic relations with the Balkan countries increased significantly during the AKP governments. For instance, while the volume of trade between the Balkan countries and Turkey was around $3.5 billion in 2002, it exceeded US$16 billion in 2016, reaching its peak in 2014 with US$20.8 billion (Ekinci, 2017, p. 9). Yet it is still difficult to claim that Turkey is the main and the biggest external actor in terms of economic partnerships. Indeed, Turkey is one of the important economic partners for the Balkan countries, but its position is not as significant as that of Germany, the U.S., the UK, Russia or the EU. For instance, while in 2015 Germany’s total export was around US$1.3 million, Turkey’s export was limited to just US$143,883 US$ (Nuroğlu and Nuroğlu, 2016, p. 13). Even though it is hard to claim that Turkey’s economic investment in the Western Balkans is about religion/ethnicity and Turkey’s new regime codes, the activities and the investment of Turkey’s newly emerging transnational state apparatuses are mostly about Sunni Muslims and ethnic Turks. In this regard, one might argue that the activities of TİKA, Yunus Emre and other actors are the outputs of Turkey’s new pro-Sunni and pro-Turk foreign policy, and so this policy aims to establish deeper relations with the Western Balkan countries, particularly Muslims and ethnical Turks of these countries. From this point of view, one might argue that these mostly religion- and ethnic-oriented activities are one of the new characteristics of Turkey’s new foreign policy in the Western Balkans. Within the same line and apart from the activities and investments of Turkey’s newly emerging transnational state apparatuses and the classical economic role of the country in the Western Balkans, the Diyanet and its Foundation (Türkiye Diyanet Vakfı) have boosted their activities since 2012. Based on bilateral agreements, they have financially supported Albanian and Macedonian Islamic communities and some groups in Serbia. Yet, the positions and discourses of Diyanet have created some concerns and problems in the region. When the struggle between the Gülen Movement and the AKP started, Diyanet began to categorize the Islamic groups in the Western Balkans as either pro-Turkish state or pro-Gülenist. In this categorization, for example, the Muslim Community of Albania and its chairman Skender Bruçaj is pro-Gülenist, and therefore the AKP government cut financial support to this organization in 2013 (Öztürk and Gözaydın, 2018). When similar issues have occurred in Serbia, the Grand Mufti of Sandžak region, Mevlud Dudić, strongly criticized the intervening and disturbing role of Diyanet in 2016 (Kostić, 2018, p.  589). However, in Kosovo, Diyanet has a strong relationship with the Grand Mufti who represents the Islamic Community at various positions. (Mehmeti, 2018, p.  398). Even though the Turkish officials and Erdoğan have made it clear that the Gülen Movement has to be considered a terrorist organization (particularly after the coup attempt), the head of Islamic scholars, ra’is al-ulame, Husein Kavazovic, the Grand Mufti of Bosnia and Herzegovina,

236  Ahmet Erdi Öztürk and Samim Akgönül declared that the Gülenist organizations should not be seen as a real threat, since the Gülenist schools in Bosnia operate under local laws they cannot be shut down or transferred to any other pro-AKP institution (Jusić, 2018, p.  125). In other words, AKP pressure has not succeeded in shutting down Gülen-affiliated institutions. After the failed coup attempt, the annihilation of the Gülen Movement abroad became a top priority for the AKP’s foreign policy, and this is reflected in the Western Balkans. As Serge Moscovici (1991) notices, former oppressed groups who collaborate to obtain legitimacy become worst enemies when this legitimacy is obtained. In his visit to Serbia on 11 October 2017, President Erdoğan declared: “We will uproot this infidelity network [the Gülen Movement] from the Balkans, as we did in Turkey”.5 This expression aimed to make Erdoğan’s ongoing policy clear rather than delivering a speech for propaganda purposes. Since late 2015 Turkey has been devoting efforts to neutralize the activities of the Gülenists in the Western Balkans and transfer the control and properties of Gülenist schools via the Maarif Foundation.6 However, only limited achievements have been made so far by the AKP government. In Bosnia, for example, many Gülenist schools are still functioning under the umbrella of the Bosna Sema Foundation. After the coup attempt, the Turkish ambassador in Bosnia, Cihad Erginay, called on local authorities to take measures against the pro-Gülenist schools. Then, some members of the main Bosniak Party of Democratic Action (SDA), which has developed ties with Erdoğan, warned these schools might reveal some problems for the country. But Esref Kenan Rasidagic, professor of international relations at the University of Sarajevo, claimed that the Gülenist schools are regulated by Bosnian law in this regard and shutting them down would be a violation of the law. Furthermore, he noted that importing conflicts from other countries would create new divisions in Bosnian society (Toe, 2016). Since the very beginning of the 2010s, or, in other words, since the beginning of the authoritarian turn of Erdoğan’s Turkey, most Western leaders have preferred to eschew establishing close relations with Erdoğan. But the situation is quite different for the leaders of the Balkan countries. For instance, while most of the Western leaders did not prefer to attend Erdoğan’s last inauguration ceremony in July 2018, Bosnia and Herzegovina’s president Balkir Izetbegovic, Albania’s Edi Rama, Kosovo President Hasim Thaçi, North Macedonian President Gjorge Ivanov, Moldovan President Igor Dodon and Serbian President Aleksandar Vučić were guests of honor, and from this point of view one might argue that the leaders of the Western Balkans do not have any direct problems with the repressive and more Islamist ruling style of Erdoğan, or that they prefer not to take a stand against Erdoğan directly due to their economic and diplomatic relations. Consequently, one might claim that, since 2011, the policy-makers of Ankara have looked at the Western Balkans with relatively different eyes under the effects of the transformation of the classical Turkish foreign policy during AKP rule. In this regard, with the increased investment and interest of Turkey to the Western Balkans on the one hand, one might argue that the AKP’s Turkey sees the Western Balkans as more important than did previous governments. On the other hand, the

Turkey 237 Western Balkans have become a battlefield for Turkey, which has been exporting its domestic struggles abroad.

Conclusion This chapter explored the recently proliferated relations between Turkey and the Western Balkan countries, with a focus on the AKP era. The overall analysis of these relations brings certain things to the fore: Turkish domestic and foreign policy changes were reflected directly in its policies on the region. The first phase of relations in this period was mostly constructive, based on a win-win understanding in both economic and cultural interaction. The policies towards the Western Balkans went through an escalation of priority in the eyes of Turkish diplomacy. In this framework, Turkey utilized some state institutions such as Diyanet, TIKA and the Yunus Emre Institute to maximize its influence in the region alongside its official embassies. Therefore, there has been a more visible, active and challenging Turkish presence in different sectors and areas of the region. In this era, Turkish authorities also tried to export the country’s major domestic conflict to the Western Balkans and all the apparatuses that are at the disposal of the AKP government were employed to uproot the Gülen Movement from the region, the main threat for Turkey in the eyes of AKP officials. However, the recent authoritarian turn and the increase of pro-Islamic nationalism in AKP’s policies have changed the tune for the negative towards Turkey and AKP government. Furthermore, the recent isolationism in Turkey’s foreign policy and rising de-Europeanization render AKP’s proposals harder to accept. Turkey’s interventionist attitudes towards the domestic issues of the countries in the region also render the country’s image somewhat imperialist in the eyes of regular citizens. With all the ups and downs, the relations between Turkey and the Western Balkan countries look like a marriage of convenience and necessity at the same time. Additionally, under these circumstances, on the one hand Turkey can be seen as an external non-Western power for the region of the Western Balkans; but on the other, it seems itself a historical and natural part of the region. Therefore, it has been becoming more active and visible, particularly on issues regarding the Muslims of the region.

Notes 1 The Gülen Movement is a highly controversial transnational Islamic movement, originating from Turkey and active in education, media, humanitarian relief and the business world. Even though it seems a Sunni Islamic-oriented community with the aim of inter-cultural dialogue, it also has a political face, aiming to expand its bureaucratic power and reach important positions within the state. The movement runs schools and associations all around the world and is very active in the Western Balkans. Even though the Movement and the AKP established an ‘informal’ coalition until the early 2010s, this close relationship has turned into a long-lasting, interest-based struggle which has been reflected in many areas of the world, including the Western Balkans, where both sides are very active and influential.

238  Ahmet Erdi Öztürk and Samim Akgönül 2 Even though the Gülen Movement is one of the active Turkish transnational structures in the Western Balkans, there is little attention paid in the scholarly literature to the activities of the Movement in the Balkans. Therefore, most of the information about the activities of the Movement is based on the authors’ extensive field work regarding the Islamic movements in the Balkans, carried out in 2016–2017. 3 The Turkish economy has been falling into decline since late 2009, and the political instability and the authoritarian turn have been affecting this situation negatively. For a detailed explanation, see; www.ft.com/content/b84016f0-c043-11e6-9bca2b93a6856354 (Accessed 21 February 2018) 4 Data from; www.tika.gov.tr/en (Accessed 24 February 2018) 5 For the full speech, see; www.ahaber.com.tr/gundem/2017/10/11/cumhurbaskani erdogan-fetoyu-balkanlardan-da-sokup-atacagiz (Accessed 19 February 2018) 6 The term ‘Maarif’, stemming from Ottoman Turkish (and originally from Arabic), means education and instruction. This Foundation, placed under the authority of the minister of education, aims to seize the real estate and other properties belonging to the Gülen Movement, which were closed down after the failed coup of 15 July 2016) both in Turkey and around the world.

References Acar, Y. G., and Uluğ, Ö. M., 2016. Examining Prejudice Reduction Through Solidarity and Togetherness Experiences Among Gezi Park Activists in Turkey. Journal of Social and Political Psychology, 4 (1), 166–179. Akkoyunlu, K., and Öktem, K., 2016. Existential Insecurity and the Making of a Weak Authoritarian Regime in Turkey. Southeast European and Black Sea Studies, 16 (4), 505–527. Aktaş, E., 2017. The Rise and the Fall of the Turkish Economic Success Story Under the AKP. Contemporary Islam, 11 (2), 171–183. Aydın-Düzgit, S., 2016. De-Europeanisation Through Discourse: A Critical Discourse Analysis of AKP’s Election Speeches. South European Society and Politics, 21 (1), 45–58. Baser, B., and Öztürk, A. E., ed., 2017. Authoritarian Politics in Turkey: Elections, Resistance and the AKP. London: IB Tauris. Bechev, D., 2012. Turkey in the Balkans: Taking a Broader View. Insight Turkey, 14 (1), 131–152. Davutoğlu, A., 2001. Stratejik derinlik. Istanbul: Küre Yayınları. Davutoğlu, A., 2008. Turkey’s Foreign Policy Vision: An Assessment of 2007. Insight Turkey, 10 (1), 77–96. Demirtas, B., 2015. Turkish Foreign Policy Towards the Balkans: A Europeanized Foreign Policy in a De-Europeanized National Context? Journal of Balkan and Near Eastern Studies, 17 (2), 123–140. Ekinci, M. U., 2014. A Golden Age of Relations: Turkey and the Western Balkans During the AK Party Period. Insight Turkey, 16 (1), 103–125. Ekinci, M. U., 2017. Turkiye-Balkan İlişkileri. SETA Analiz, No. 204, May. Jusić, M., 2018. Bosnia and Herzegovina. In: Scharbodt, Oliver, Akgönül, Samim, Alibasic, Ahmet, Nielsen, Jorgen S., and Racius, Egdunas (eds.), Yearbook of Muslim in Europe. Leiden: Brill, pp. 121–141. Kaya, A., and Tecmen, A., 2011. The Role of Common Cultural Heritage in External Promotion of Modern Turkey: Yunus Emre Cultural Centres. Istanbul Bilgi University, Working Paper No: 4 EU, pp. 1–23. Keyman, E. F., 2014. The AK Party: Dominant Party, New Turkey and Polarization. Insight Turkey, 16 (2), 19–31.

