While the Washington Agreement signed in September and the Brussels Declaration from December may seem like standard documents from international meetings, their combined content reveals that Serbia, particularly in the energy sector, had already begun pivoting away from its reliance on Russia before the U.S. sanctions were imposed on NIS, the Oil Industry of Serbia.
The sanctions, targeting NIS—majority-owned by Russian companies Gazpromneft and Gazprom—only accelerated Belgrade’s gradual shift. This shift began well before January 10, and though the sanctions hastened the process, Serbia had already quietly laid the groundwork for it. The government’s careful, low-profile approach acknowledges the ongoing local public sympathy for Russia, whose president, Vladimir Putin, was long considered a counterpart to Serbian President Aleksandar Vučić, based on public opinion.
In the meantime, the approval ratings of both Putin and Vučić have significantly dropped. Putin’s inability to quickly take Kyiv has disillusioned pro-Russian citizens, while Vučić has faced persistent protests from students accusing him of being unaccountable and unresponsive to their demands. These political challenges, coupled with potential disagreements over the NIS, create a complex equation for both leaders—one that could further damage their standing.
Strategic shifts in Serbia’s energy policy
Before the U.S. extended sanctions to NIS in September, Serbia had already moved toward cooperation with Western countries in the energy sector. This shift was made evident by the strategic energy agreement signed with the U.S. on September 18, 2024, just months before the sanctions were imposed. While little was known about the agreement’s specifics at the time, Serbian Foreign Minister Marko Đurić outlined the agreement’s goals, emphasizing green transition, energy security, and clean energy access.
However, the agreement raised eyebrows when, before even being ratified, the U.S. demanded that Serbia remove Russian influence from NIS, a key energy company responsible for a significant portion of the country’s budget and GDP. This demand, coming from Washington even as the agreement underscored the desire for friendly cooperation, reflects the complexities of Serbia’s balancing act between the West and Russia.
The impact of U.S. and EU policies
While the Washington Agreement focuses on promoting private sector investments from the U.S. in Serbia’s clean energy projects, the EU’s December 2024 declaration further complicated Serbia’s energy position. The declaration calls for the Western Balkans to reduce their dependence on Russian energy and urges alignment with the EU’s foreign policy, including sanctions against Russia. Serbia, in response, undertook to open its energy projects to U.S. companies, ensuring that potential contractors are informed of opportunities and invited to submit bids.
One of the agreement’s key aspects involves Serbia gradually phasing out coal-based electricity generation, which aligns with both the U.S. and EU’s goals for cleaner energy. However, the document does not clarify how Serbia will manage its nuclear energy plans—especially given Serbia’s longstanding ties with Russia in the nuclear sector, where President Vučić has previously advocated for acquiring modular nuclear power plants from Russia as a solution for growing electricity needs.
The strategic energy shift
These shifts in Serbia’s energy policy mark a clear pivot from its traditional Russian alliances toward greater cooperation with the West. However, the government has not been quick to make bold, public statements about this change, likely due to the sensitive domestic political climate. The sanctions on NIS have forced Serbia to diversify its oil sources, and while this has been a relatively smooth transition, Serbia’s dependence on Russian gas remains a significant challenge.
The country has yet to resolve the issue of Russian ownership in NIS, as the government seeks a mutually acceptable solution that would not disrupt its gas supply. Without resolving this, Serbia risks economic consequences, including reduced energy security.
The cost of infrastructure projects
In addition to its energy strategy, Serbia’s cooperation with the U.S. extends to infrastructure. The 2018 Memorandum of Understanding with the U.S. paved the way for a controversial $900 million contract with Bechtel and Enka to build the Moravian Corridor. Despite delays, the project is now projected to cost between 2.2 to 2.5 billion euros, more than double the initial cost. Still, the Serbian government is continuing to engage the same contractors for additional infrastructure projects, showing a deepening commitment to cooperation with American companies, despite the cost overruns.
Long-term consequences
As Serbia navigates its energy transition, the pressure is mounting from both Western partners and domestic stakeholders. The sanctions, the shifting alliances, and the rising costs of energy and infrastructure projects will likely shape the country’s energy future for years to come. Serbia’s energy dependence on Russian gas is still a critical vulnerability, and its ability to find a balanced solution will define its long-term energy security. The government’s efforts to handle this quietly, without alarming domestic supporters of Russia, may work for now, but it remains to be seen what the consequences will be for Serbia’s energy sector and its relationship with the West.
