Moscow loan to Serbia boosts ties

Tadic (right) thanked Medvedev for the loan and Russia's historic support

Russia's President Dmitry Medvedev has approved a 1bn-euro ($1.5bn; £0.9bn) loan to Serbia to help the country cover its budget deficit.

The agreement came during a visit to Belgrade described by Serbia's president as an important development for the two countries' relations.

Energy issues were high on the agenda during the visit.

Serbia is a traditional ally of Russia, but its government is pro-Western and is seeking membership of the EU.

President Boris Tadic is therefore seen as having a delicate balance to strike.

Economic ties

Of the 1bn-euro loan, Serbia wants to use 350m euros to help cover its deficit - a condition of a deal with the International Monetary Fund - with the rest set aside for railways and motorways.

Announcing the loan, Mr Medvedev lauded the strategic cooperation between the two countries on such projects as the planned South Stream natural gas pipeline that would bring Russian gas to Europe via the Balkans.

The gas pipeline is a key element of Russia's energy policy.

"Our goal is to make Serbia a big energy player which will distribute the Russian gas," Mr Medvedev told Serbia's parliament.

Mr Tadic thanked Mr Medvedev for the loan, and Russia's historic support.

"Having in mind our centuries-old relations, now we are developing very important economic ties," he said.

Political clout

Mr Medvedev also attended celebrations marking the 65th anniversary of the liberation of Belgrade from Nazi occupation in World War II and visited the seat of the Serbian Orthodox Church.

Russia's relationship with Serbia rests on two pillars, says the BBC's Mark Lowen in Belgrade.

The first is Kosovo. When Serbia needed a big-hitter to support its fierce opposition to Kosovo's independence, Moscow filled that role, he says.

The other is energy. Last year the two countries agreed a deal under which Russia's Gazprom gained control over Serbia's oil monopoly NIS, in return for investing in the South Stream pipeline that would cross Serbia rather than Ukraine.

E-mail this to a friend

Printable version