Russia Gaining Economic Foothold in Western Balkans: Report

The Western Balkans have become one of the regions in which Russia has increasingly sought to (re)assert its presence in the past decade, a new report by Bulgarian think-tank Center for the Study of Democracy (CSD) says.

In an attempt to improve the understanding of the impact of the interplay between existing governance gaps and the inflow of authoritarian capital in the region, CSD developed an assessment of the Russian economic footprint in Serbia, Montenegro, Macedonia and Bosnia and Herzegovina.

The Russian economic footprint has remained stable in the past decade in the region, with the notable exception of Montenegro, where it contracted significantly, the report shows.

In 2015, the share of Russian-owned or indirectly-controlled companies from the total revenues in the economy varied from as low as 1.5% in Macedonia to as high as 13% in Serbia.

The Russian economic footprint in the Western Balkans has been concentrated in a small number of strategic business sectors such as energy, banking, metallurgy and real estate, CSD says.

Since all four economies are relatively small and dependent on energy imports, the expansion of Russian capital in the region has transformed into a source of vulnerability that has been used to pressure governments to yield on strategic decisions related to foreign and security policy.

“In order to entrench its presence in the region, Russia has used its soft power, political pressure and its economic leverage “ranging from the control and acquisition of critical energy assets to the financing of political parties and media”, the authors of the report asserted.

Thus far, the region has remained committed to its Euro-(Atlantic) integration.

“Russia’s meddling in the region has enhanced space domestically for political opportunists to try to avoid implementing necessary reforms, particularly those related to strengthening the rule of law and curbing of autocratic tendencies – as a result undermining civil society and the media, leading to democratic backsliding and an economic slowdown,” the report says.