WEST BALKANS - Special Report - March 2019

1. BERD’s massive loans in Serbia, BIH and Croatia’s energy and transport infrastructure;
2. Serbia gets more and more involved in region’s energy resources management;
3. Measures to increase reaction capacity for the Serbian army;
4. Serbian citizens involved in Romania’s drug traffic;
5. Allegations between Zagreb and Sarajevo on Islamic radicalism in Bosnia and Herzegovina.
6. The National Day of Republic of Srpska raises tensions in Bosnia and Herzegovina.

I. BERD’s massive loans in Serbia, BIH and Croatia’s energy and transport infrastructure

According to the International Economic Studies in Wien, the global economic decreased rate, Brexit’s effects and the constant issues with the Euro zone are going to be the most significant challenges for Central, East and South-East Europe’s economies. The times wherein most of the region have enjoyed a high economic increase rate (2017-2018) will be soon history as the following 2-3 years the economies in the region will met great decreases (from 3,2% foreseen in 2018, to 1,8% in 2019, 2,5% in 2020 and 2,7% in 2021).

Despite this prognosis, on 27.03.2019, the International Economic Studies Institute has revealed that two Western Balkans region states, Albania and Kosovo, will have the fastest economic growth, for the 2019-2020 period, of all the 23 Central, East and South-East Europe states, and Bosnia and Herzegovina’s economy (BIH) will be continuously increasing within the same period.

Hence, the European Bank for Reconstruction and Development (EBRD) has revealed, before the annual meeting from May 2019, its intention on increasing the BIH investments from 200 million euro, in 2018, to 300 million euro in 2019, funds going mostly in infrastructure.

Concurrently with BIH’s demands, most of the EBRD investments will go to Pan European Corridor Vc, a segment of a great project that will connect Budapest to Croatian port Ploče, will pass through BIH and will have a total length of 700 km. EBRD has already hired financial resources worth of 550 million euro for this project that will integrate BIH in the Pan-European commercial fluxes once completed. Also, EBRD is investing in BIH’s municipal infrastructure in transports, water supply and piping.

EBRD’s strategy within BIH reveals its entire policy against the Western Balkans region. It starts from linking the investments with the political reforms from Western Balkans’s entities, in order to develop the private sector, the reduced pollution economy and the entire infrastructure in the area. EBRD also co-funds the biggest two eolian parks in Serbia, from Čibuk and Kovačica, given that the energy strategy, approved at the end of December 2018, calls on investments’ unconditional blocking in charcoal power stations.

In 2018, EBRD had a record turnover in Western Balkans’ six entities, reaching 1,1 billion euro. The EBRD Secretary General, Enzo Quattrociocche, has called the Western Balkans as a region to have huge potential. Furthermore, Quattrociocche has underlined that a more effective state administration in a competitive investments environment and a favorable businesses climate are a must for reaching success.

The profile fields also call on the necessity to have a certain equilibrium, by focusing on renewable energy and energy effectiveness’s growth. EBRD’s strategic approach is “Green Economy Transition” as the bank wants, until 2020, to use 40% of the annual investments in ecologic projects.

In such circumstances, besides the concrete projects, like funding a heater based on biomass coming from Banja Luka, EBRD also supports a structured strategy, as Sarajevo, Banka Luka and Zenica are joining the “EBRD Green Cities”.

II. Serbia gets more and more involved in region’s energy resources management

On 15.03.2019, Russia’s ambassador to Belgrade, Alexandrs Cepurin, has revealed his country’s intention to block, starting with 2020, the gases supply to Europe through the Trans-Balkan Corridor (TBC- starts in Russia, passes through Ukraine, Moldova, Romania and Bulgaria before getting to Greece and North Macedonia).

Hence, Serbia will get more involved in managing the energy resources in the region, most likely taking a stance in the gases provisions towards Europe, given that one of the two sectors of “Turkish Stream” project will be build and working on its territory. According to the Russian official, besides great prices, Serbia will also receive significant incomes from transit commissions. On the other hand, even if, officially, Bulgaria’s contract with Gazprom for the Russian gas transit and import through the Trans-Balkan Corridor on its territory will expire in 2030, considering Gazprom’s intentions, Sofia will lose of 97,1 million euro income from transit taxes).

