Serbia ratifies key pacts that balance its EU, Russia ties

(BELGRADE) - Serbia on Tuesday sealed two deals seen as a key for its future, balancing a bid for European Union membership with a stronger presence of key ally Russia in its vital energy sector.

In a decisive parliament session, deputies ratified a partnership accord with the EU, considered a first step to membership, and gave the green light for Russian gas giant Gazprom to build a pipeline and underground gas storage facility in Serbia, and to buy the Serbian oil monopoly NIS.

"We expect Serbia to become an engine of growth in the region and to provide a kind of bridge ... where we are interested in European integration and economic cooperation with the East," said Prime Minister Mirko Cvetkovic.

By voting for the accords, Serbia confirmed its readiness to join the European Union and, at the same time, maintain strong ties with Russia, its key ally in the diplomatic battle against Kosovo's independence.

The independence of Kosovo, proclaimed on February 17, has so far been recognised by 46 countries, including 21 EU members and the United States, despite opposition from Serbia and Russia.

The EU accord can only be fully implemented when member states express satisfaction on Serbia's cooperation with the UN war crimes tribunal in The Hague.

Belgrade hopes to get EU candidacy by early next year and to win full membership by 2014.

This is conditional on the arrest of the last two remaining war crimes fugitives, former Bosnian Serb military chief Ratko Mladic and Croatian Serb leader Goran Hadzic.

Like wartime political leader Radovan Karadzic, who was captured in July, Mladic is charged with genocide, war crimes and crimes against humanity over the 1995 Srebrenica massacre of some 8,000 Bosnian Muslims.

UN war crimes prosecutor Serge Brammertz is to visit Belgrade on Wednesday to assess Serbia's cooperation with the court.

The parliamentary vote also came amid a split in the ultra-nationalist Serbian Radical Party, whose acting leader Tomislav Nikolic resigned over a disagreement within the party over its future in the EU.

Ahead of the parliamentary vote, which had been stalled for weeks due to opposition obstruction, Serbia's pro-European President Boris Tadic said the deals were of "historical value for Serbia."

"Serbia must not be an enemy to Russia, but Serbia as a member of the EU must be a friend of Moscow," Tadic said.

Gazprom offered to pay 400 million euros for 51 percent of NIS and to invest 500 million euros in the company. It also promised to ensure passage via Serbia of the planned 900-kilometre (560-mile) South Stream pipeline to transport gas from Russia to southern Europe.

Critics of the deal -- among them Deputy Prime Minister Mladjan Dinkic -- considered the Gazprom offer too low, while some even blamed authorities for selling NIS on the cheap to Russia for its support over Kosovo.

A consulting company estimated that NIS alone is worth 2.2 billion euros (3.1 bln dollars) and Dinkic has called for new price negotiations with the Russian side.

The Gazprom Group welcomed the ratification of the accord, describing it as a "big step toward the implementation of one of our largest infrastructure projects."

"The enhanced cooperation between Serbia and Russia will improve the security of natural gas supply to Europe and increase the flexibility of export routes, especially through the South Stream gas pipeline," said Gazprom deputy chairman Alexander Medvedev in a statement.

Medvedev said the agreement would make Serbia "become a major European energy hub and benefit the Serbian economy as a whole."

The accord, signed in January in Moscow, was widely seen as increasing Russia's energy presence in the region and confirming the two countries' political links.