Since the beginning of the Russian aggression against Ukraine, Serbia has managed to avoid the introduction of sanctions against Moscow, but they have now arrived at its doorstep.
The US Treasury Department made a decision to impose sanctions on Russian companies from the energy sector – Surgunneft and Gazpromneft and their subsidiaries, with the aim of reducing Moscow’s income from the sale of energy products, which finances the war in Ukraine.
Among the sanctioned companies is the Oil Industry of Serbia (NIS), which Washington says is Gazpromneft’s subsidiary in Serbia.
Although it is not yet known what consequences the American decision will have on the operations of NIS, Serbian President Aleksandar Vučić said that the country “today is facing heavy and serious sanctions”.
Serbia is being asked for the complete withdrawal of Russian interests from the company, which must be completed in 45 days, the Serbian president claims.
Russian company Gazpromnefta subsidiary of Gazprom, owns about 56 percent of NIS shares, the Republic of Serbia controls about 30 percent of ownership, and the rest are minority shareholders.
Gaspromjeft your 2008. bought 51 percent of NIS shares for 400 million euros without a tender, and experts warned that the sale was “below the price“.
NIS and sanctions
Listed by the US Treasury, NIS is at risk of secondary sanctions.
Great Britain also joined the American sanctions that were introduced for vessels that transport Russian oil, but also for the property and companies of dozens of businessmen from the Russian energy sector.
Gazpromneft, a company based in St. Petersburg, has been under US sanctions since 2022 and the start of the war in Ukraine, due to its ties to the Kremlin.
By transferring operations to the umbrella company Gazprom, with which European Union countries have contracts for the supply of gas and oil, Russia has so far tried to circumvent sanctions.
Vučić says that unnamed American officials told him that “they do not intend for Serbia to be a target, nor only for the NIS, but for a comprehensive attack” on Russian companies and all those connected to them.
“Moscow and Washington are dear to us, but Serbia is ours, we will protect Serbia’s interests. There won’t be any shortages or financial catastrophe,” Vučić promised.
The Serbian president announced that he will speak with the future US finance minister, and on January 11, he will also meet with Richard Verma, the US deputy secretary of state for management and resources, in Belgrade.
What do the sanctions mean for NIS, Serbia and the population?
The closure of the Adriatic Pipeline (JANAF) could be one of the direct consequences, and if the sanctions remain in force in the long term, destabilization of the economy would also be possible,” Kapor believes.
“Inflation would increase, consumption would decrease, our exports would be more expensive, foreign companies would be discouraged from coming to Serbia, but I would still not expect any consequences of sanctions like those in Yugoslavia in the 1990s,” he says.
Although cooperation with NIS brings “the biggest income” to the Croatian company that manages the oil pipeline, “it would not risk its own business by maintaining cooperation with NIS2,” he believes.
“Even if the European Union does not introduce sanctions, any company from the EU would not risk doing business with a company under American sanctions, so as not to receive sanctions themselves,” explains the energy expert.
NIS is “JANAF’s long-term and largest business partner, with whom it has a three-year contract for the transport of 10 million tons of oil until the end of 2026,” said the company’s Telegraph portalwithout revealing the next steps in case of sanctions against the Serbian company.
Croatia and the Serbian company concluded a new contract in January 2024, in which there is a “force majeure clause”, which implies that the contract is automatically terminated in such circumstances, reports the newspaper Danas.
In the case of an appeal by NIS against such a decision, the arbitration court would decide.
Despite the importance of this pipeline for Serbia, sanctions against NIS would not necessarily directly affect the security of market supply in the short term, says Aleksandar Kovačević.
“There are enough instruments and market participants to preserve or improve security of supply, but it is obvious that security of supply requires more attention and more funds from the Government of Serbia,” he adds.
The prices of oil derivatives and firewood in Serbia “already reflect the increased costs of supply and the perception of risk that exists in the market”, he assesses.
Although he does not expect greater instability if there are no disruptions on the Mediterranean and European markets, in Serbia there is a “need to put the security of supply on a more solid foundation, because there may be a cumulation of several different risks”, Kovačević points out.