Turkey 239 Kösebalaban, H., 2011. Turkish Foreign Policy: Islam, Nationalism, and Globalization. London: Springer. Kostić, I. E., 2018. Serbia. In: Scharbodt, Oliver, Akgönül, Samim, Alibasic, Ahmet, Nielsen, Jorgen S., and Racius, Egdunas (eds.), Yearbook of Muslim in Europe. Leiden: Brill, pp. 588–598. Lord, C., 2018. The Story Behind the Rise of Turkey’s Ulema [Online]. London, Middle East Research and Information Project. www.merip.org/mero/mero020418 [Accessed 5 March 2018]. Moscovici, S., 1991. Psychologie des minorities actives. Paris: PUF. Mehmeti, J., 2018. Kosovo. In: Scharbodt, Oliver, Akgönül, Samim, Alibasic, Ahmet, Nielsen, Jorgen S., and Racius, Egdunas (eds.), Yearbook of Muslim in Europe. Leiden: Brill, pp. 393–403. Müftüler-Baç, M., 1996. Turkey’s Predicament in the Post-Cold War Era. Futures, 28 (3), 255–268. Nuroğlu, E., and Nuroğlu, H., 2016. Balkanlarda Almanya ve Türkiye: İhracat ve Yatırımlar, SETA Rapor. Öktem, K., 2010. New Islamic Actors After the Wahhabi Intermezzo: Turkey’s Return to the Muslim Balkans. European Studies Centre, Oxford: University of Oxford, pp. 2–57. Öktem, K., and Kadıoğlu, A. G., 2012. Another Empire? A Decade of Turkey’s Foreign Policy Under the Justice and Development Party. Istanbul: Bilgi University Press. Öniş, Z., and Yilmaz, Ş., 2009. Between Europeanization and Euro-Asianism: Foreign Policy Activism in Turkey During the AKP Era. Turkish Studies, 10 (1), 7–24. Öztürk, A. E., 2016. Turkey’s Diyanet Under AKP Rule: From Protector to Imposer of State Ideology. Southeast European and Black Sea Studies, 16 (4), 619–635. Öztürk, A. E., and Gözaydın, İ., 2018. A Frame for Turkey’s Foreign Policy Via the Diyanet in the Balkans. Journal of Muslims in Europe. Öztürk, A. E., and Sözeri, S., 2018. Diyanet as a Turkish Foreign Policy Tool: Evidence from the Netherlands and Bulgaria. Politics and Religion, 1–25. https://doi.org/10.1017/ S175504831700075X. Sayari, S., 2000. Turkish Foreign Policy in the Post-Cold War Era: The Challenges of Multi-Regionalism. Journal of International Affairs, 54 (1), 169–182. Strauss, D., 2009. Turkey’s Ottoman Mission [Online]. Financial Times, 23 November. www. ft.com/content/af859474-d868-11de-b63a-00144feabdc0 [Accessed 27 February 2018]. Tanasković, D., 2012. Turkey and the Balkans: Old Traditions, New Aspirations. Israel Journal of Foreign Affairs, 6 (2), 51–62. TC. Başbakanlık Türk İşbirliği ve Kalkınma Dairesi Başkanlığı, 2004. TİKA Faaliyet Raporu (TİKA Activity Report). Ankara: Grafiker [Online]. www.tika.gov.tr/ upload/2017/YAYINLAR/Faaliyet%20Raporları/2004/2004%20TIKA_Faaliyet.pdf [Accessed 1 February 2018]. TC. Başbakanlık Türk İşbirliği ve Kalkınma Dairesi Başkanlığı, 2008. TİKA Faaliyet Raporu (TİKA Activity Report). Ankara: Grafiker [Online]. www.tika.gov.tr/upload/ oldpublication/faaliyet-raporu-2008.pdf [Accessed 1 February 2018]. TC. Başbakanlık Türk İşbirliği ve Kalkınma Dairesi Başkanlığı, 2010. TİKA Faaliyet Raporu (TİKA Activity Report). Ankara: Grafiker [Online]. www.tika.gov.tr/upload/ oldpublication/KalkinmaYardimlariRaporu2010.pdf [Accessed 1 February]. Toe, R., 2016. Gulen Schools Fight Provokes New Tensions in Bosnia [Online]. Sarajevo, Balkan Insight. www.balkaninsight.com/en/article/gulen-schools-fight-provokes-newtensions-in-bosnia-07-26-2016 [Accessed 1 March 2018]. Türbedar, E., 2011. Turkey’s New Activism in the Western Balkans: Ambitions and Obstacles. Insight Turkey, 13 (3), 139–158.

240  Ahmet Erdi Öztürk and Samim Akgönül Uzgel, İ., 1998. Doksanlarda Türkiye İçin Bir İşbirliği ve Rekabet Alanı Olarak Balkanlar. En Uzun On Yıl, 3 (1), 403–444. Vračić, A., 2016. Turkey’s Role in the Western Balkans [Online]. Berlin: Stiftung Wissenschaft und Politik. www.swp-berlin.org/fileadmin/contents/products/research_papers/ 2016RP11_vcc.pdf [Accessed 12 September 2017]. Yavuz, M. H., 1997. Turkish-Israeli Relations Through the Lens of the Turkish Identity Debate. Journal of Palestine Studies, 27 (1), 22–37. Yavuz, M. H., 1998. Turkish Identity and Foreign Policy in Flux: The Rise of Neo-Ottomanism. Critique: Journal for Critical Studies of the Middle East, 7 (12), 19–41. Yavuz, M. H., 2016. Social and Intellectual Origins of Neo-Ottomanism: Searching for a Post-National Vision. Die Welt des Islams, 56 (3–4), 438–465. Yavuz, M. H., and Koç, R., 2016. The Turkish Coup Attempt: The Gülen Movement vs. the State. Middle East Policy, 23 (4), 136–148.

12 UAE Sultanism meets illiberal democracy Will Bartlett and Tena Prelec

Unlike many Middle Eastern countries, the United Arab Emirates (UAE) was never part of the Ottoman Empire. Instead, the small states that formed it1 were protectorates of the British Empire, given support and protection in return for controlling piracy in the Indian Ocean against British ships trading with India. Oil exports began to take off in the 1960s, and in 1971 Britain withdrew from the region, overseeing the creation of an independent federation of seven emirates: Abu Dhabi, Dubai, Sharjah, Ras Al Khaimah, Ajman, Fujairah and Umm al-Qaiwain. Of these, Abu Dhabi is the largest, covering 87 percent of the territory and 38 percent of the population, while Dubai is the second largest emirate with 30 percent of the population. Abu Dhabi is the political capital; it has more than 90 percent of the country’s oil reserves. Although Islam is the official religion, the constitution guarantees religious freedom and while Arabic is the official language English is widely used. The leading families in each emirate run the UAE in a system of hereditary autocratic rule. The Federal Supreme Council consists of the emirs of the seven emirates, who appoint the president and vice president, the ministers and the judges of the Supreme Court. A member of the Abu Dhabi ruling family usually holds the presidency of the UAE, while a member of the ruling family of Dubai usually holds the position of vice president (Davidson, 2011, p. 13). The Federal National Council has 40 members roughly in proportion to the population of each emirate: half are appointed by the emirs, and the other half are elected by voters designated by the emirs. The UAE’s first president was Sheikh Zayed bin Sultan Al Nahyan, who had nineteen legitimate sons. The current president of the UAE and ruler of Abu Dhabi is Sheikh Khalifa bin Zayed Al-Nahyan, the eldest of these sons; he controls the country’s oil revenue and largest sovereign wealth fund. The third eldest son, Sheikh Muhammad bin Zayed Al-Nahyan, is Crown Prince and chairman of the Abu Dhabi Executive Council and deputy Supreme Commander of the UAE Armed Forces. Foreign policy is in the hands of the Crown Prince and the Foreign Minister, Sheikh Abdulla bin Zayed al Nahyan (Young, 2014, p. 122). Other family members hold prominent roles in the society such as government ministers or directors of large public companies and national wealth funds. The UAE is one of the wealthiest countries in the world. Emerging from a poor coastal and desert community of 50,000 people in the middle of the last century, it

242  Will Bartlett and Tena Prelec has become the home of over nine million people living in glittering urban megacities. Natural resource wealth has supported the development of a large middle class, the education of civil servants, and improvements in the life expectancy and health of the population (Young, 2014). The economy of the UAE, with a GDP of US$350 billion in 2016, is four times larger than the economy of the Western Balkans as a whole, and nine times larger than that of Serbia, the largest regional economy. While it is not quite in the ‘great power’ league, the UAE is a sizeable economic entity in relation to the economies of the Western Balkans. Its wealth is based on oil and natural gas, with almost 6 percent of the world’s proven oil reserves; exploitation of these natural resources accounts for about 25 percent of the country’s GDP. The Abu Dhabi emirate alone has the world’s fifth largest natural gas reserves and fourth largest oil reserves, producing 90 percent of the country’s oil, which is a key source of government revenue. The other resourcerich emirate, Dubai, was badly hit by the global financial crisis and accumulated debts of US$80 billion, which became unsustainable. Its richer neighbor, Abu Dhabi, bailed it out and from that time onwards Dubai has been a junior partner in the federation. Recent low oil prices have dented the UAE’s performance and slowed economic growth from 6.4 percent in 2011 to 3.0 percent in 2016. The other emirates are still relatively poor, and high unemployment and poverty in the emirates of Fujairah and Ras al-Khaimah have brought about a situation in which many people travel to Abu Dhabi or Dubai for work. To counter this internal migration, the federal government has set up a regional development fund that provides for the redistribution and transfer of resources to the poorer emirates. As we show below, strong linkages have developed in recent years between the UAE and several Western Balkan countries, structured around sectorspecific investment projects. The UAE’s increasing involvement in the region can be understood as a strategic approach to developing soft power through prestige projects providing leverage over the domestic policy process. This leverage has two main dimensions. On the one hand, the UAE is supportive of the Western Balkans’ EU accession trajectory, as it expects this to eventually open opportunities for access to a larger market. On the other hand, the peripheral status of the region is also advantageous to UAE investors as they are not fully subject to EU regulation of their business affairs, enabling non-transparent business dealings more aligned with UAE business culture than is possible in the EU. Moreover, we argue that within the Western Balkans such linkages have created interest groups that support the continuation and growth of these investments. Although opposition groups in some of the Western Balkan countries have protested against such non-transparent business deals, the political power interests among the local leaderships have supported such deals, as documented below. In this chapter we argue that such linkages have developed within a specific political culture in both countries which may be called ‘sultanism’, a political system that emphasizes the controlling power of a few individuals at the peak of society (Diamandouros and Larrabee, 2000). In the case of the UAE, these individuals are members of a family-based ruling elite, with few political constraints other than the informal institution of the majlis. In the case of the Western Balkans they are members of

UAE 243 the ruling coalitions that over the last few years have pulled back from promoting democratic consolidation in a noticeable process of democratic backsliding. In some Western Balkan countries this has led to the return of former practices of competitive authoritarianism, with elements of sultanistic-style practices also re-emerging. The rest of this chapter is organized as follows. In the second section we explore the nature of the UAE economy as a rentier state, highlighting the need to diversify production and invest in projects abroad to ensure economic stability in a future post-oil economy. We argue that the rentier state relies for its political legitimacy on the institutions of patronage and clientelism. The third section explores the implications of this type of economy for the political system, identifying the political culture of ‘sultanism’ as an extreme form of patrimonialism in which an authoritarian ruler exercises personalized power, blurring the line between the official and the private, and in which state resources are viewed as the personal property of the ruler and his or her associates. This leads us in the fourth section to an examination of the UAE’s foreign policy, and in particular the motives for its aid and investment policies in other countries. These motives revolve around the need to ensure a diversified post-oil economy and to win allies around the world through the exercise of soft power based on the country’s huge financial resources and the possibility to invest in long-term projects with few conditions attached. In the fifth section we apply these insights to examine the nature and extent of UAE investment in the Western Balkans and the motivations for these investments, focusing on the types of linkage that have developed between the two sides. This section highlights the UAE’s focus on projects in agriculture, property development, the armaments industry, and transport services. The section highlights the personalized and non-transparent nature of the agreements underpinning these investments. The final section concludes with some observations about the influence of the UAE as an external actor in the Western Balkans, suggesting that the informal business practices common to a sultanistic political culture have been imported into the Western Balkans at a time when the region is undergoing its own transition to more illiberal forms of democracy and authoritarian styles of governance. Seen from this perspective, the main influence of UAE involvement in the Western Balkans may be to undermine the conditionality and rules-based approach explicit in EU accession processes by providing an alternative model for economic and political development in the region.