Serbia (together with North Macedonia) also showed its interest in participating at Bulgaria’s project for rebuilding the Belene Nuclear Power Plant (BNPC). According to Bulgarian Vice prime-minister’s statements, Tomislav Doncev, on 05.03.2019, both states have revealed their intention on becoming future BNPC clients.

Given the last information, Sofia was about to launch the auction procedure by the end of March 2019.

Russia's decision favors Serbia, which is already considering the possibility of connecting the gas pipeline through its territory (one of the two branches of the Turkish Stream pipeline will come from Bulgaria to Serbia and will transit the territory of the Serbian state to Hungary) with Romania, North Macedonia and Kosovo, the first two countries being neighbors, but also countries located on the CTB.

Regarding the Belene project, according to the adopted strategy, the Bulgarian government has set up the construction of the CNEB in 10 years with a cost of up to 10 billion euros.

BNPC may now actually become a reality after the moment in February 2013 when Bulgaria has abandoned the project through Parliament’s decision, for lack of progresses, calling on the construction’s great costs and the unclear aspects related to the produced electric energy capitalization.

This project’s financial support became an urgent necessity for Bulgaria, given that the Bulgarian state has paid, in December 2016, after the international arbitrage, 601,6 million euro as consideration for the Russian company that produced the Belene project’s equipment. The equipment is, however, still binned where the BNPC should be built.

Prime-minister Boiko Borisov and Energy’s Minister, Temenujka Ptkova, have repeatedly underlined that Bulgaria will take part in the project only with the acquired equipment, in the established location and with the necessary licenses. Doncev underscored that Belene project cannot be completed without the Russian company Rosatom’s participation, which has provided the necessary equipment. Its representatives have showed their interest in participating at the project, during the visit in Sofia, within the delegation led by Russian prime-minister, Dmitri Medvedev. We must notice that Montenegro also wants to be part of the project, as stated, at the beginning of this year, by Energy Minister, Temenujka Ptkova.

III. Measures to increase reaction capacity for the Serbian army

Starting with 01.04.2019, it has been modified the command chain of special operations forces from the Serbian Army (the Special Brigade from Pancevo/ Bg. Spc.), being directly subordinated to the Chief of the General Staff from Serbia’s Army. From 2007 to 01.04., the Bg.Spc. was part of the Army Forces of Serbia’s Army and has been directly subordinated to this force’s commander, which has its headquarter in South of the country, Nis.

Bg.Spc. becomes the second brigade to be directly subordinated to the Chief of the General Staff of the Army, after the guard brigade from Belgrade (“Guard”), seen also as a unity for special missions and operations.

Bg. Spc. is a unique tactical unity in the Serbian army, having a specific structure and being “responsible” with country’s entire area.

Bg. Spc. battalions are dislocated in two garrisons, in ”Rastko Nemanjić” Barrack from Pancevo (a command battalion, an antiterrorist and a research-diversion battalion) and in “Aerodrom” Barrack from Nis (Batallion 63 paratroopers).

With this subordination, the command chain was shorted and has also been reduced the necessary time to send orders to this unity.

The authorities have underlined that the decision was made by the Serbia’s Army Supreme Commander, country’s president, at the Serbia’s Army activity report from December 2017, but it is also enlisted in 2018’s measures took by Belgrade’s political-military leadership for the reinforcement of army’s operative and functional capacities.

The other 2019 measures, to reinforce the operative and functional capacities of the Serbian army, could be looked at the same: the operationalization of another four MiG-29 aircrafts (from a Byelorussian donation), the reception of five “Airbus” H-145M helicopters (four of them being, probably, designed as fight helicopters), three Russian medium transport helicopters Mi-17 and four Russian attack Mi-35 helicopters, as well as other armament systems, military technique and equipment produced by the  Serbian defence industry to enter army’s endowment.

All these measures should be seen in the context in which Belgrade takes into account a potentially significant deterioration in the security situation in Kosovo (as a result of massive violence against Serbian or ethnic Serb property or as a result of Pristina's attempt to forcefully take control of "Serbian" municipalities in the north). In fact, Belgrade has warned Pristina, as well as the “international community”, that they will not exclude an intervention in Kosovo to protect the Serbian population if needed.

