News | Economic / Social Policy - Southeastern Europe - North America Serbia, Kosovo, and “Economic Normalization”

A curious agreement dictated largely by Donald Trump’s re-election campaign

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US President Trump with Serbian President Aleksandar Vučić and Kosovo Prime Minister Avdullah Hoti at the signing ceremony in the Oval Office of the White House, 4 September 2020.   Flickr/Joyce N. Boghosian

The “economic normalization agreement” signed by the representatives of Serbia and Kosovo in Washington, D.C. on 4 September was presented as a great deal for the economic development of the Western Balkans. During the two-day negotiations, almost all media in the region were focused on the President of Serbia, Aleksandar Vučić, and Kosovo’s Prime Minister Avdullah Hoti. Pro-government media in Serbia competed over who would present the incumbent president as the greater statesman, defender of Serbian national interests, and champion against the recognition of Kosovar independence.

Luka Petrović is a political scientist and research assistant at the Institute for Philosophy and Social Theory in Belgrade. He writes regularly for the left-wing online portal Mašina, a partner of the RLS Southeast Europe Office.

On the first day of negotiations, 3 September, the news that item 10 of the agreement envisaged the recognition of Kosovo exploded across Serbian media. Yet it was soon reported the disputed provision had been removed at the request of the Serbian side. Serbian media lauded the agreement’s signing as “historic” and a “diplomatic victory”, considering that recognition of Kosovo was avoided. However, Richard Grenell, the former US ambassador to Germany and “Special Presidential Envoy for Serbia and Kosovo Peace Negotiations”, soon spoke up, pointing out that it was not true that such a provision existed and that the issue of Serbian recognition of Kosovo was not on the agenda at all.

The Kosovar side also found words of praise for the agreement. Prime Minister Hoti wrote on his Twitter account that the “agreement is a big step towards reaching a final agreement of mutual recognition with Serbia”. Pristina thus appears to view the agreement as only an intermediary stage in a process that will end with full recognition of the country’s independence by its Serbian neighbour. President Trump congratulated the signatories of the agreement, saying it marked a “major step forward to bringing prosperity and peace to the Balkans and the world”, while Mike Pompeo, US Secretary of State, congratulated the supporters of the agreement in a press statement, saying he “commends Serbian President Vučić and Kosovo Prime Minister Hoti on historic agreements they reached at the White House” and adding that “the United States reaffirms its support for the ongoing negotiations between Kosovo and Serbia toward comprehensive normalization of relations”.

Not Your Average Agreement

It would thus appear that the agreement signed in the Oval Office, full of the foreign policy hawks who make up the Trump administration, satisfies all parties. Yet the entire process was marked by ambiguities. Shortly after the ceremony at the White House, Serbia’s current Minister of Foreign Affairs, Ivica Dačić, spoke up, emphasizing that “no document has been signed with Kosovo … there is a separate text signed by our side and theirs”, and that “there is no agreement signed by Vučić and Hoti”. Grenell denied that statement, saying that the two sides agreed with each other and that the US was not one of the parties to the agreement. Ultimately, it turned out that the US had not signed any agreement with either side.

The fact is there is no single document bearing the signatures of both parties, but rather each side individually signed documents which are not identical in content. Specifically, the first 15 points in both documents are identical, while differing in the sixteenth point. Thus, formally speaking, it is not a bilateral agreement between Serbia and Kosovo, nor a trilateral agreement between Serbia, Kosovo, and the US. Indeed, it is not entirely clear how the signed documents can be classified.

The question that remains is who will formally guarantee the implementation of what was agreed upon in both documents. It is clear that the administration of the incumbent US president is behind everything, but nowhere do the documents stipulate who is officially in charge of implementation. Why was the agreement signed now, given that the European Union has historically been responsible for negotiations between the two sides, and what information can we gleam from the content of the two documents?

Setting Up the Perfect Moment

That the Trump administration cared about signing the agreement and wanted to be actively involved in the negotiations could be sensed back in October 2019, when Richard Grenell was appointed Special Envoy. Bearing in mind that 2020 is an election year in the US and Trump has only a few foreign policy accomplishments to his name, it seems that, quite simply, he needed some diplomatic successes.

The first obstacle to Trump’s agreement was in the form of the government of Albin Kurti from Kosovo’s Vetëvendosje party, which refused to remove tariffs on trade with Serbia, thus blocking negotiations. Kurti’s government was formed in early February, but a vote of no confidence threw him out by the end of March as the coronavirus pandemic began to hit the Balkans. Grenell played a big role in removing Kurti, and he expressed satisfaction that negotiations would continue once tariffs were removed. The new government, led by the Democratic League of Kosovo and the Alliance for the Future of Kosovo, soon abolished the tariffs as anticipated.

The next important moment was the parliamentary elections in Serbia. The meeting in Washington was originally planned for 27 June, six days after the parliamentary elections in Serbia held on 21 June, which were boycotted by most opposition parties due to the ruling party’s control of mainstream media and misuse of public resources. The elections brought a convincing victory for President Vučić’s European People’s Party-affiliated Serbian Progressive Party, winning 60.65 percent of votes cast with no real opposition parties represented in the new parliament. The important thing for the US administration was not the state of democracy in Serbia, but the fact that Vučić now had all the levers of power in his hands, making him an ideal partner for signing the agreement.

The meeting was not held on 27 June, however, as the special court for Kosovo Liberation Army crimes, the so-called “Kosovo Specialist Chambers” in The Hague, suddenly announced the indictment of Kosovo’s President Hashim Thaçi, who was to take part in the negotiations together with Prime Minister Hoti. Hoti also cancelled his trip to Washington soon thereafter. Most analysts from the Balkans interpreted the indictment and cancellation of talks as part of a struggle between the EU (primarily Germany) and the US over who will be the main international mediator between the two sides, as the two actors have different views on how the dispute should be resolved.