The rentier state Rentier states, such as UAE, obtain most of their income from rents on natural resources. This income flows to the government, which then plays a distributive role to ensure their populations’ political support in return for generous welfare payments and state subsidies (Young, 2014). The oil revenues also support a system of patronage in which jobs in public administration and the extensive system of state-owned enterprises are allocated on a preferential basis to the native population, often on the basis of patrilineage through family networks. Much

244  Will Bartlett and Tena Prelec public expenditure is also allocated to prestige projects, large-scale infrastructure and military spending. This has led to the dominance of the public sector and an oversized bureaucracy, suffocating the development of private entrepreneurship (Althani, 2012). Immigrant workers, who form the largest part of the population, have only limited rights and no access to public sector employment. When oil prices fall, the government of a rentier state is more likely to reduce spending on capital projects than on welfare benefits and consumption spending, further undermining productive entrepreneurship. Such a state is therefore vulnerable to fluctuations in the price of its natural resources and so the diversification of the economy into non-oil activities is a natural aim of the government. The UAE has followed this logic and its strategy for the future post-oil economy has been to diversify the economy (Al-Hashemi, 2015). Dubai, whose oil reserves are much more limited than Abu Dhabi’s, pioneered the policy of economic diversification, building deep-water ports and an airport, while building its brand as a global business, logistics, media and leisure hub. It also invested in property development, building an entirely new city; one of the largest of the developers was the property company Emaar. Dubai now has a comparatively diversified economy in which retail trade, tourism, real estate and construction are key sectors of growth. The policy seeks to render the emirate a “sustainable, diversified, high-value added economy that encourages enterprises and entrepreneurship and is well integrated in the global economy” (Young, 2014, p. 60). Non-oil sectors now contribute about 70 percent of GDP in the UAE as a whole. One side effect has been that domestic demand for natural gas has increased due to rapid economic development based on the diversification of the economy into industrial production, real estate and tourism, necessitating substantial imports of natural gas from neighboring Qatar. To overcome this energy shortage Abu Dhabi is constructing a 5.6-GW nuclear power station and the UAE has set itself a target of 30 percent clean energy by 2030. The UAE has also established a number of Free Zones, which are insulated from the local economy and the bureaucracy and are organized along modern Western business principles with the added advantage of low or zero taxation. This approach was initiated by Dubai, which succeeded in attracting substantial foreign investment to drive the economic growth of the emirate. Abu Dhabi has followed to some extent, but has mainly outsourced production to external investments by sovereign wealth funds in other countries in the fields of agriculture, armaments and ownership in both productive and non-productive assets abroad, the latter principally in property investments. In this way, the UAE has effectively created a dual economy, with the inefficient domestic part of the economy insulated from the modern competitive economy based on the Free Zones and other isolated enclaves. As Hertog notes, “Free Zones are not only spatial enclaves with their own infrastructure, but constitute parallel economies, and in many ways, governments” (Hertog, 2017, p.  10). The aim is to insulate the emirate from external economic shocks and ensure its competitiveness in the global economy. However, “the new urban enclaves could be hard to export to other jurisdictions

UAE 245 where elites have less fiscal and political autonomy, where local [civil] societies are larger and better organized” (Hertog, 2017, p. 23).2

Complementarities in political cultures The political cultures in the UAE and the Western Balkans are to some extent convergent. The top-down approach of dealing with state issues characteristic of the UAE’s ‘sultanist’ political culture finds a number of similarities in the authoritarianism latent in several Balkan countries. As one interviewee remarked in discussing the UAE’s involvement in Montenegro “it is easier for us to talk to decision-makers here, as it is a rather small country. It is the same in our country. We have the concept of majlis:3 people can meet our rulers directly. It is similar here; when you want to meet officials from the government you just call, and easily get hold of the minister you want speak to. If it were in a bigger country, it would take more time” (Interview A). The majlis is a form of patrimonial governance, in which family structures provide a countervailing force to the absolute powers of the rulers (Young, 2014). As an informal method of government, family connections are more important than market relationships in determining the allocation of resources. The UAE has improved its transparency in recent years. In the latest Corruption Perception Index, it is ranked twenty-first worldwide, with a score of 71/100 (well ahead of any Western Balkan country) due to the efficient management of public finances, effective public procurement and good access to public services and infrastructure. Yet, despite its high ranking, the UAE places “severe restrictions on civil and public freedoms and suppresses any form of political dissent or criticism placed on the ruling families” (Transparency International, 2018). Although the Western Balkan countries have passed through a process of democratization, this has had a somewhat superficial character, and recent years have exhibited a reversion to practices of competitive authoritarianism that were characteristic of the early years of transition (Günay and Dzihic, 2016). The path to democratization in the Western Balkans has been a two-stage process, with an initial lingering of the communist elites, followed by a delayed democratic transition after 2000. However, democratization processes fell on shallow ground, given the legacy of sultanism and patrimonialism inherited from the Ottoman period and the authoritarian nature of the one-party states established under the communist regimes (Diamandouros and Larrabee, 2000). Diamandouros and Larrabee, following Max Weber, define sultanism as an extreme form of patrimonialism. Its distinctive features are “the personalized exercise of power, the lack of a clear distinction of the state from the ruler’s household and the official from the private, the discretionary unconstrained and unmediated exercise of power the subservience of the officials to the ruler, the use of tradition as a major principle of legitimation, and more generally the tendency to regard the state as a form of provisioning of the ruler” (Diamandouros and Larrabee, 2000, p. 30). This portrayal seems to chime with the return of the authoritarian elites in recent years in the Western Balkans, which has been accompanied by the re-emergence

246  Will Bartlett and Tena Prelec of the practices of illiberal democracy. These trends sit within the context of a political economy in which the rule of law is weak and contracts are enforced through informal rather than formal methods. The recent rise of ‘stabilitocrats’ (Pavlovic, 2017; BiEPAG, 2017) in the Balkans has given way to the consolidation of a specific system of governing that characterizes both Montenegro and Serbia, and partially Bosnia as well. Their leaders project relative stability to the outside world and present themselves as the guarantors of such stability, thus garnering the support of Western leaders and institutions, while all but eliminating political competition and consolidating a system of patronage at home. This, in turn, allows for a very personal way of conducting politics. The enhanced power of individual rulers, both during the war years and now, following the long period of economic crisis and the re-emergence of authoritarianism in various guises, has led to a situation of patronage and clientelism run rife. The potential similarities in character also extend to the wider attitude among the population. A senior representative of an Emirati company investing in the Balkans stated that in both the UAE and in the Western Balkans “people are more sentimental and emotional than in Western Europe, which extends to the ways of doing business”, highlighting that “this is both a good and a bad thing” (Interview B). They may be better equipped to navigate the muddy waters of informality, but as for any investor, the Emiratis are nominally unhappy with uncertainty and weakness in the rule of law. Discussing problems with investing in the Balkans, the respondent lamented the general lack of clarity and enforceability, stating: “there is a lot of gray; rules are not clear. This is hindering business, but it is also the reason why the yields are potentially higher, as there is less competition” (Interview B).

UAE foreign policy and motivations The UAE has traditionally tried to position itself as a neutral power internationally, and to do so it has developed its role as an aid donor. Its interest in the provision of foreign aid is fairly recent. In 2008, it established an Office for the Coordination of Foreign Aid with the aim to pursue a coordinated and sustainable approach to foreign policy in this field. This office was subsequently merged with the Ministry of International Cooperation and Development, which is officially mandated to propose strategies and policies related to foreign aid, raise the profile of the UAE as a major donor and support the foreign aid decision-making process. Globally, the UAE is the fifth largest provider of official overseas development assistance (ODA), and in 2017 it spent just over 1 percent of its GDP on ODA, amounting to an expenditure of US$1.24 billion.4 Over the period from 2011 to 2016, the flow of ODA from the UAE to the Western Balkans amounted to US$300 million.5 Most of this was provided in the form of grants. In 2015, 36.0 percent of all UAE aid to European countries went to Montenegro, 29.1 percent to Albania, 8.4 percent to Kosovo and 6.5 percent to Bosnia and Herzegovina (MOFAIC, 2015). While these countries have large Muslim populations, it is notable that the largest aid flow went to Montenegro, which has only a relatively

UAE 247 small Muslim population. The motivation for foreign aid is therefore not simply related to religious considerations, but also motivated by the UAE’s wider geopolitical interests. In this instance the motivation appears to be that of ensuring economic development through a US$50 million concessional loan to support agricultural development in Montenegro (Arabian Business, 2015). The UAE has also provided peacekeeping troops in regional conflict zones. This approach to foreign policy has been designed partly to deflect domestic opposition to the country’s dependence on protection from Western superpowers (Davidson, 2011, p. 24). Following involvements in Jordan and Somalia, the UAE intervened in the Balkans in 1995 by airlifting wounded Muslims out of Bosnia and Herzegovina and sending a peacekeeping force to Kosovo in 1999 (Davidson, 2011, p. 25). It has pursued its foreign policy goals through the instruments of “constructive engagement, quiet diplomacy, the power of the purse and commitment to the peaceful settlement of conflicts” (Al-Mashat, 2008). According to a senior UAE official, the country’s main foreign policy objective is to make friends by opening up to the world, investing in countries where it did not previously have a presence (interview A), and its attitude is defined as “geographically agnostic” (Interview  B). It should be emphasized that the UAE is not a source of radical Islamist resurgence in the Western Balkans, which has mostly been associated with the Salafist branch of Islam emanating from Saudi Arabia (Petrović, 2016). On the basis of its oil wealth, the UAE has established a number of sovereign wealth funds (SWFs) that are mainly controlled by members of the ruling families who hold the senior management positions in the funds. These funds include the Abu Dhabi Investment Authority (ADIA), the second largest SWF in the world, with assets estimated at US$627 billion. Other SWFs are the Abu Dhabi Investment Council (ADIC), Mubadala Development Company (MDC), International Petroleum Investment Company (IPIC), Dubai World, and Dubai International Capital (DIC).6 The funds invest in financial assets and other property and industrial ventures around the world; by 2016, net FDI outflows amounted to 4.5 percent of GDP. The UAE has used its excess oil revenues to generate good returns abroad ever since the 1970s, when ADIA was set up with the explicit goal of investing in long-term value creators (Ashton, 2016). It is thought that ADIA manages about US$800 billion in assets, nearly 10 percent of which are real estate holdings. The fund has about US$50 billion worth of real estate spread across 41 countries. For example, ADIA and the GID Development Group are building a 1,132-unit apartment complex project7 on New York’s Upper West Side. This development, called Waterline Square, will consist of three 38-story buildings spread over five acres. ADIA and GID raised a combined US$2.3  billion to finance the development, which is expected to open in 2019. In the UK, the Abu Dhabi royal family has become the second largest landowner in Mayfair, after the Duke of Westminster (Ashton, 2016). ADIA has also acquired a 16 percent stake in Gatwick Airport and a 9.9 percent stake in Thames Water, serving 8.5 million Londoners with 2.6 billion liters of tap water every day.

248  Will Bartlett and Tena Prelec The UAE has also projected soft power by making strategic investments abroad in the property and cultural sectors. Dubai’s various investment vehicles have bought the Carlton Tower and Lowndes Hotel in central London. The London Eye and Madame Tussaud’s waxworks were purchased in 2006. In 2005, the Mubadala Development Company bought a stake in the Italian motor manufacturer Ferrari, sponsored the Ferrari Formula One team, and hosts an annual Formula One Grand Prix (Davidson, 2012, p. 93). Abu Dhabi has also been involved in several urban regeneration projects. One of these has been a US$1.5-billion project to regenerate New East Manchester in collaboration with Manchester City Council in the UK. The project developed an 80-acre site close to the Manchester United soccer stadium. Abu Dhabi United Group bought Manchester City Football Club in 2008 for US$360 million (Davidson, 2012, p. 94). Human Rights Watch has accused the emirate of using the ownership of British assets to “construct a public relations image of a progressive, dynamic Gulf state, which deflects attention from what is really going on in the country” (Ashton, 2016). Economic considerations cannot be discounted when attempting to understand the motivations of the recent flows of investments from the UAE to the Balkans. They are in the forefront of the way the UAE portrays its presence in the Balkans, though whether presentation and substance are well matched is another matter. Criticism that all Emirati investment is merely ‘a smokescreen’, not based on real economic considerations, is misleading since UAE investors’ behavior in the Balkans has been serious and professionally executed. But it would be equally inappropriate to think that economic considerations are the only reasons for the UAE’s bolder presence in the Balkans in recent times, as strategic considerations are also taken into account. Its main motivation is based on a long-term perspective with the aim to develop sustainable economic relations with the countries with which it engages. The UAE is preparing for a post-oil economy by expanding its influence and striking alliances around the world while its economic power is still at its peak. The gray economy has been touted as a possible attraction factor for those ­investors in the Western Balkans who favor expediency over cumbersome transparency procedures. The extensive gray economy may be attractive to UAE investors, who stand to gain financially and strategically from establishing relations with Western Balkan countries before they become too subjected to EU ­regulations. One London-based investor argued that “when a state-controlled entity from the Arab world invests in the Balkans you are never sure why they are doing it. The presence of Arab investors may put off Western investors due to the perception that they have local political connections, pay bribes and use underhand methods to secure a competitive edge. In my view, the presence of Arab money in the Balkans further muddies the waters in the region” (Interview C). It should be noted that the Emiratis are not the only foreign investors in the region who are accused of not playing by the rules: a senior finance professional active in the banking sector in the Balkans has indicated that investors from other countries, such as Azerbaijan and Slovakia, are much more problematic, while the UAE usually behaves professionally in an administrative sense (Interview D).