Serbia gets about three quarters of its oil from imports, mostly from Iraq (52 percent) and Russia (47 percent).
NIS, along with Elektroprivreda Srbije, is the company with the highest revenue on the domestic market, they show data for the year 2023 of the Agency for Economic Registers.
That company participates with nine percent in the state budget. said Vučić.
“As a result, there could be a shortage of fuel, because NIS controls about 80 percent of the fuel market in Serbia.
“Serbia has strategic reserves for about two months, but after that destabilization would follow,” adds Kapor.
Is there a way out for Serbia?
Since the beginning of the war in Ukraine, several models have been mentioned for changes in the ownership of NIS.
One of them is the nationalization of the company, but Vučić rejected such a possibility in May 2022.
“It doesn’t occur to us to do that,” he said.
Serbia could partially or fully buy out the shares of the Russian company in NIS, but also transfer the majority ownership to another foreign company, which would avoid the sanctions of the United States.
“The purchase of Gazprom shares would not be a problem for Serbia, it can be implemented without too many consequences for the budget, because the construction of the national stadium, for example, would be a many times more valuable investment,” says Kapor.
The value of one NIS share on the Belgrade Stock Exchange was 678 dinars on December 16after a 10 percent drop after the announcement of possible sanctions, and the total purchase price of Russian shares in NIS could amount to more than 1.5 billion euros, evaluated by experts.
Christopher Hill, the American ambassador in Belgrade, said earlier that “a change of ownership would certainly bring more peace and prosperity, both here and in the region.”
“The Russian owners of NIS use part of the profits to finance brutal aggression against Ukraine and threaten stability in the Balkans and throughout Europe, rather than investing in the future of Serbia.” Hill said.
They found a similar solution in Germany, where the shares of the company Sefe, which deals with gas imports and was owned by Rosneft until the beginning of the war, purchased by the state on market terms from the Russian owners.
Another way out for Serbia could be negotiations with Washington or Moscow and resolving the situation diplomatically.
The solution could also be the introduction of sanctions against Moscow due to the war in Ukraine, which Serbia, along with Belarus, is the only European country that has not done so.
In mid-December, Vučić asked the Government of Serbia to form a working group that will deal with sanctions against NIS.
The effects of sanctions on NIS will depend on the “type and depth” of these measures, says Aleksandar Kovačević, an expert in energy economics, for the BBC in Serbian.
“Various transport or financial services, equipment, spare parts or professional services may be denied, and if this happens, business could be seriously hampered,” says the adviser to numerous international organizations, such as the United Nations, the World Bank and the International Energy Agency. (IEA).
Punishment for Serbia or Biden’s ‘revenge policy’ towards Trump
Due to the moment in which the decision was made, it could be interpreted as part of “Joseph Biden’s revenge policy towards Trump”, “a short-sighted and counterproductive move”, says foreign policy analyst Boško Jakšić for the BBC in Serbian.
“Six months or a year ago, the situation was practically the same regarding the ownership of NIS and Serbia’s policy towards Russia.
“If we deserved sanctions, then we deserved them a year ago, and there was no talk about it, so the sanctions are much more addressed to Trump than to Belgrade, which is collateral damage,” Jaksic believes.
Due to the timing, but also the nature of the measures that America would introduce to the NIS, Trump could also benefit politically from their cancellation.
“I believe that he would abolish them very quickly and consequently be even more celebrated in Serbia as someone who saves it from freezing during the winter,” says Jakšić.
Executive orders, as one of the instruments at the disposal of American presidents, come into force immediately upon adoption, so with such a move, Donald Trump could quickly prevent the consequences of sanctions on Serbia.
“The only question is whether sanctions against Serbia would be on Trump’s agenda so quickly, unless his associates point out to him that he has an opportunity to score one good point.
“Sanctions like these have a negative political dimension for America, because they intensify anti-American and anti-Western sentiment in a country where it is already at an enviable level,” adds Jakšić.
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Source: www.vijesti.me