What was not signed in June was signed in September. It seems that it was important to Trump to present himself to the American public as someone capable of solving international problems, but who also clearly stands on the side of Israel. The agreement between Serbia and Kosovo, which was framed as part of the US push for recognition of Israel by Muslim countries, was preceded by the agreement between the UAE and Israel, which made the Emirates the third Arab state to normalize relations with that state. This explains why the agreement between Serbia and Kosovo contains a number of provisions concerning Israel.

It’s the Politics, Stupid!

Although the title of the document suggests that it is an economic agreement, a large part of the text unequivocally concerns the political interests of the US and the state of Israel. Economic issues occupy a secondary role. The most important economic provisions are those relating to the creation of a “mini-Schengen” zone in the Western Balkans between Serbia, Albania, Kosovo, and Northern Macedonia, which would enable the free flow of people, goods, services, and capital between the three entities that are not part of the EU. The agreement also envisions fulfilling the previously agreed upon construction of a highway and railway between Belgrade and Pristina. The opening of the US Internal Development Finance Corporation, intended as a channel for American investments in the Western Balkans, has also been defined. According to Serbian Minister of Construction, Transport, and Infrastructure Zorana Mihajlović, it is estimated that the US will invest about four billion dollars.

As for other provisions, Serbia pledged to stop campaigning against recognition of Kosovo’s independence in the next year, while Kosovo agreed not to apply for membership in international organizations during that period. Further provisions directly concern the interests of the US. It is predicted that both sides will “diversify” their energy supply, which means the supply of natural gas, considering that Russia is the most important supplier thereof to Serbia. Serbia meets about 90 percent of its gas needs by importing from Russia, which has been an important political partner to almost every Serbian administration. That Russia is not particularly satisfied with the was evidenced by a tweet from Maria Zakharova, Director of the Information and Press Department of the Ministry of Foreign Affairs of the Russian Federation, who compared Vučić’s stay in Trump’s office with a scene from the movie Basic Instinct. It seems that relations with Russia have also taken a hit.

The agreement goes on to stipulate that the parties “will prohibit the use of 5G equipment supplied by untrusted vendors”. This point obviously targets the Chinese company Huawei and is directed against Chinese influence in the Balkans, where the share of Chinese direct investment has increased in recent years, mostly in the form of infrastructure projects in the context of the Belt and Road Initiative. The US Internal Development Finance Corporation, which is set to operationalize the announced construction of a highway and railway from Belgrade to Pristina, can be interpreted as a response to China’s growing presence. It has also been announced that the US will provide loans for small and medium-sized enterprises with the conclusion of new bilateral investment agreements. This comes as Serbia began developing closer ties with China during the pandemic. At the reception held for Chinese medical staff and equipment flown into the country during the pandemic, President Vučić thanked China and “Brother Xi” for their help, while cities in Serbia were full of billboards expressing gratitude to the People’s Republic. Serbian media often portrayed China as the largest provider of medical aid.

Perhaps the most important part of the agreement concerns Israel’s interests, which in turn is closely linked to the upcoming US elections. Indeed, it is the points referring to Israel which are different in the two agreements. A document signed by Hoti states that “Kosovo [Pristina] and Israel agree to mutually recognize each other”, while the document signed by Vučić states that “Serbia [Belgrade] agrees to open a commercial office, and a ministry of state offices, in Jerusalem on 20 September 2020 and move its embassy to Jerusalem by 1 July 2021”. Although it might seem strange that the provision on Israel is included in an agreement concerning relations between Serbia and Kosovo, it makes sense if we assume that the agreement is largely geared around domestic US politics.

Donald Trump himself paid the most attention to this point, writing in a tweet that it marked “Another great day for peace with Middle East – Muslim-majority Kosovo and Israel have agreed to normalize ties and establish diplomatic relations. Well-done! More Islamic and Arab nations will follow soon!” It is perhaps not so important whether Trump really knows that Kosovo is in the Western Balkans and not in the Middle East. More important, however, is that it constitutes a clear illustration that Trump is trying to present himself to the US public as someone who manages to solve international problems, and that little in this agreement really concerns Kosovo and Serbia. It was more important for him to present one of the parties as a “Muslim state” that would have good diplomatic relations with Israel. The same applies to the point that both sides agreed to treat Hezbollah as a terrorist organization.

The relocation of the Serbian embassy to Jerusalem is especially interesting, as Serbia is one of the few countries that has managed to cultivate good relations with both Palestine and Israel, neither of which has recognized Kosovo’s independence. It remains unclear what exactly Serbia received in exchange for this point, considering that nothing in the agreement really benefits it. After the US and Guatemala, Serbia has become only the third country in the world to have its own embassy in Jerusalem. It will be interesting to see how this decision affects Serbia’s further relations with the EU and the accession process.

The new agreement is thus an extremely unusual document that mostly concerns the interests of non-signatory parties, the US and Israel, while Serbia and Kosovo expect further negotiations and agreements on mutual relations but with much-changed relations with other world powers, the EU, China, and Russia. Grenell said that “Economic normalization is pulling Serbia and Kosovo away from Russia and China”, and that “it is Donald Trump’s diplomatic victory”. Perhaps this is the most important consequence of the agreement. It will be especially interesting to see how the European Union will approach the parties, considering that it views itself as the main mediator in the peace-building process, and that both sides have set joining the EU as a strategic goal.