UAE 249 In relation to the UAE’s linkages with Montenegro, a UAE official remarked that “my country saw Montenegro as their gateway to the Balkans. We were drawn here by the tolerance of the place, and also by the fact that, as a small country, it is easy to reach out to officials in no time” (Interview A). The official further observed that the UAE supports Montenegro’s EU aspirations, expecting that investors with a foot on the ground when the country becomes an EU member state will be well-placed to access a much wider market.

UAE activities, linkages and influence in the Western Balkans The financial involvement of the UAE in Southeast Europe is not a new phenomenon, but it has changed in character in recent years (Bartlett et al., 2017). While previous disbursements to Kosovo and Bosnia in the 1990s and early 2000s were mainly intended as foreign aid for post-war reconstruction purposes, coupled with a desire to help fellow Muslim populations in need, the present interest in Montenegro and Serbia is incontrovertibly related to commercial investments. In Montenegro, the main sectors of investment are construction, especially on coastal areas, and agriculture, for which a US$50 million loan was agreed. The first UAE embassy in the Balkans was opened in Montenegro in 2012, two years into the construction of the Atlas Capital Centre in Podgorica in the heart of the Montenegrin capital, financed by the Abu Dhabi Financial Group (ADFG). The complete overhaul of Serbia–UAE relations has been stunning. In the 1990s, Sheikh Zayed Al Nahyan was the first voice calling for the UN to recognize genocide in Bosnia (Romano, 2004). Less than two decades later, his son Sheikh Mohammed, the Crown Prince, struck up a close collaboration bordering on friendship with Serbia’s current president and former prime minister, Aleksandar Vučić. The Serbian leader promised lavish UAE investments to the Serbian public, including several high-profile business deals and a US$1 billion state loan negotiated in 2013.8 Shortly afterwards, in October 2013, the strategic state investment company Mubadala Development signed an agreement with the Serbian government to invest in sectors such as aerospace manufacturing, telecoms, renewable energy and semiconductors (Bernard, 2014). While much criticism has been made regarding the transparency and the potential for corruption these deals have created (Donaghy, 2014), UAE officials strongly contest such a view. They stress the long-term character of their investments, whose aim is to prepare for a future in which oil alone will no longer secure enough wealth for their country. Property development In both Dubai and Abu Dhabi, the ruling families are key players in the real estate market. Emaar Properties, the Dubai developer, was created through a combination of the wealth of the ruling family with a publicly listed company (Young, 2014, p. 61). It has recently branched out into property development in the Western Balkans. In the case of the Belgrade Waterfront (Beograd na vodi), UAE investments have caused huge controversy. The project, a luxury redevelopment

250  Will Bartlett and Tena Prelec along the riverfront of Belgrade, aims to transform a run-down area right in the center of the Serbian capital. In order to develop the site, a controversial lex specialis was approved in April 2015,9 granting the project a ‘public interest’ status. Major (and still debated) issues concern the lack of transparency surrounding the deal and the alleged rule relaxations to accommodate the investors. The site is being developed by Eagle Hills, a UAE property development company owned by executives from Emaar Properties. The contract was finally unveiled only nine days before the start of the works, in September 2015. In contrast with the €3.5 billion investment that the Serbian authorities promised to the public, it has emerged that under the terms of the contract the Serbian government will grant Eagle Hills a 99-year lease on land and in return the company will invest €150 million equity and €280m in loan capital. For this investment, Eagle Hills will own 68 percent of the project and the Serbian government will own the remaining 32 percent. Serbia is also bearing the cost of clearing the site, allegedly spending around €100 million, a subsidy which may contradict state aid rules which prohibit preferential state support for private investors.10 The contract also de facto obliges Serbia to implement changes in the law that are “necessary or desirable” to ensure the execution of the deal. In terms of urban planning, discontent is caused by the Belgrade Waterfront project’s character of luxury development, which risks making it inaccessible to most of Belgrade’s citizens. But the greatest controversy was caused by an event which occurred on the night between 24 and 25 April 2016 when masked hooligans (never identified) crashed and damaged a number of buildings in the Hercegovačka ulica in the Savamala district, while the Belgrade police failed to react to the local residents’ alarming reports about the demolition (KRIK, 2017). The Belgrade Waterfront development will rise in that area. In Montenegro, ADFG has developed the Atlas Capital Centre and the Capital Plaza in Podgorica, comprising a state-of-the-art mall offering high quality products and a hospitality and residential space (Bernard, 2015). It has plans to develop further housing projects on the Montenegrin coast. Similar controversies to the Belgrade Waterfront project have accompanied the recent attempt by the UAE’s Royal Group to invest in the Queen’s Beach between Budva and Bar in Montenegro, which was eventually stopped. In that case, critics stated that no tender was announced, that the real ownership of the investors’ company was in doubt, and that the Montenegrin government had promised to implement all necessary laws that would suit the investor (Interview E). However, a senior professional in Montenegro’s banking sector painted a different picture, stating that in his experience the two major UAE companies currently involved in Montenegro – the ADFG and the Investment Corporation of Dubai – are extremely professional and interested in investing further in the country (Interview D). He highlighted that the Investment Corporation of Dubai’s 2016 investment of more than €200 million in the luxury marina ‘Porto Montenegro’ was made with the intention of developing the project in the long term, unlike the previous investors – a consortium led by a Canadian billionaire – who had entered the project with the aim of quickly selling it off. The US$50 million agricultural loan mentioned above has also come under

UAE 251 intense scrutiny. It has been claimed that the funds were mostly disbursed to firms with close connections to the government, and in almost half the cases the projects have not been carried out properly (Mehanizam, 2019). In Bosnia and Herzegovina, Buroj Property Development of Dubai announced plans to invest €4.3 billion over eight years to build a luxury ‘tourist city’ in Trnovo near Sarajevo, in Bosnia and Herzegovina (Reuters, 2015). The development will cover 137 hectares and create thousands of housing units, hotels, sports facilities and the largest shopping mall in the region. It is expected to generate thousands of jobs and contribute to the development of the Bosnian tourism industry. Food security The UAE has limited food-producing capacities of its own due to a limited supply of fresh water and the hot climate, and so it imports about 85 percent of its food supplies to feed the rapidly growing population. Potential food scarcities could cause political instability, and so food security has become a key objective of the government. This concern became a reality in 2008, when increased food prices triggered riots by low-paid migrant workers (Ulrichsen, 2011, p. 111). The UAE has sought to diversify its sources of food supply and has bought land in several countries with more favorable climates, such as Egypt, Ethiopia, Mozambique, Pakistan, Tanzania and Yemen. More recently the it has invested in farmland in Serbia. The UAE Minister of Economy, Sultan bin Said Al-Mansuri, declared that investment in foreign agricultural land formed “part of our strategic investments in general” (quoted in Ulrichsen, 2011, p. 115). In 2014, the ADFD provided a €78 million loan for irrigation systems, and in exchange the Serbian Government guaranteed food exports to the UAE to ensure its food security. In an example of the close personal linkages between the rulers of the two countries, and the complementarity of patrimonial styles of government, the deal was agreed personally between Sheikh Mohammed bin Zayed and Aleksander Vučić, then Serbian Deputy Prime Minister. Under the deal, Al Dahra bought eight state-owned agricultural companies and acquired a majority stake in Rudnap Agrar, a subsidiary of the Rudnap Group based in Serbia, with the purpose of farming and distributing various crops. Al Dahra Rudnap currently operates an apple orchard comprising of 500,000 apple trees, spread over 130 hectares of land in Serbia with an annual production capacity of 10,000 metric tons. In addition, Al Dahra is building and cultivating six new apple orchard farms in Serbia, spread over an area of 2,400 acres and producing different apple varieties.11 Al Dahra Rudnap will build four new cold storage facilities in the new orchards with the capacity to accommodate 10,000 tons each. These new facilities will complement the cold storage facility at the existing orchard with the capacity to store 4,240 tons. The investment is expected to assist the development of the Serbian agricultural sector by transferring knowhow with scientific institutes and leading global companies specializing in this sector. It will also enable Al Dahra to gain greater access to the European markets and distribute its other products.

252  Will Bartlett and Tena Prelec The arms industry and military cooperation Socialist Yugoslavia developed a substantial arms industry that exported its products around the world and developed significant trade links with the Gulf States under the umbrella of the ‘Non-Aligned Movement’ of developing countries. The industry was damaged during the NATO offensive of 1999, but has since recovered and is now an important part of the Serbian economy. It is managed under the umbrella of the Ministry of Defense, under which 16 companies export military equipment and products though the state-owned Yugoimport-SDPR. The legacy of the former connections to the Gulf States has underpinned a revival of trade and investment linkages with the UAE in this sector.12 In March 2014 Sheikh Abdullah bin Zayed Al Nahyan, UAE Minister of Foreign Affairs, met Nebojša Rodić, Serbian Minister of Defense. A  cooperation between their respective security and defense agencies was agreed.13 Soon afterwards, in April 2014, a defense cooperation agreement was signed to provide training to UAE military police and Special Forces in the military academy in Serbia. The agreement also covered cooperation in the field of defense technologies, beginning with the joint development of mid-range mortar systems.14 A strategic partnership agreement has been signed between Yugoimport-SDPR and the Emirates Advanced Research & Technology Holding LLC-EARTH, the first product of which was a €200m contract to develop a land-based anti-ship cruise missile called the Advanced Light Attack System (ALAS). Although the contract is small in comparison with the overall UAE defense budget, it is significant for the development of the burgeoning Serbian military industrial complex. In a sign of the strengthening of such linkages in the field of defense, Serbia has also signed a number of MoUs with UAE-based companies to produce semiconductors and aircraft components. The UAE has become a key market for the Serbian arms industry, which has active contracts to supply armaments worth some US$220 million.15 The industry has begun to produce increasingly sophisticated products and is a driving force in the development of industrial production in Serbia. Transport The diversification of the UAE economy has also extended into the aviation industry. The UAE’s state-owned national airline, Etihad, has sought to expand its fleet and network of destinations by buying controlling stakes in Air Seychelles, Air Berlin, Virgin Australia, Aer Lingus, Jet Airways, Alitalia and Darwin Airlines. The strategy has been to create a global network of connecting flights with Abu Dhabi International airport as the hub. The airline is one of a small group of ‘super-connector’ airlines that are making competitive inroads into the market for international air transport.16 However, more recently Etihad has begun to experience financial problems as the business strategy proved to be too ambitious in the reckless drive for expansion, announcing a loss of US$1.87 billion in 2017 (Harkin, 2018). Air Berlin and Alitalia became bankrupt in 2017, and in January 2018

UAE 253 Air Seychelles launched austerity measures and announced the implementation of a restructuring plan. In 2013, Etihad acquired a 49 percent stake in the Serbian national carrier JAT and restructured the airline under a five-year management contract under the name of Air Serbia. According to a comment posted on Ex-Yu Airline News, “Air Serbia . . . [was] purchased through a political governmental deal . . . I still remember [the Emirati CEO] saying in one of his first speeches in Belgrade how he would have never have looked at JAT if he wasn’t ordered by the Emir”.17 This brings out the central importance of the personal linkages between the top rulers in both the UAE and Serbia in making key investment decisions, a practice that is characteristic of sultanism as a political system. The Chairman of the Supervisory Board of the airline is none other than Belgrade’s former mayor Siniša Mali, the same official who has been promoting the Belgrade Waterfront project.18 The investment was initially successful in improving the business performance of the company. By 2016, Air Serbia had 21 aircraft and 19 codeshare partners enabling connectivity to 127 destinations, employing 1,500 people and carrying 2.6 million passengers (up from 2.3 million in 2013). In November 2017, Serbia’s President Aleksandar Vučić met the Crown Prince of Abu Dhabi, Mohammed Bin Zayed al-Nahyan, to discuss the “further improvement” of relations between the two countries. Among other questions, the two leaders discussed the “continuation of the cooperation between the Republic of Serbia and Etihad through operations of the national air carrier of Serbia” and reviewed the continuation of the partnership. In February 2018, Air Serbia also announced its own restructuring plan as it struggled to keep a lid on costs, growing competition, an over-inflated workforce and the winding down of state subsidies, transferring 340 employees from its handling unit to the state-owned Belgrade airport (Ex-Yu Aviation News, 2018). At the same time, the airline’s CEO stepped down from his position (Harkin, 2018). A proposed new service to Geneva has been postponed, and the pricing model has been revamped under intense competitive pressure from European low-cost airlines. It is uncertain whether Etihad will maintain its investment stake when the five-year investment management agreement expires in January 2019, which will probably depend upon the success of the restructuring program. Overall, the involvement of the UAE in the Serbian airline company has led to the introduction of new investment and a shake up of the company’s business performance. As part of the Etihad connectivity strategy, many passengers now fly with Air Serbia as part of a longer journey, passing through Belgrade airport. This has led to a larger number of destinations becoming available for passengers travelling to and from Serbia, and Belgrade airport has become a regional hub, bringing new business to the country. This would not have been possible without the long-term investment in the company provided by its partnership with UAE. Nevertheless, the industry is highly competitive and the long-term sustainability of Air Serbia as a viable national carrier is not assured without careful stewardship by a responsible management team, independent of political influence from the majority owner, the Serbian state.

