RUSSIA’S ECONOMIC INFLUENCE IN THE BALKANS: TACKLING KREMLIN’S SHARP POWER

Center for democratic studies in Sofia, after the Brussels fiasco with the French blockade for North Macedonia and Albania, published a study which shows how Russia is immediately activated. According to them, Kremlin launched an offensive, primarily through its oligarchs in the Balkans, to exploit the vacuum and expand its influence in the Balkan countries. This is the first of three parts of the study.

The European Union’s decision[1] from October 2019 not to start accession negotiations with Albania and North Macedonia is yet another warning sign that the EU might not be willing and/or able to commit the necessary political capital to integrating the Balkans within the Euro-Atlantic community. The unexpected decision has undermined the credibility of the EU enlargement process, as well as that of the separate Berlin Process initiated by Germany in 2014 to reassure the Western Balkan countries of their European future. This has further weakened the EU gravitational pull, widening the power vacuum in the region that has been readily exploited by authoritarian powers such as Russia and China. The latter are taking advantage of the democratic backsliding and the widespread corruption and state capture[2] to expand their economic and political influence in the region.

Key points:

→ The weakening of the EU gravitational pull leaves a power vacuum in the region that is readily filled in by authoritarian powers such as Russia and China. They are taking advantage of the democratic backsliding and the widespread state capture among dysfunctional institutions to expand their economic and political influence.

→ Russian economic influence has declined since the imposition of U.S. and EU sanctions in 2014, but Russian companies still control between 5 and 10% of the regional economy, including strategic companies such as the largest refineries, fuel distribution networks, gas transmission and storage facilities, telecoms and retail chains.

→ Russia has locked in governments from the region in costly large-scale projects that have been used to feed networks of domestic and Russian businesses with significant leverage over policy-makers and institutions.

→ The Kremlin has amplified its influence and yielded sharp power in the region through employing all instruments from its playbook, such as supporting mainstream and fringe political parties, employing media, cultural and religious ties, sponsoring civil society activities, and pulling former security services’ strings.

→ SEE countries, with the help of the EU, should implement a diverse set of strategies to counter state capture in strategic economic sectors and diversify foreign direct investment.

→ Anti-money laundering and anti-trust authorities should clearly establish final beneficial ownership, prevent illicit capital from entering the region, and priorities work on the risks posed by capital from authoritarian states serving political goals, in particular large-scale infrastructure projects.

Local political elites in the Balkans have readily embraced the proposed alternative authoritarian model touted by Russia and China, sweetened by large scale unaccountable infrastructure and energy projects. This has undercut local democratic institutions and has further reduced the EU’s conditionality-based accession negotiations’ impact. For example, Serbia has pressed on with its strategic engagement with Russia[3] and China, although the EU started accession negotiations with the country in 2014. In what might be seen as a move to counterbalance the failure of the EU accession process to pull in Serbia and other Western Balkan countries and reverse their democratic backsliding, the U. S. has increased its engagement in the region. It has appointed two special envoys[4] in 2019, and has pressed on with NATO enlargement. [5]

The impact of Russia’s economic footprint on the Balkans in particular has been underestimated by Western governments, resulting in a failure to recognize the true extent of the associated sharp power and structural risks. Russia remains the most influential external player in its ability to mobilize oligarchic networks domestically to acquire strategic assets or to try to tilt the foreign policy orientation of countries in the region.

The EU’s decision to block the Western Balkans’ accession process can at least partially be traced back to the success of strong Russian meddling in the decision-making of national governments in the region. In the past decade, the Kremlin has relentlessly placed Balkan governments under pressure through deploying the full array of instruments from its sharp power playbook. [6]from economic dependence underpinned by corruption and state capture, through coordinated political and media disinformation campaigns, to special security services’ operations. Russia aims to use this geopolitical opening to reignite regional divisions and derail the region’s EU integration. The Kremlin is likely to view the Balkans as an important building block in its global strategy to outmaneuver the U.S. and the EU, and to position itself as important power broker. This strategy has been visible in the Middle East (Syria and Turkey), Central Asia, Africa and increasingly South America.

[1] The Council of the European Union failed to endorse the recommendation of the European Commission to start negotiations with Albania and North Macedonia. France, backed by the Netherlands and Den­mark, have been the main opponents for starting the ne­gotiations.

[2] Shentov, O., Stefanov, R., Todorov, B. (Eds.). 2016. Shadow Power: Assessment of Corruption and Hidden Economy in Southeast Europe. Sofia: Southeast European Leadership for Development and Integrity/Center for the Study of Democracy.

[3] For example, in 2019 Serbia signed a free-trade agreement with Russia’s Eurasian Union, deepened military ties with Russia, and pressed on with the Russian strategic political project in the region, the Turkish Stream pipeline. In an attempt to further hurt reformist governments, following the EU decision not to invite the two countries to start negotiations Russia has also suggested that Albania and North Macedonia should instead join its Eurasian Economic Union.

[4] The U. S. has appointed Ambassador Matthew Palmer as Special Envoy for the Western Balkans, and Ambassador Richard Grenell as Serbia-Kosovo peace envoy.

[5] Montenegro became NATO’s 29th member in 2017, and North Macedonia is expected to become NATO’s 30th member by April 2020.

[6]  Conley, H., Stefanov, R., Mina, J., and Vladimirov, M. 2016. The Kremlin Playbook: Understanding Russian Influence in Central and Eastern Europe. Rowman & Littlefield.