US sanctions on Serbia’s largest oil producer, a majority-Russian-owned refinery and the only such facility in the Balkans, will begin on Oct 1, Serbian President Aleksandar Vučić said Thursday.
“The Americans have extended the non-imposition of sanctions for only four more days. So, from October 1, we will have sanctions imposed on the Serbian oil industry,” Vučić said.
The arrival of restrictive measures in Serbia coincides with both a tightening of screws on Russian oil revenue worldwide and Belgrade’s increasingly precarious geopolitical position, trying to please both Moscow and Brussels to ensure its own economic prosperity.
Serbia’s Naftna Industrija Srbije (NIS) is roughly 55 percent owned by Russia’s Gazprom and Gazprom Neft (with 30 percent held by the Serbian government). India’s Nayara Energy facility, which was targeted by EU sanctions in July, is majority held by Kremlin-controlled Rosneft.
US President Trump has followed the Europeans’ lead by targeting Russian oil infrastructure in other countries: US tariffs of 50 percent took effect in August on many Indian products, doubling an existing import tax, paid by American consumers, as Trump sought to punish India for buying Russian oil.
At the same time, Trump has pointed his finger at Europe for not doing enough to put a stranglehold on Moscow’s fossil-fuel revenues.
The US leader has in recent days leaned more toward support for Ukraine than for Russia as his patience with the indifference of Kremlin strongman Vladimir Putin toward a peace effort has worn thin.
On Wednesday, in the first address of his second term to the UN General Assembly, Trump described it as “embarrassing” that Europe is “buying oil and gas from Russia while they’re fighting Russia.”
US Energy Secretary Chris Wright said on Thursday that reducing Russia’s natural gas sales to Europe is the “most immediate hammer” that Washington has to use on Moscow to end the war.
While most European countries are in an uncomfortable situation, long reliant on Russian oil and gas, Serbia is in a near-impossible position, torn between historic ties to Moscow and its candidacy to join the European Union.
When asked in April if he planned to participate in the May 9 ceremony in Moscow commemorating the Allied victory over Nazi Germany, Vučić said he might not be able to, as he was slated to visit the US capital on those dates.
But despite pressure from EU leaders on the matter, the Serbian president decided to attend and preserve his ties with Putin.
“Numerous European guests will be coming to speak to me about the trip to Moscow, but they haven’t convinced me yet that I shouldn’t go. That’s hard to do with people as hard-headed as we are,” Vučić said at the time.
‘Extremely high price’
On Thursday, Vučić stated that the imposition of sanctions on Oct. 1 would have a crushing impact on Serbia’s economy.
“We have been extremely fair towards our Russian and American partners. We will try to be fair, but people must know that we will pay an extremely high price,” he said.
The measures would force Russian shareholders to divest their stakes in the company or face nationalization, AFP explained. That predicted outcome would hit Serbia’s economy hard, causing oil shortages and broader price hikes.
“There would be difficulties in the supply of oil derivatives, given that NIS supplies over 80 percent of the wholesale market,” Goran Radosavljevic, general secretary of the National Petroleum Committee of Serbia, told AFP.
“Oil derivatives directly affect transportation prices, and transportation affects the prices of all other goods and services,” he said, adding that panic-buying by firms and households could further deepen shortages.
Radosavljevic also warned that NIS would struggle with basic payment operations soon after the sanctions are enforced, with knock-on effects for Serbia’s economy.
“Everything is getting complicated, the economy and everything else,” Vučić said.