254  Will Bartlett and Tena Prelec Foreign policy and security At present, the UAE does not appear to be actively attempting to influence the foreign policy of Western Balkan states. Their stated intention – of making friends around the world and establishing themselves in the markets of the Western Balkans before a larger market opens following eventual EU accession – can be interpreted as setting out a geopolitical interest which is not seeking an immediate return, but laying a long-term basis for influence at the doorsteps of the EU. The cooperation in the military sector may however have a more immediate and troubling foreign policy angle. An investigation by the OCCRP, BIRN and the Guardian showed that the UAE and other Middle Eastern countries have acquired weapons valued at more than €1 billion from East European countries, including Serbia, Montenegro and Croatia, and that a share of these imports lands in the hands of fighters in Syria (Angelovski, et  al., 2016). The inquiry identified 42 airplanes that had left Serbia carrying weapons. Further concerns exist about the possibility of the use of the port of Bar, in Montenegro, for weapon and cigarette smuggling to the Middle East (Interview F). In regard to specific foreign policy topics, it is notable that the UAE and Serbia are in disagreement over the Kosovo issue (Bartlett et  al., 2017). On 14 October 2008, the UAE became the 51st UN member state – and the first Arab League or GCC state – to recognize Kosovo. The Foreign Ministry of the UAE explained the decision by expressing “support for peoples’ legitimate right to self-determination” (Agence France-Presse, 2008). Since then, the actions of the UAE leadership vis-à-vis the Balkans have ceased to have an ideological element and have focused almost exclusively on the economic dimension. This is best exemplified by the different approach of the late Sheikh Zayed in condemning Serbia’s actions in the 1990s as outlined above, compared to the more pragmatic stance taken by his son Mohammed.

Conclusion The above analysis demonstrates the strong linkages that have developed over the last five years between the UAE and the Western Balkans (primarily Serbia, Bosnia and Herzegovina and Montenegro). These linkages have been mainly structured around specific investment projects in a diverse set of sectors including agriculture, property development, armaments and military procurement and cooperation, and transport services. They have partly been designed within the context of the UAE’s strategic need for the diversification of industrial development and establishing food security for the future needs of a growing population. The UAE’s increasing involvement in the region can be understood as a strategic approach to developing soft power through prestige projects, of which the Belgrade Waterfront can be seen as one example, and the Air Serbia investment another. The latter also fits in with the strategic approach to diversification of the economy away from oil and gas production, in this case towards the development of a global airline industry.

UAE 255 Referring back to the rationale of the book set out in the introductory chapter, we have found that the type of linkages that have developed between the UAE and the countries of the Western Balkans are mainly economic (FDI and loans) and partially military (procurement and cooperation), while the societal dimension is almost absent. The UAE are using these linkages as a ‘medium’, intended to create links with small powers to gain leverage over them in terms of conduct and policy outcomes, only in a subtle way: Emirati officials are nominally supportive of the Western Balkans’ EU accession trajectory, as they expect the opening of a larger market to bring benefits to their business investments further down the line, once their foothold has been firmly established. Moreover, as remarked by Tzifakis and Bieber in the introductory chapter to this book, linkages intended as ‘sources’ of influence bear costs and benefits that are often not equally distributed. The distribution of such benefits creates constituencies in each country that develop a common interest in the continued presence and growth of the linkages. This phenomenon is clearly seen at play in the case of Emirati investments: although part of the local population in Balkan countries has, in many cases, been vocal in opposing the imposition of business deals seen as non-transparent and non-inclusive, the political leadership has relentlessly pushed on with their implementation. All these linkages have developed within a very specific political culture in both countries which may be called ‘sultanism’, a political system that emphasizes the controlling power of a few individuals at the peak of society.19 In the case of the UAE, these individuals are the members of the ruling family. In the case of Serbia, they are members of the ruling coalition. While the UAE has always been a family-based ruling elite, in which political constraints are imposed by extended family networks and the informal institution of the majlis, in the case of the Western Balkans the political culture has been in a state of flux. The process of democratization has been characterized as a two-stage process in which, in the 1990s, parts of the old elite from the communist period hung on to power and reform was delayed until the democratic turn in 2000. Since then, although some progress has been made to establish liberal democratic practices, this appears to have been cut short following the austerity programs adopted in response to the economic crisis (see Bartlett and Prica, 2018). In the last few years there has been noticeable democratic backsliding, leading to the return of former practices of competitive authoritarianism with some elements of sultanistic-style practices emerging. This has coincided with enlargement fatigue on the part of the EU and the gradual slowing down of the EU accession process. Part of the conditionality for accession is the adoption of rules regarding state aid and competition policy, especially in relation to public procurement. However, some of the investment examples discussed in this chapter highlight the lack of transparency and infringement of the spirit of the rule-based system implied by progress in the EU accession process. This lack of transparency is underpinned by personalized bargaining and informal agreements between the rulers of the two countries. It is almost as if the informal practice of the majlis has been brought into the business practices and political culture of the Western Balkans. The modus operandi of some of the UAE investments in the Balkans fits a pattern of competitive authoritarianism and illiberal

256  Will Bartlett and Tena Prelec democracy that have re-appeared in the region. This may have a retrograde influence on the political culture and institutional framework underpinning economic transactions in the region, and if it were to deepen might provide a serious impediment to further progress with EU integration and democratic consolidation. On the other hand, it is relevant to note that other investments have been less controversial, and that the long-term philosophy underpinning the UAE’s style of investing is capable of providing a much-needed stimulus for economic d­ evelopment – as long as transparent methods, and not handshake investments, are put to use.

Notes 1 These states were known as the Trucial States due to the truce signed with Britain. 2 Some countries of the Western Balkans, have developed a number of Free Zones in recent years. In Serbia there are, at the time of writing (June 2018), 14 free customs zone in the following cities and towns: Pirot, Subotica, Zrenjanin, FAS Kragujevac, Sabac, Novi Sad, Uzice, Smederevo, Svilajnac, Krusevac, Apatin, Vranje, Priboj and Belgrade (see: https://ras.gov.rs/en/invest-in-serbia/why-serbia/free-zones). 3 The majlis is literally a sitting room or reception room or council. The informal institution of the majlis as a system of governance is analyzed in Karen Young’s book (Young, 2014). 4 See: https://data.oecd.org/oda/distribution-of-net-oda.htm#indicator-chart 5 Data taken from the OECD QWIDS database. Although this is rather trivial in comparison to the US$3 billion annual outward private investment made by UAE companies and wealth funds around the world, its significance should be seen in its effectiveness in building diplomatic and business alliances and paving the way for larger commercial investments. 6 The MDC and the IPIC have recently announced a merger. 7 GID is a diversified investment firm based in Boston, USA. 8 Alexander Vučić, deputy prime minister at the time the loan was agreed, said it could almost be “considered a gift” (Buckley and Kerr, 2013). The first of five annual instalments of US$211 million was disbursed in 2016 as official development assistance, at 2.25 percent interest rate with a grace period of 10 years, making UAE the largest donor to Serbia after the EU. 9 Full text available at www.vreme.com/cms/view.php?id=1282511&print=yes 10 The Western Balkan countries that have signed Stabilization and Association Agreements with the EU are obliged to follow the EU acquis on state aid controls. 11 www.aldahra.com/en-us/business-divisions/human-food-division/fruits-and-vegetables/ al-dahra-rudnap 12 The UAE was a member of the Non-Aligned Movement, founded by Yugoslavia, and attended the first summit of the movement, held in Belgrade in 1961. The two countries had active trade relations exchanging petroleum for manufactured goods. 13 Ministry of Defense of the Republic of Serbia, 2013 14 Ministry of Defense of the Republic of Serbia, 2014. The issue of military training capacity has become more important for the UAE since the introduction of compulsory military service. 15 Tanjug (2017). 16 The Economist (2015). Other ‘super-connector’ airlines are Emirates and Qatar Airways. Together with Turkish Airlines, they have combined fleet of 700 aircraft with 900 more on order. 17 Reader comment on Ex-Yu Aviation News, 19 February 2018 at 09.16AM

UAE 257 18 Mali was the subject of several controversies concerning abuse of power and corruption, including the allegation that he prided himself with organizing the illegal demolitions in Savamala to make space for the Belgrade Waterfront in April 2016 (as stated – and then withdrawn – by his former wife in an interview with KRIK, 13 February 2017). 19 The related concept of ‘neopatrimonialism’ has been used by some authors to describe these phenomena, such as Eisenstadt (1973), Guliyev (2011) and Ugar-Cinar (2017)

References Agence France-Presse, 2008. UAE Is First Arab State to Recognize Kosovo. Agence France-Presse, 14 October. Al-Hashemi, H., 2015. The Role of Diversification Strategies in the Economic Development of Oil-Dependent Countries: The Case of UAE. International Journal of Business and Economic Development, 3 (1), 47–57. Al-Mashat, A., 2008. Politics of Constructive Engagement: The Foreign Policy of the United Arab Emirates. In: Korany, B., and Dessouki, A. (eds.), The Foreign Policies of Arab States: The Challenge of Globalization. Cairo: The American University in Cairo Press, pp. 457–480. Althani, M. A. J., 2012. The Arab Spring and the Gulf States: Time to Embrace Change. London: Profile Books. Angelovski, I., Patručić, M., and Marzouk, L., 2016. Revealed: The £1bn Flowing from Eastern Europe to the Middle East. The Guardian, 27 July. Arabian Business, 2015. Abu Dhabi Fund Offers $50m Loan to Support Montenegro Farmer. Arabian Business, 7 July. Ashton, J., 2016. How Abu Dhabi’s Mega-Rich Are Buying Up London. Evening Standard, 16 April. Bartlett, W., and Prica, I., 2018. Debt in the Super-Periphery: The Case of the Western Balkans. Third World Thematics, 2 (6), 825–844. https://doi.org/10.1080/23802014. 2017.1438850. Bartlett, W., Ker-Lindsay, J., Alexander, K., and Prelec, T., 2017. The UAE as an Emerging Actor in the Western Balkans: The Case of Strategic Investment in Serbia. Journal of Arabian Studies, 7 (1), 94–112. Bernard, L., 2014. Abu Dhabi Signs $1bbn Loan Agreement with Serbia. The National, 6 March. Bernard, L., 2015. Abu Dhabi Investors Expand in Montenegro as Capital Plaza Opens. The National, 27 September. BiEPAG, 2017. The Crisis of Democracy in the Western Balkans. Authoritarianism and EU Stabilitocracy. Policy Paper, March. Buckley, N., and Kerr, S., 2013. Serbia Seeks Billions in Loans from UAE Amid Bankruptcy Fears. Financial Times, 7 October. Davidson, C. M., 2011. The United Arab Emirates. In: Davidson, C. (ed.), Power and Politics in the Persian Gulf Monarchies. London: Hurst & Co, pp. 7–30. Davidson, C. M., 2012. After the Sheiks: The Coming Collapse of the Gulf Monarchies. London: Hurst & Co. Diamandouros, P. N., and Larrabee, F. S., 2000. Democratization in South-Eastern Europe: Theoretical Considerations and Evolving Trends. In: Pridham, G., and Gallagher, T. (eds.), Experimenting with Democracy: Regime Change in the Balkans. London: Routledge. Donaghy, R., 2014. The UAE’s Shadowy Dealings in Serbia. Middle East Eye, 15 August.

