Recent years have seen surprisingly deep economic and political relations established between Serbia and the United Arab Emirates (UAE). Increasing enthusiasm for investing in the former Yugoslav state by the UAE has geopolitical and economic implications. Tactics Institute considers the spill over of this relationship onto the wider security agenda, specifically Yemen, the poorest country in the Arab world and gripped by major conflict since 2015.
In 2013, Serbia’s then-Deputy Prime Minister Aleksandar Vučić, secured high-profile business deals and a $1bn state loan from the UAE. Vučić has gradually built a dominant position in Serbian politics, becoming Prime Minister and currently serving as President. The special relationship with the UAE that he helped to set on track has progressed in parallel to his rise. The Emirates has emerged as a strategic investor in Serbia, with a major share in former state-owned companies in agriculture, air transport, armaments production and construction. This positioning has also allowed the UAE to position itself as a major influencer of Serbian policy, founded less on shared world-view and more on strategic cosiderations.
The first deal between Belgrade and Abu Dhabi was a $40 million equity investment by the Etihad airline in Serbia’s struggling JAT Airways in 2013. After that, investment from the Gulf state scaled up and diversified. A $400 million sovereign loan from the UAE’s Development Fund was channelled to Serbian agriculture via the Emirates food production company, Al Dahra, which gained a controlling stake in bankrupted socialist-era farms.
This was a strategic investment given that the Gulf is the most food dependent region in the world, according to the Food and Agriculture Organization of the United Nations, and Serbia was the “breadbasket” of former Yugoslavia, with vast arable land. For Serbia too, this was strategic as the UAE invested in the modernisation of the local agro-business sector, not least by opening a €200 million credit line for major investment in irrigation projects. Soon, Serbia was signing bilateral framework agreements with companies belonging to the UAE’s Sovereign Investment Fund for cooperation in strategic industrial sectors, such as microchips and aircraft parts.
For the UAE, strategic investments in Serbia appear to offer tangible benefits that fit with Abu Dhabi’s long-term strategy of accessing European markets and diversifying the economy away from its over-reliance on oil. The Emirati investment portfolio is now positioned in Serbia’s real estate and tourism industries and is expanding into neighbouring Montenegro, which, like Serbia, is a candidate for EU accession country and has access to the Single Market.
Although a medium sized European nation with a population of around seven million, Serbia offers the UAE an opportunity to establish strong economic and strategic ties with a likely EU member state, from a position of power less attainable with other states. While Serbia has not yet recovered economically from the break-up of Yugoslavia and the wars of the 90s, it was once the political epicentre of the sixth most industrialised economy in the world and has the human and natural resources to emerge as a vital supplier of food to the Gulf.
After aviation, the arms industry is the UAE’s second biggest area of investment in Serbia. Having declared that is does not aspire to join NATO and the strictures inherent in that organisation, Serbia has some freedom to revive its once-strong defence industry after its debilitating experience during the wars of the 90s which saw a United Nations boycott of its arms trade. For just under a decade, Serbia has forged a strategic alliance with the UAE, providing the Serbian defence sector with capital for its modernisation and opening new markets across the Middle East.
Growth in Trade
In 2013, the countries announced a first, relatively modest, arms deal with Serbia exporting armoured personnel carriers and a programme for the joint development of a guided surface-to-surface missile. The two sides also explored areas for investment in aerospace manufacturing, telecoms, renewable energy and semiconductors. However, details about Serb-Emirati state deals were shrouded in secrecy from the outset; it has been reported that a clause in the 2013 agreement between the two governments dictates that details of arms deals are to be kept secret
Secrecy appears to suit both countries and there are also similarities in the way both nations do business, with Serb exports overseen by the state-owned company Yugoimport-SDPR and UAE companies operating through the state investment company Mubadala Development.
By 2015, the relationship was becoming closer, with coordinated military security agencies and cooperation between military police and special units; Emiratis were being trained at Serbia’s military academy, sharing information and there were enhanced protocols of cooperation in communication technologies and cyber defence. The UAE Navy also tested anti-ship cruise missiles developed with their Serb partners. And in 2018 reports indicated a significant resurgence in Serbian arms exports, with the UAE a steadily expanding market.
Some analysts have pointed to a common trend for geostrategic positioning in the region, not least Turkey and Russia. However, the difference in UAE’s partnership with Serbia is that the level of secrecy and the public suspicions of corruption. Deals that seem to enjoy political support without public scrutiny, legal or regulatory oversight are impacting Serbia’s democratic integrity. The overnight demolition of houses close to a high-profile UAE investment in Belgrade’s Waterfront by unidentified, masked individuals in 2016 is a case in point.
Most gravely, the UAE’s investments in Serbia’s arms industry have raised international alarm, with evidence emerging of Serb weapons being deployed in the Saudi-UAE led war on the Yemen.
According to Amnesty International’s 2019 Yemen Report, parties to the conflict in Yemen “committed serious violations of international humanitarian law…the coalition led by Saudi Arabia and the UAE…continued to bomb civilian infrastructure and carry out indiscriminate attacks, killing and injuring hundreds of civilians.”
The result has been the world’s biggest humanitarian disaster. The UN estimates that air attacks by the Saudi-UAE led coalition have caused two thirds of civilian deaths. The UN Office for the Coordination of Humanitarian Affairs estimates that more than three million Yemenis are internally displaced, and 280,000 have sought asylum in other countries.
A UN report published in 2019 estimated that close to a quarter of a million people would have been killed in the Yemen conflict by 2020, with 60 per cent of those killed being children under the age of five.
As well as being an arms supplier to a state accused of war crimes, Serbia’s relationship with the UAE and other state actors in the Yemen war has seen Belgrade implicated in the transfer of weapons to the Islamic State terrorist group, exposed by investigative journalism site Arms Watch using internal documents from Jugoimport SDPR and the state-owned arms manufacturer Krusik.
The UAE has independent ambitions that fall outside of its alliance with the Saudis in Yemen, as shown when they backed the takeover of Aden in June 2019 against the wishes of Saudi Arabia. In the Middle East and Africa, the UAE uses weapons as currency to influence warlords and increase its power and global reach. It seems that Serbian arms have become a key part of this strategy.
In January 2020, Tactics Institute released a major report analysing Saudi and Emirati influence in the phenomenon of radicalisation in the Balkans. You can download the report here.