IV. Serbian citizens involved in Romania’s drug traffic;

On 20.03.2019, in East of Tulcea, the Police found a package to have 1 kg of cocaine. The package would have fell from a truck enrolled in Bucharest. Hereof, they have started a huge anti-dope operation and, after a large investigation, they have found on Black Sea’s coast, on 22.03.2019, close to Saint Gheorghe, a boat that had significant cocaine charge. Both actions have also discovered some suspect packages close to that area, packed in rubber balloons, including on land. During the operation, there were found 1040 kg of cocaine, 90% pure, worth of 300 million euro, most likely dedicated to Romanian traffic also. According to Directorate for Investigating Organized Crime and Terrorism, when distributed on the drug market, the cocaine quantity could be tripled after combining it with different other substances.

In these circumstances, we must notice that the Romanian Police has arrested two Serbian citizens (Nenad Cvetković and Tode Krstić) for being suspects in this drug traffic case, one of them being caught when trying to pass the border to Serbia, through the Iron Gates 2, and the second one caught in Prahova, while driving a vehicle enrolled in Serbia.

DIOCT continues the investigations along with the Serbian authorities to identify all the people responsible and involved in this case.

The interference of Serbian citizens in the drug traffic from the region is not something new. In December 2018, in Serbia, across the biggest lawsuit on drug traffic, the supposed chief of the Serbian organized crime, Darko Saric, was convicted to 15 years of prison for being involved in traffic and bootleg actions with 5,7 tons of cocaine from South America to Europe. This first sentence could have been disputed.

Another Serbian citizen, Zoran Jaksic, important member of the “Group America” (Eastern Europe crime organization that has many leaders dealing in South America drugs, since the beginning of the 90’s), was arrested in July 2016, Peru, while trying to run the border in Ecuador. Last year, some of the evidences for Jaksic’s criminal activities have started to show up in Argentina also, when a Brazilian drug dealer got arrested on Ezeiza airport. With all the investigations, it was found that Jaksic has created a criminal structure which is in charge with acquiring cocaine from Peru and Ecuador, transforming it in liquid substance, and then sending it to Europe in “San Juan” wine bottles. Moreover, Jaksic was also suspected for introducing huge cocaine quantities in Netherlands and Belgium.

Another important actor of this Balkan organized crime system was Goran Nesic, known as “Ciga”, arrested in 2011, who worked with Saric, but also with “Group America”, and was known as the main leader of the Serbian organized crime form Brazil.

The size and magnitude of these Serbian organized crime activities are quite clear in terms of the Balkan mafia from Latin America, a group which, during time, has become of the most important European drug traffic networks in the region.

V. Allegations between Zagreb and Sarajevo on Islamic radicalism in Bosnia and Herzegovina.

In March 2019, the allegations between Sarajevo and Zagreb related to actions deployed by members and supporters’ belonging to the Salafi Wahhabite movement from Bosnia and Herzegovina (BIH) have escalated. Furthermore, the Bosnian state officials and Bosnian political leaders have stated that the National Croatian security and Intelligence Agency is hiring members of the Salafi movement from the Bosnian state only to deal in guns or develop attacks in BIH (against mosques!).

Croatian officials have denied the allegations, but some of them have admitted that SOA tracks the Islamic radicalism phenomenon from BIH and that there were contacts between the SOA operative officers and members of the Salafi movement from the Bosnian state.

The “Salafi scandal” (“afera selefije”) has reached its highest point in March 2019, when the BIH Prosecutor’s Office has opened a criminal record and investigated many Bosnian officials (including the Minister of Security, with a technique warrant, Dragan Mektic, Serbian ethnic), and in the second half of the month BIH’s Minister of Security has informed the BIH presidency about it.

The leader of the biggest Bosnian party in BIH (SDA), Bakir Izetbegović, has criticized SOA’s activities and the general Croatian consul from Tuzla (Ivan Bandic) for recruiting members of the Salafi movement, calling it a destabilizing attempt against BIH.