258  Will Bartlett and Tena Prelec Eisenstadt, S. N., 1973. Traditional Patrimonialism and Modern Neopatrimonialism. Beverly Hills, CA: Sage Publications. Ex-Yu Aviation News, 2018. Air Serbia to Undergo Deep Restructuring. Ex-Yu Aviation News, 19 February. Guliyev, F., 2011. Personal Rule, Neopatrimonialism, and Regime Typologies: Integrating Dahlian and Weberian Approaches to Regime Studies. Democratization, 18 (3), 575–601. Günay, C., and Dzihic, V., 2016. Decoding the Authoritarian Code: Exercising ‘legitimate’ Power Politics Through the Ruling Parties in Turkey, Macedonia and Serbia. Southeast Europe and Black Sea Studies, 16 (4), 529–549. Harkin, M., 2018. Rumor: Air Serbia to Restructure. Will Etihad Pull Out? AeroTime, 21 February. Hertog, S., 2017. A Quest for Significance: Gulf Oil Monarchies International ‘soft power’ Strategies and Their Local Urban Dimensions. LSE Kuwait Programme Paper Series 42, London School of Economics and Political Science. KRIK, 2017. Marija Mali o poslovima bivšeg supruga: ofšor, skrivena imovina, Savamala. KRIK, 13 February. Mehanizam (2019) “Poslovna Tajna - I dio” (Business Secret - first part), Mehanizam, RTCG, 7 March 2019. Ministry of Defense of the Republic of Serbia, 2013. Intensified Military Cooperation with Emirates, 14 March. Ministry of Defense of the Republic of Serbia, 2014. UAE Partners with Serbia for Military Training, 26 April. MOFAIC, 2015. United Arab Emirates Foreign Aid 2015. Abu Dhabi: Ministry of Foreign Affairs and International Cooperation. Pavlovic, S., 2017. West Is Best: How ‘stabilitocracy’ Undermines Democracy Building in the Balkans. LSE EUROPP European Politics and Policy, 5 May. Petrović, P., 2016. Islamic Radicalism in the Balkans. Paris/Brussels: European Institute of Security Studies. https://www.iss.europa.eu/content/islamic-radicalism-balkans Reuters, 2015. Dubai Developer to Build Dh17bn Tourist Resort in Bosnia. The National, 11 October. Romano, A., 2004. A Historical Atlas of the United Arab Emirates. New York: The Rosen Publishing Group. Tanjug, 2017. Serbia Showcases New Weapons and Equipment at UAE Arms Expo. Tanjug, 20 February. The Economist, 2015. Super-Connecting the World. The Economist, 25 April. Transparency International, 2018. Rampant Corruption in Arab States. Regional Analysis by Marwa Fatfta, 21 February. Ugur-Cinar, M., 2017. Embedded Neopatrimonialism: Patriarchy and Democracy in Turkey. Social Politics, 24 (3), 324–343. Ulrichsen, K. C., 2011. Insecure Gulf: The End of Certainty and the Transition to the PostOil Era. London: Hurst & Co. Young, K. E., 2014. The Political Economy of Energy, Finance and Security in the United Arab Emirates: Between the Majilis and the Market. Basingstoke: Palgrave Macmillan.

Interviews Interview A: UAE official, Podgorica (Montenegro), September 2015 Interview B: Senior representative of an Emirati company investing in the Balkans, Abu Dhabi (UAE), October 2015

UAE 259 Interview C: Manager in a UK-based hedge fund investing in emerging markets, phone interview, November 2017. Interview D: Senior banking professional working in Montenegro and Serbia. Podgorica, November 2016, and email interview, March 2018. Interview E: Former senior official of the Montenegrin municipality of Budva, Podgorica (Montenegro), September 2015. Interview F: Former senior Montenegrin official, April 2018.

Conclusions Florian Bieber and Nikolaos Tzifakis

The Western Balkans is a region defined by being both outside the European Union, yet surrounded by it. With the integrative force of the EU and the engagement of the U.S. to uphold the post-war order, the region appeared to be closely linked with Western Euro–Atlantic structures, such as NATO and the EU. This is no longer to be taken for granted. As the transatlantic relationship has become brittle, not least since the election of Donald Trump as U.S. president, and the EU has become beset with problems, the attractiveness and the engagement of the EU and NATO towards the Western Balkans have declined. In parallel, other countries have increased their presence, ranging from great powers, namely, Russia and China, to regional actors such as Turkey and the United Arab Emirates. This shift is part of a wider global change that is not unique to the Western Balkans. It also sets what has been called the ‘new scramble for Africa’ (Carmody, 2011), and it has even been manifested within the EU itself. This self-confidence and engagement by powers that, until recently, were too weak or remote in the Western Balkans is not negative per se, as it includes some important economic investments and diversification. Thus, this book argues for understanding these links for what they are: complex, multifaceted and based on varying motivations. Furthermore, this book also seeks not to reduce the countries and societies of the Western Balkans to mere objects of global geopolitical conflicts. Local governments, acting as gatekeepers, shape the role external actors can play and have been using the interests of third countries to maximize their positions towards their own populations and other external players. Indeed, the role of external actors is often highly personalized, as epitomized by the close ties between Turkish President Recep Tayyip Erdoğan and the leader of the Bosniak SDA, Bakir Izetbegović. This is the result of the personalized style of government in the Western Balkans and in some of the external countries under discussion, in particular Turkey, Russia and the UAE. The chapters in this book consider different dimensions of linkages and relations, including military and political, economic and societal. What emerges is that some actors are primarily important in the field of economic relations, such as China or the UAE, but without matching political or societal ties. Others, such as Russia and Turkey, often develop greater political or societal linkages, but

Conclusions 261 maintain more limited economic ties. Thus, no single actor is deeply engaged with the Western Balkans in all dimensions. Furthermore, this book is interested in understanding not just the extent of engagement, but also the impact. As outlined in the introduction, the chapters seek to examine how external actors either seek compliance or consensus with regional countries, and whether this engagement is directed through linkages that function as transmission belts of influence (i.e., as mediums) or, more directly, through linkages that establish mostly asymmetric relationships and themselves represent sources of influence. These criteria allow us to assess the ability of these external actors to influence developments in the region and understand the types of relationships that have emerged. Notably, there are external actors that have either entered the region only in recent years (China and the UAE) or have lately transformed their engagement (Russia and Turkey). Consequently, the chapters reflect dynamic and often changing types of relationships. When it comes to economic engagement, Turkey, China and the UAE have become important investors, including both government and private investors in the region. There is no doubt that this inflow of money has created jobs and has contributed to the economic growth of the Western Balkans. At the same time, these investments have benefited from and contributed to authoritarian patterns in the region. Many of these investments have been initiated by contacts among governments and in many cases among leaders themselves. As a result, many investments have circumvented conventional public procurement procedures that require competitive bids and transparent processes. This has raised concerns about whether this engagement is weakening state institutions and formal procedures, but also whether the resources prop up autocratic rulers, either by directly syphoning off funds or by funding politically profitable prestige projects. Finally, investments based on political considerations can lead to economic dependencies, as some of the externally funded projects risk creating debt traps for the countries of Western Balkans, such as the ‘highway to nowhere’ in Montenegro. The engagement of external actors with close religious or cultural ties has often created expectations among populations sharing the connections but has also generated sentiments of fear among other, neighboring communities. Both are often based on misconceptions. Whether Serbian citizens grossly overestimate Russian economic engagement, or whether Bosnia’s non-Muslims worry about investments from the UAE in their country, external actors are rarely viewed in the region as mere neutral investors. As a result, external actors’ engagement, in its true scale or perceived through the lenses of cultural affinity and blown out of proportion, has at times increased tensions. Displays of cultural proximity are often trumped by the reality of economic pragmatism, as highlighted by the example of Turkey’s greater investments in Serbia than in Bosnia. Overall, the regional picture suggests that China and the UAE are primarily economic actors, who best fit the type of consensual engagement. In addition, their relevance is rather based on linkages that establish asymmetric relationships than by linkages that seek to function as mediums for the advancement of

262  Florian Bieber and Nikolaos Tzifakis particular messages or policy objectives. The UAE has become engaged through both highly personalized ties, as in the case of Serbia, resulting in significant economic engagement or through the more decentralized engagement in tourism and real estate in Bosnia and Herzegovina. Neither is based on a clear long-term strategy or region-wide plan. As the UAE is prosperous, but not a unified global economic actor, this type of engagement is not surprising and sets it apart from China. China, as an emerging global economic and political actor, has grown its influence and engagement at a similar pace to the UAE. Here, however, the country has engaged not so much with individual leaders or countries, but rather focuses on a regional and in fact a broader strategy that includes Central Europe and the Balkan EU members as well in the 16 + 1 format, and even more broadly in the ‘Belt and Road Initiative’. Thus, the Chinese engagement is embedded in a wider strategy, which has to date not been political and sought consensus with the countries of the Western Balkans. The only exception is Kosovo, which China does not recognize, and thus remains ignored or in effect subject to a more coercive policy. Russia and Turkey display a stronger political and social engagement in the region, both shaped by proximity, historical ties and specific political agendas. As a result, the relationship to several countries of the region is more compliancebased and focuses on the creation of multiple channels for the transmission of influence. Russia and Turkey have been supportive of governments that have followed their agendas. The most notable examples are Serbia’s foreign policy alliance with Russia and the support of regional governments for Turkey’s efforts to crack down on the Gülen movement after the failed 2016 coup attempt. Both Russia and Turkey have also reprimanded governments when they failed to comply. For instance, Russia has rebuked the governments of North Macedonia and Montenegro for pursuing their NATO bids, and it has additionally expressed its disapproval of the former’s ascent to power through the ‘colorful revolution’. Turkey has, likewise, criticized those who did not follow its request for closing allegedly Gülen-sponsored institutions. Non-Western actors do not form a single block in the region. They do not share common interests and they do not coordinate their policies. On major issues, external actors are found on diametrically opposite sides. For instance, Turkey supports Bosnia and Herzegovina’s NATO bid and the Bosniak struggle through the SDA for a more centralized state. On the other hand, Russia opposes Bosnia’s NATO accession and backs up Milorad Dodik, the main advocate of Bosnian Serb separatism. Similarly, Turkey and the UAE have recognized Kosovo statehood, whereas China and Russia have been defending Serbia’s sovereignty claim over Kosovo in the UN Security Council. Moreover, not only do external actors concentrate their engagement in different sectors, they also privilege their relations with different Western Balkan countries, with Serbia being the notable exception owing to its size and location. In addition, the economic, political and social engagements of external actors in the region do not always overlap. While Turkey has extended most social and political support to governments and political leaders from Muslim majority countries or parties appealing to a Muslim electorate,

Conclusions 263 its economic engagement has been strong in Serbia and North Macedonia, disregarding these religious affinities. Russia has found most reception for cultural and social engagement among the Serb population in Serbia, Montenegro, and Bosnia and Herzegovina, but has also engaged politically in North Macedonia. Economically, Russia has also been involved in Croatia, despite the absence of strong political or societal ties. Interestingly, external actors do not oppose to the region’s EU accession. In many respects their economic interest in the Western Balkans is stimulated by its European perspective. The prospects of political stability, economic growth and full membership in the single market explicate much of the Chinese and UAE strategic economic investments in the region. Turkey, formally an EU candidate itself, is not against the EU enlargement in the Western Balkans. As for Russia, the EU accession of countries with which it shares strong linkages and religious and cultural affinity implies that the number of EU members that may function as ‘Trojan horses’ in foreign policy matters and undermine unity of purpose may increase. Overall, the engagement of external actors is domestically not uncontested. The Russian influence is highly polarizing in Montenegro, Bosnia and Serbia and far from uniformly welcomed. In Bosnia, it is due to the support from the nationalist position of Milorad Dodik and his attempt to buy Russian favor, whereas in Montenegro it is the support of Russia for Serb nationalist opposition groups, as well as past murky investments, while in Serbia, the liberal opposition views Russia as backing the increasingly authoritarian rule of Aleksandar Vučić (who can also count on Western backing). Turkey and the UAE are similarly polarizing for supporting projects of regional strongmen and their (presumed) preference for parties and leaders with a Muslim political agenda. China has been less polarizing, but the rising debts and disregard for the environment (as in Montenegro) also create tensions. In a region that has long been a periphery with competing influences, there is a strong historical pattern of both looking for outside models and patrons, and for playing different actors off each other. Thus, the outsiders are also increasing the choice of regional governments who no longer exclusively rely on Western or EU support and can play up (or down) different actors for their own advantage. In this respect, Western Balkan leaders are given the opportunity to convey to Brussels the message that if their countries’ EU accession does not advance, they may examine alternatives for their countries’ external orientations. Nevertheless, the danger here is that skeptics of the Western Balkans’ EU accession may perceive the linkages of external actors with the region as a confirmation of their belief that the process of EU enlargement should discontinue. External actors have risen as the EU and the United States have become weaker actors in the Western Balkans (and beyond). Economically, they have filled a gap left in terms of investments, loans and infrastructural projects. Some of this engagement can or could help in the transformation of the region. However, as chapters in this book highlight, the lack of transparency, the economic dependencies and political considerations connected with many of the investments create political risks that could result in bolstering authoritarianism, economic failure and becoming a wedge in the links between the region and the EU.

264  Florian Bieber and Nikolaos Tzifakis The political engagement is often more detrimental, as it actively seeks to undermine the ties between the countries of the region and the West, but also among each other. The political influence of Russia and Turkey has favored undemocratic actors, as well as parties who emphasize ethnic and religious affinity to them, often undermining cross-cutting cooperation. In addition, their political engagement has also been a useful tool to play up regional xenophobia and nationalist antagonism or disguise and even justify authoritarian policies on countries of the region, such as Montenegro. The ‘return of geopolitics’ has resulted in the increasing significance of global strategic power (or weakness) in relations with large and medium powers and reduced the relevance of norm-based alignment. Thus, the EU and the United States in their policies towards the Western Balkans have, over the past decade, often emphasized the strategic containment of radical Islam or of Russian influence over value-driven policy goals such as democracy consolidation and the rule of law. Consequently, the symbiotic relationship between the West’s state of disunity and the relative weakness of its norms-driven policy in the Western Balkans has facilitated the rise of external actors. Whereas the region is replicating global trends, its specificity arises from the promise of EU membership. Presumably, to the extent that all Western Balkan countries are EU member aspirants, processes of identification and internalization of EU norms and policies should increasingly come into play. Moreover, the links of external non-Western countries with the Balkans should not be overestimated. In economic terms, the position of EU28 in the region is unrivaled. In 2017, the EU28 accounted for 72.8 percent of the region’s international trade in goods (83.8% of exports and 66.5% of imports). As for China, Russia and Turkey, they were distant seconds, representing 5.7 percent, 4.8 percent and 4.3 percent of the region’s international trade, respectively (European Commission, 2018b, p. 8). A similar picture emerges in FDI, with 72.5 percent of inflows during the 2007–2015 period coming from the EU28 and only 4.6 percent originating from Russia (European Commission, 2018a, p.  1). The fact that Western Balkan people tend to overestimate the importance of linkages with China, Russia or Turkey should not be overlooked. It implies that these external countries take the maximum credit (i.e., influence) out of their linkages, with the EU28 failing to make its role fully appreciated. To conclude, the EU has considerably more leverage in structuring the region and engaging with external actors to limit their pernicious effects. If this fails in the Western Balkans, it is unlikely to succeed elsewhere.

References Carmody, Pádraig, 2011. The New Scramble for Africa. Cambridge: Polity Press. European Commission, 2018a. European Union, Trade in Goods with Western Balkans 6. Directorate-General for Trade, Units A4/G2, 16 April. http://trade.ec.europa.eu/doclib/ docs/2006/september/tradoc_111477.pdf. European Commission, 2018b. EU-Western Balkans Economic Relations – Investing in People, Infrastructures and Reforms, May. https://ec.europa.eu/commission/sites/ beta-political/files/economic-relations_en.pdf.

Index

16 + 1 initiative 52, 55, 207, 209 – 210, 212 – 215, 218, 219, 262; Albania 171 – 172; Montenegro 154; North Macedonia 137, 139; Serbia 72, 76 Abkhazia 24, 68, 119, 190 Abu Dhabi 241 – 242, 244, 247, 249 Abu Dhabi Capital Group 157 Abu Dhabi Financial Group (ADFG) 249 – 250 Abu Dhabi Fund for Development (ADFD) 95, 158, 176, 251 Abu Dhabi Investment Authority (ADIA) 247 Adriatic Charter 22, 111, 187 Agrokor 195 Ahtisaari, Martii 190 Ahtisaari Plan 65 Air Serbia 4, 74, 253 – 254 Albania 22, 67; Chinese influence 171 – 173; EU integration 166 – 169; Gulf countries’ influence 176 – 178; NATO membership 17, 20; religion and identity 177; Russian influence 169 – 171; trading partners 38; Turkish influence Albanian Muslim Community 176 Aleksandrovych, Oleksandr 192 Al-Masri, Khalid 28 Al Nahyan, Sheikh Abdulla bin Zayed 241 Al Nahyan, Sheikh Khalifa bin Zayed 249, 252–253 Al Nahyan, Sheikh Muhammad bin Zayed 241 Al Nahyan, Zayed bin Sultan 95, 241 Anadolu Agency (Turkish news agency) 3, 135 Arab Spring 1, 232

Atlas Capital Centre (Podgorica, Montenegro) 249 – 250 Austria 149 Austrian EU Presidency 26 authoritarian 18, 227, 233 – 234, 243, 245, 261, 263; drift 18, 243; regimes 19, 122; tendencies 28 – 30, 234; turn 28, 236 – 237 authoritarianism 139, 165, 243, 245, 263; competitive 19, 24, 255 – 256; re-emergence of 246 Balkan Battle Group (HELBROC) 63 Banatski Dvor (Serbia) 71 Banja Luka 92, 99, 196 – 197 Bar-Boljare highway 3, 146, 155 – 157, 160, 211, 216 Belgrade 4, 74, 208, 250, 253 Belgrade-Budapest railway 3, 209 Belgrade-Pristina dialogue 114 – 115 Belgrade Waterfront 4, 74, 250, 253, 254 Belt and Road Initiative (BRI) 52, 208 – 211, 222, 262; Albania 171; Bosnia and Herzegovina 99; Montenegro 154, 156 – 157; Serbia 78 Beopetrol (Serbian petroleum company) 72 Berlin process 45, 55, 72, 114 Bilgiç, Tanju 231 Blushi, Ben 175 Bosnalijek (company, Bosnia and Herzegovina) 195 Bosna Sema Foundation 85 – 86, 236 Bosnia and Herzegovina 21 – 23; economic relations with Turkey 67, 86 – 89; Erdoğan’s pre-election rally 90 – 91; Russian influence 197 – 198; trading partners 38; UAE influence 93 – 98, 251 Bosniak 86; Muslim 97, 153; party 89, 154; political elite 84, 98, 101

266 Index Bosniak Party in Montenegro 153 – 154 Bosniak Party of Democratic Action (SDA) 84 – 86, 89, 236, 260, 262 Bosnian: Muslim 84, 95, 229; Serb 90, 188, 262; war 95 Bosnian-Chinese Friendship Association 98 Bozay, Mehmet Kemal 231 Brexit 1, 20, 36, 103, 146 Brod (Bosnia and Herzegovina) 91, 92 Bruçaj, Skender 235 Bucharest summit 22, 24, 129 Budva (Montenegro) 152, 250 Bulgaria 189, 193, 194, 197, 228 Buroj Property Development 4, 97, 251 Bush, George W. 189, 191 Bushati, Ditmir 171 Camp Ugljevik (Bosnia and Herzegovina) 187 Capital Plaza 146, 157, 250 Čavić, Dragan 92 CEFTA 38, 44, 50 – 52, 55, 57 Central Intelligence Agency (CIA) 28 Chechnya 68, 150 China 3, 23, 38, 64, 78, 83, 262; economic cooperation with the Western Balkans 51 – 52, 55, 214 – 218; historical relations with Serbia 61, 210; history 206 – 208; improved image in Serbia 76; influence in Albania 171 – 173; influence in Bosnia 98 – 101; influence in North Macedonia 136 – 139; infrastructure investments 216 (in Montenegro 146, 155–157; in Serbia 72–73); non-recognition of Kosovo 120; One China policy 66; trade with Serbia 45 – 47, 69 – 70 China-Central and Eastern European Countries (CEEC) Summit 66 China Communications Construction Company (CCCC) 155 China Development Bank 100 China Everbright (company) 172 China Road and Bridge Corporation (CRBC) 155 – 156 Chinese Exim Bank see Chinese ExportImport Bank Chinese Export-Import Bank 73, 99, 160, 211, 216 Chinese Hainan Airlines 101 civil society 2, 117, 148, 166, 192, 230 Clarke, Wesley 187 Cold War 165, 227 Collective Security Treaty Organisation (CSTO) 64, 191, 194

Commonwealth of Independent States (CIS) 72, 189 Communism 26; communist 164, 166, 169, 171, 193, 206, 210, 245, 255 Confucius Institute 213; Albania 172; Bosnia 99; Serbia 74 Contact Group for former Yugoslavia 188, 190 corruption 4, 18, 74, 83, 102, 139, 148, 196, 197, 233, 249 Council of Europe Development Bank 55 Council of the European Union 18 Croatia 17, 36, 99, 195, 263 Cyprus 22, 113, 131, 134 Davutoğlu, Ahmet 61, 84, 152, 159, 225 – 226, 229 – 230, 232 – 233 democracy 2, 72, 77, 101, 165, 232; consolidation 264; illiberal 19, 243, 246, 255–256; lack of 146; liberal 103; promote 114, 148 Democratic Front (Montenegro) 150 – 151 Democratic Party (Albania) 168, 171 Democratic Party of Serbia (DSS) 62, 66 Democratic Party of Socialists of Montenegro (DPS) 148, 150 – 152, 156 democratization 118, 147, 148, 154, 165, 245, 255 development aid 37, 76, 88 – 89, 95, 118, 135, 208 Dodik, Milorad 2, 91 – 92, 192, 196, 201, 262 – 263 Dongfang Electric Corporation (China) 100 Dost Eli Charity (Turkey) 88 Dubai 157, 241 – 242, 244, 249, 251 Dudić, Mevlud 235 Dugin, Alexander 134 Đukanović, Milo 149, 151, 198 Durrës (Albania) 232 Dveri Movement 66 EBRD 37, 210 economic crisis (2008) 1, 5, 50, 56, 77, 83, 87, 192, 246 Ecumenical Patriarchate 199 Elektroprivreda BiH 100 enlargement fatigue 19, 77, 255 Erdoğan, Recep Tayyip 3, 18, 61, 73, 84 – 86, 89, 90, 101, 117, 140, 153, 174, 175, 232 – 236, 260 Erginay, Cihad 236 Etihad (company, UAE) 74, 252, 253

Index  267 EU acquis 1, 47, 149 EU constitutional treaty 22 EUPM 29, 34 EUPOL 33 Eurasian Economic Union (EEU) 70, 191 Euro-Atlantic integration 1, 17 – 26, 29, 30, 32, 114, 260 European Commission 4, 36, 127, 148, 161, 167, 191, 192 European Council 127, 167; Thessaloniki Summit 1, 23, 36 European Investment Bank 55, 166 Europeanization 1, 176; de-Europeanization 174, 237; EU prescribed reforms 4 European Union (EU): brain drain 74; CFSP 18 – 19, 22, 24, 30, 31, 128; vs. Chinese investment in Serbia 72 – 73; competition with China in the Western Balkans 220; conditionality 1, 23, 27, 36, 77, 83, 122, 255; crisis management operations 63; CSDP 24, 30, 31; economic relations with North Macedonia 128; enlargement 19, 36, 147 – 148, 189; EU membership 36, 264; sanctions on Russia 47, 67, 94, 114, 119, 151, 169 European Union Rule of Law Mission in Kosovo (EULEX) 24, 65, 110 Europol 27 Euroscepticism 103 EU Rule of Law Mission in Kosovo (EULEX) 24, 65, 110, 113, 115, 116 Federal Security Service (FSB) 197 – 198 Federation of Bosnia and Herzegovina (FBiH) 92, 96, 100, 195 Fethullahist Terror Organization (FETO) 86, 135 Fly Dubai 97, 157 Friedmann Pacific Asset Management 172 Frontex 27 Gabriel, Sigmar 113 Gas-Res (company, Bosnia and Herzegovina) 194 Gazprom 2, 71, 192, 194 Geo-Jade Petroleum (company, China) 172 Georgia 24, 119, 190 Germany 55, 69, 70, 113, 114, 189, 220, 235; relations with Kosovo 111, 113 Gezhouba Group (company, China) 100 Gezi protests 232, 234–235 Girkin, Igor 197

Greece 22 – 23, 72, 126, 128, 129; relations with North Macedonia 127, 130; relations with Russia 133 GRU (Russian military intelligence) 150, 197 – 198 Gruevski, Nikola 29, 129 – 132, 139, 197, 222 Gül, Abdullah 230 Gülen, Fethullah 28, 85 Gülen movement 3, 11, 18, 225, 227, 228, 231 – 232, 233 – 237, 262; Albania 175; Bosnia and Herzegovina 85 – 86; Kosovo 117; North Macedonia 135; struggles with AKP 233 Gulf states 117, 126, 176 – 177, 247 Halkbank (Turkish bank) 73 Hamza, Abu 28 Haradinaj, Ramush 28, 117 HeSteel (company, China) 211, 215 Hizmet movement see Gülen movement Hoxhaj, Enver 120 Hungary 20, 193 IFOR see SFOR Industrial and Commercial Bank of China 100 International Balkan University 135, 230 International Civilian Office (ICO) 115 – 116 International Court of Justice (ICJ) 65, 112–113, 198 International Criminal Tribunal for the former Yugoslavia 27, 65 International University of Sarajevo 230 Investment Corporation Dubai (ICD) 157, 250 Islam 4, 122, 134, 177, 228, 241; Islamicization 84; Islamist 174, 232 – 233, 236, 247; political (see Muslim, political agenda); radical 118, 178, 199, 264; Salafism 228, 247; Sunni 225, 226, 233, 237; Wahhabism 228 Islamic center in Bar 153 Islamic Community of Bosnia and Herzegovina 48, 89 Islamic Development Bank 118, 176 Istanbul declaration 231 Italy 69, 149, 190 Ivanov, Gjorge 219, 236 Izetbegović, Alija 105 Izetbegovic, Bakir 84 – 86, 89 – 90, 236, 260 Izetbegovic, Sebija 89