Some Bosnian leaders think that the “scandal’ is connected to the 2017 statement of Republic of Croatia’s president, Kolinda Grabar-Kitarović, according to which there would be 10.000 Islamic extremists in BIH, however, not having proofs to that end.

Although the BIH authorities have “investigated” at least one case related to SOA’s attempt to recruit a certain “HC”[1], the Bosnian Prosecutors’ investigation would hardly have any result, as it is difficult to get “clear” evidences (to make it in court) on SOA’s activities to recruit radical Islamists from BIH. The “Salafi scandal” has exposed some of the SOA from BIH activities and personnel (consul I. Bandic), but also a series of possible errors[2].

This case should definitely be placed in a larger context, like Zagreb’s efforts to defend BIH’s Croatian people rights, materialized through Zagreb’s attempts to sole the electoral legislation problems from BIH with European Institutions’ support from Brussels. Finally, the modification of this legislation would be Zagreb’s minimum objective if it will not make it to found a “Croatian entity from BIH”. Derailing a terrorist action belonging BIH’s Islamists extremists would have had the “media bomb” effect. It would have showed the lawfulness of the Croatian warnings about Islamic radicalism and BIH’s terrorist attacks and would have been followed by the justified intervention favoring the Croatians from BIH.

VI.  The National Day of Republic of Srpska raises tensions in Bosnia and Herzegovina.

On 29^th of March, Bosnia and Herzegovina’s Constitutional Court (CC BIH) has issued a decision which claims that celebrating the National Day of Republic of Srpska from BIH on 9^th of January is not following the BIH Constitution. It is underlined that it does not deprive R. Srpska from celebrating its national day or disputing this entity’s right to organize a referendum about it.

CC BIH’s decision comes after the Bosnian and Croatian parliamentarians of R. Srpska Parliament’s People’s Chamber have issued a complaint about art. 2 from the Law on R. Srpska National Day. It comes into force one day after being published in BIH’s Official Monitor.

This date, as well as the R. Srpska’s National Day celebration were BIH’s controversial topics for years, especially since 2015, when R. Srpska has adopted a “declaration” to that end, reaching its highest point in 2016, when it has organized a referendum for it (however unconstitutional and canceled by CC BIH). Regardless of the stances of BIH’s Croatians or Bosnian leaders, the Serbian entity has always celebrated its National Day on 9^th of January. However, since 2017, it has separated the secular significance from the religious one (on 9^th of January it is also celebrated the third day of Christmas by the old rite orthodoxies, Saint Stephen, “Srpska’s religious patron”).

Because of these three constituent nations, BIH does not have a law on its entities’ celebration days, although there are almost 24 years since the military actions have ended.

Most of the constitutional CC BIH judges think that that the law is discriminatory and goes against the effective legislation. 

Bosnian Serbians have blamed CC BIH’s sentence, and M. Dodik and SNSD have asked, again, for the dissolution of this institution, claiming that it was founded illegally in BIH by the High Representative institution and forcefully imposed by the international community. BIH’s state authorities do not have the capacity and necessary connections to prohibit its celebration on 9^th of January and, most likely, the Bosnian elite and some Croatian groups from BIH will only criticize the refuse of BIH’s Serbian leaders to confront the CC BIH sentence.  

Bakir Izetbegovic, the leader of the biggest Bosnian party from BIH (the Democratic Action Party/SDA) may be the most firm critic of these Bosnian Leaders’ options. The support of the Srpska’s Parliament People’s Chamber Croatians deputies for the complaint against celebrating Srpska’s National Day on 9^th of January comes due to all the pressures coming from Zagreb, rather than from an independent decision of the Croatian Parties from BIH.

The pressure of BIH’s Bosnian and Croatian circles to change Srpska’s National Day has negative consequences over the work conditions of all state’s bodies (parliament, govern, presidency). Disputing Srpska’s day gathers Serbians’ political forces from BIH and, implicitly, offers enough “arguments” for increasing the radical thoughts among Serbians asking for Srpska’s withdrawal from BIH.

Somehow, Srpska’s National Day will continue to be celebrated on 9^th of January, however, anniversary’s name or its mandatory character may be changed just to reduce critics and international community’s confrontation.