268 Index Jackson, Mike 187 Janakievski, Mile 139, 222 JAT (former national airlines, Serbia) 74, 253 Jinping, Xi 207, 211 Juncker, Jean-Claude 19, 28 Juncker Plan 221 Justice and Development Party: AKP (political party, Turkey) 24, 84, 85, 225 – 237; authoritarian drift 227, 233–235 Kadare, Ismail 167 Kara, Tülin Erkal 135 Karpushin, Alexander 169 Kavazovic, Husein 235 Kemalist 83 – 84, 233 Kerry, John 193 Khrushchev, Nikita 164 Knežević, Milan 150, 198 Kosovo 65; contested statehood 109, 121; economic situation 111; and EuroAtlantic structures 121; foreign policy 108 – 109, 114; recognition of 65, 112, 113, 120 – 121; Russian influence 198; state-building 108, 110, 113, 121; state capture 109, 122; status negotiations 21 – 22, 24, 190; ties with the EU 110, 114; trading partners 42, 111; Turkish influence 228; unification with Albania 122; Unilateral Declaration of Independence 22, 190 Kosovo Security Force (KSF) 111, 116, 198 Kostolac (Serbia) 73, 217 Kozyrev, Andrei 188 Kumanovo (North Macedonia) 132 Kuwait 96, 177 Lagumdžija, Zlatko 98 Lavrov, Sergei 92, 133, 197 liquefied natural gas (LNG) 191 Lukoil 75, 131, 194 Maarif Foundation 236 majlis 245, 255 – 256 Mali, Siniša 253 Malofeev, Konstantin 197 – 198 Mandić, Andrija 150, 198 McAllister, David 4 Medvedev, Dmitry 71, 190 MER (company, North Macedonia) 194 Merkel, Angela 193

MIG-29 fighter jets 194 migration crisis 20, 28, 36 Millennium Challenge Corporation 111 Milošević, Slobodan 61, 150, 169, 188, 190, 205 Mogherini, Federica 4, 149, 193 Montenegro 67; attempted coup 19, 150, 188, 198; Chinese influence 155 – 157, 216; EU relations 147 – 149; foreign policy 149; NATO accession 17, 18, 148, 151; port of Bar 150, 155, 254; Russian influence 149 – 152, 191, 198; trading partners 43; Turkish influence 152 – 154; UAE influence 157 – 158, 245 Muslim 146, 177, 235, 237, 262; community 3, 117 – 118, 140, 153, 225, 231; identity 178; Muslim-populated 116, 135; political agenda 228, 263; population 3, 97, 230, 234, 246, 247, 249; umbrella organizations 226, 231 Muslim Community of Albania 235 Nabucco pipeline 191 Naftna Industrija Srbije (NIS) 71, 190 – 191 Nagorno-Karabakh 68 nationalism 1, 178, 199, 237 NATO 17 – 32; expansion 2, 20; Individual Partnership Agreement (IPAP) 63, 194; integration 11, 17; intervention in Kosovo 115; Membership Action Plan (MAP) 89, 94, 129; Partnership for Peace (PfP) 63, 129; relations with Serbia 64 NATO Kosovo Force (KFOR) 110, 129, 187 NeftegazInKor 91, 93 neoliberal 209, 216, 218; economy 114; reforms 205; state neoliberalism 206 neo-Ottomanism 84, 134, 225 – 226, 228, 233–234 Netherlands 50, 70, 149 Nikolić, Tomislav 64 Niš 30, 63, 119, 194 Non-Aligned Movement 95, 252 North Macedonia 67; EU integration 127 – 128; foreign policy 126; name dispute 126, 130; NATO accession process 19, 22, 129 – 130; participation in NATO missions; relations with China 207 – 208; Russian influence 197; Tirana platform 133; trading partners

Index  269 43, 128; Turkish influence 228; visa liberalization 29 Novi Sad 71, 75, 213 Obama, Barack 168 Office for the Coordination of Foreign Aid (UAE) 246 Office of High-Representative (OHR) 92, 94 One Belt, One Road initiative see Belt and Road Initiative (BRI) Organization for Security and Cooperation in Europe (OSCE) 67 – 68, 77, 153 Organization of Islamic Cooperation 95, 176 organized crime 115, 148, 158 Orthodox 92, 94, 164; brotherhood 90; Eastern Orthodox communities 171; Serbian Orthodox Church 75, 199; unity 197 Ottoman: Empire 61, 84, 176; heritage 174, 225; legacy 140; period 84, 88, 174, 230, 245 Özal, Turgut 173, 225, 228 Pančevo 71 patrimonialism 243, 245 patronage 72, 110, 243, 246 Patrushev, Nikolai 198 Peace Implementation Council (PIC) 90 – 91, 99, 198 peacekeeping 22, 26, 90, 113, 116, 129 Podgorica 97, 146, 153 – 154, 157, 158, 198 Police Cooperation Convention for South Eastern Europe 26 Popular Movement for Macedonia 133 port of Bar 150, 155, 254 Porto Montenegro 146, 157, 250 post-conflict 209; reconstruction 26; recovery 108, 111 Prespa agreement 22 – 23, 127 Primakov, Evgeny 188, 193 Pristina 187 Putin, Vladimir 18, 63, 90, 188 – 190, 192, 199 Qatar 158, 176 – 177, 244 Rama, Edi 167 – 168, 177, 178, 236 Regional Economic Area 45, 47 Republika Srpska 2, 22, 27 – 29, 84, 93, 94, 97, 99, 100, 192; oil sector 91; Russian economic presence 196, 197, 201, 203

Rodić, Nebojša 252 Romania 20, 22, 189, 194 Royal Group (company, UAE) 157, 250 RT 2, 75, 133, 197 RTB-Bor copper mining complex 73 rule of Law 18, 26, 28, 36, 102, 103, 113, 116, 122, 148, 178 Russia 18, 28 – 29, 78, 83, 262; annexation of Crimea 19, 24, 94, 128; Balkan strategy 190; FDI in the Western Balkans 51, 71, 191; gas market 2, 30, 37, 47, 71, 118, 119, 131, 190 – 191, 194 – 196, 200; Georgia war 24, 67; influence in Albania 169 – 171; influence in general 2, 22, 30 – 31, 118; influence in North Macedonia 131 – 133, 197; influence in Serbia 61 – 72, 194; public diplomacy in Serbia 75 – 76; relations with Kosovo 119; relations with Montenegro 149 – 152, 198; relations with NATO 188 – 189; role in the Bosnian war 90; trade with Bosnia and Herzegovina 93 – 94; trade with Serbia 47, 70 Russian-Albanian Intergovernmental Commission 169 Russian-Serbian Humanitarian Center (RSHC) 30, 63, 119 Russian World 75, 94, 170 Sarajevo 90, 92, 95, 97, 230 Šarović, Mirko 94, 99 Saudi Arabia 118, 176, 177 Sberbank (Russia) 93, 195 Schengen area 166 Šekerinska, Radmila 133 Serbia 2, 21; Chinese influence 61, 210; decreasing popularity of EU 75; EU relations 64 – 65; High Level Cooperation Council with Turkey 67; NATO relations 63; Russian influence 62 – 63, 190 – 194, 198 – 199; Serbian government 27; trading partners 43, 69; UAE influence 61, 74, 249 – 251 Serbian Honor (paramilitary group, Bosnia and Herzegovina) 198 Serbian Progressive Party (SNS) 66, 196 Serb People’s Party (SNP) 66 SFOR 90, 188 Shehi, Dashamir 174 Shkodra (Albania) 232 Silajdžić, Haris 99 Silk Road Initiative 52, 209

270 Index Simurg Media (company, Bosnia and Herzegovina) 85 Sino-CEEF Holding (company, China) 55 Sinohydro Corporation LTD (company, China) 99, 139, 222 Sino-Serbian Friendship Bridge 73 Skanderbeg 164, 170 Skopje 135, 197, 230 Skripal case 133, 159, 169 Slatina airport (Pristina) 187 Slavic Brotherhood (military exercise) 63 small powers (concept) 5 – 10 Smederevo steel mill 52, 54, 73, 211, 215, 256 SNSD (Bosnia and Herzegovina) 102 Social Democratic Party (Montenegro) 157 Social Democratic Union of Macedonia 139 Socialist Party of Albania 168 Socialist Party of Serbia (SPS) 196 soft power 7, 61, 89, 99, 152, 154, 172, 199, 242, 248 Solway (company, Russia) 195 Southern Gas Corridor 191 South Ossetia 24, 119, 190 South Stream 2, 71, 190, 191 – 192 Spain 22, 113 Sputnik 2, 19, 75, 94, 133, 170, 192 Srbijagas 195, 196 Srebrenica 67 SREM 2014 military exercise 63 stabilitocracy 19 Stabilization and Association Agreement (SAA) 23, 30, 44; Kosovo 110; Montenegro 149; Serbia 65, 69 – 70 Stabilization and Association Process (SAP) 26, 36, 48, 189 state capture 109, 122, 196 Stav (newspaper, Bosnia and Herzegovina) 86 Stoltenberg, Jens 130 Strategic Depth 226, 229 sultanism 242 – 243, 245, 253, 255 T-72 tanks 194 Tadić, Boris 62, 66 TAV Airports Holding (company, Turkey) 135, 230 Thaçi, Hashim 198, 236 Tirana 176, 232 Tirana-Elbasan Highway 176 Tivat (Montenegro) 158 TKG (company, Russia) 195 Transparency International 91

TRT 3, 85, 135 Trump, Donald 20, 121, 168, 191, 260 Turkey 23 – 24, 38, 64, 78, 83 – 84, 262; attempted coup (July 2016) 18, 85, 89, 117, 233, 236, 240; economic influence in the Western Balkans 51, 235; extraditing 28; FDI in Bosnia and Herzegovina 86 – 87; foreign policy 84 – 85, 173, 180, 229, 233 – 234, 236; history 227 – 228; influence in Albania 173 – 176; influence in Montenegro 152 – 154; influence in Serbia 61, 66, 69, 73; relations with Kosovo 116 – 117, 122; relations with North Macedonia 134 – 135; television series 154, 226 Turkish Cooperation and Coordination Agency (TIKA) 3, 75, 88, 89, 230; Montenegro 153, 158, 174, 237; North Macedonia 135 Turkish Presidency of Religious Affairs (Diyanet) 3, 86, 88 – 89, 176, 225 – 228, 231, 234 – 235, 237 TurkStream 72, 191, 193 Ukraine 28, 191; Ukrainian conflict 1, 19, 24, 67 – 68, 192 United Arab Emirates (UAE) 3 – 4, 64, 83, 146, 176; diplomatic relations with Bosnia 95; economic situation 243 – 244; foreign policy 247; general information 241; influence in Kosovo 117 – 185; influence in Montenegro 157 – 158, 249; influence in Serbia 61, 74, 249 – 251; real estate in Bosnia 94 – 96 United Macedonia 133 – 134, 140 United Nations General Assembly 68, 95, 129, 171 United Nations Interim Administration Mission in Kosovo (UNMIK) 113, 115, 118 United Russia 2, 66, 102 United States 1, 23, 26, 114; relations with Albania 166, 168; relations with Kosovo 111 – 112 UN Security Council 22, 65, 27, 119, 188, 190, 262 U.S. Department of the Treasury 92 U.S. Senate 151 Uygur, Burcu 85 Vienna Agreement 94 visa liberalization 26, 29, 166, 101; roadmap 23

Index  271 Višegrad (Bosnia and Herzegovina) 89 Vlora (Albania) 169 – 170 VMRO-DPMNE 130 – 132, 139 Vnesheconombank 91 Volksbank 93, 200 VTB (bank, Russia) 195 Vučić, Aleksander 64, 192, 196, 198, 211, 219, 236, 249, 251, 253, 256, 263 Washington Consensus 48 Welfare Party (Turkey) 228 Western Balkans Investment Framework 55 World Bank 37, 55, 104, 111 Xhaferi, Talat 133 Yahya Kemal Education Foundation 135, 232

Yanukovych, Viktor 192 Yardimeli Foundation 88 – 89 Yee, Brian Hoyt 4, 107, 115, 194 Yeltsin, Boris 187 – 188, 202 Yugoslav 17, 211; crisis 90; successors 187; wars 199 Yugoslavia 61, 95, 228; disintegration of 48; former 95, 187 – 190, 189 Yunus Emre Institute 3, 75, 89, 225, 231, 234 – 235, 237; Albania 174; North Macedonia 135 Zaev, Zoran 130 – 133 Zakharova, Maria 197 Zaman (newspaper, North Macedonia) 232 Zarubezhneft (company, Russia) 196 Zeybekci, Nihat 87 Zrenjanin free trade zone 73, 256