Kelić also told "Vreme" that Serbia in this case is not an innocent victim in the game of the big ones, as is claimed in the public. Namely, it has missed many opportunities, from the announcement of the sanctions until today, to ensure Serbia's energy stability. The dogmatic approach, with the accompanying uncritical loyalty to Russia, led to the current collapse. By purchasing Nisa, Russia primarily satisfied its political interests, and now Serbia has the opportunity to move away from the negative aspects of relations with Russia.
WEATHER: In the context of the introduction of US sanctions, the public is mainly talking about gasoline and diesel, ie, possible shortages and price increases at gas stations. No, the question is how the sanctions will affect other energy producers that depend on processing in the Pancevo refinery, such as fuel oil (important for district heating), bitumen (important for roads), jet fuel, FUEL, or indirectly - on the entire economy?
VASKO KELIC: Sanctions will almost certainly lead to a decline in the domestic production of the mentioned oil derivatives, which will certainly have a negative impact on the industrial component of GDP. In most cases, the supply itself should not be drastically threatened until the end of the year and during the winter. And after that, we are faced with enormous uncertainty, the outcome of which will depend on what will happen in the meantime.
Can it then be said that the budget of Serbia will be left not only without a large part of the funds it receives from Nisa (during 2024. Nis paid more than two billion dinars into the Serbian budget, which makes up almost 12 percent of all budget revenues) rather, it will be damaged indirectly, through other economic consequences of sanctions? Given that we know that state budgets are already empty, What are the consequences, citizens?, except for shortages and the increase in the price of petroleum products, I can expect?
We are facing a period in which many things will be uncertain. However, the most certain of all is that there will be significant negative economic consequences. The government will have to choose between which negative economic consequences will be more acceptable. The specific consequences will depend on what he chooses. An illustrative example is as follows. A disruption in supply, given the role of petroleum products, will put pressure on prices in a huge part of the economy. This negative consequence may be mitigated to some extent by reducing excise taxes or other levies, but this will further threaten public revenues, which are already threatened by the difficult operations of Nisa.
You spoke recently about the fact that Serbia missed a number of opportunities to protect itself from sanctions, from the moment they were announced until today. What opportunities are we talking about?? Are we? "victims of the great" or we put ourselves in this situation?
Politics is a game where the outcomes depend on the decisions of all the players involved. In this particular case, due to the multiple postponement of sanctions, Serbia had plenty of room to make decisions that would have avoided sanctions. Thus, the responsibility of our authorities for this situation is greater. It is further increased by the fact that a takeover of Nisa (management or ownership) would not lead to worse outcomes than the ones we have now. The gas deal is mentioned as an argument for continued accommodation to Russian demands regarding Nis. As we can see, despite the favorable attitude of the authorities towards the Russian Federation, that agreement is questionable, and announcements from Bulgaria and the EU suggest that for a few years, no inflow of Russian gas may be possible. In these ten months since the sanctions were initially announced, and especially in the past few years, our government has missed the opportunity to seek an additional long-term gas arrangement with other potential partners, both in Europe and in the world.
Can it then be said that Vučić's government put the interests of Russia above the interests of Serbia and its citizens? It seems that he is much more ready for Serbia to suffer enormous damage than to hold a grudge against Russia.
Vučić's government decided without any hesitation to subordinate the interests of Serbia and its citizens to the interests of Russia. In order to preserve Russian influence in Serbia, this government decided first to deprive our country of a more recent European perspective, and now to threaten economic development. I assume that the most significant benefits for Vučić's government, which he receives in return from this kind of policy towards Russia, are of a propaganda and security-intelligence nature.
Would you, as the regime media claims, the citizens of Serbia at this moment would suffer if relations with Russia were to cool in terms of long-term energy stability? That is - whether the nationalization of Nis would enable energy stability or threaten it in the long term?
At this point, it is difficult to do anything to preserve energy stability. Nationalization or forced takeover of management of Nisa were actually the only solutions that would avoid sanctions and maintain the stability of the oil derivatives market. In the long term, huge opportunities to further diversify gas supply have been missed and, as we can see, Russian gas supply is also quite uncertain at the moment. Part of some potential decisions on nationalization would definitely have to be an agreement with the American and European sides on additional and more favorable gas supply to Serbia.
Despite the phrases, Russia shows no desire to help its own in this situation "to Balkan friends", but protects exclusively its economic and political interests. You mentioned the gas arrangement.. The Russians restricted it until the end of the year, which is the president himself "surprised". He said the Russians limited the arrangement to prevent the nationalization of Nis, although no one, as Vučić says, he didn't even plan it. How do you comment on all this??
Obviously, the Russian side does not have enough trust in the government of Serbia. It is probably related to the experience of sending weapons to Ukraine. The question is how surprised Vučić really was, but this treatment of Serbia confirms that Russia knows very well that politics is not about closeness and emotions, but about interests.
Generally, can it be said on this example that Vučić's foreign, energy and economic policies have experienced a collapse?
I think so. I especially consider it bad that this further endangers Serbia's economic prospects in the coming period. In the coming period, it should be decided whether Serbia will be treated as an economically developed country according to the internationally established criteria. I am afraid that the application of sanctions against Nisa may jeopardize the chances of Serbia joining the high-income countries in the long term. That is why the lifting of sanctions is very important and as such should be among the priorities of the platform of the anti-regime front in the upcoming elections. I am glad that some organizations, among them the Green-Left Front, openly came out with proposals that can realistically solve this problem. The scenario according to which we will have any sanctions even after the next elections is a dark scenario for me.
How to get out of trouble? What are short-term, What about long-term solutions??
Without the lifting of sanctions, the only possible way to continue supplying the country with sufficient oil products is to import from other countries. For now, it seems that Hungary and its MOL will lead the way. Import competition in itself does not have to be a bad thing, but it will be impossible to compensate for the numerous advantages we have from domestic sources and domestic processing of oil derivatives. Given that domestic sources and resources for processing are currently under Nisa's control, domestic production will be permanently threatened and limited by sanctions. There is no optimal solution, neither in the short nor in the long term, without the nationalization of Nis or the forced takeover of its administration in accordance with the requirements of the decision on sanctions.
Sanctions will, experts say, the Croatian economy will also be damaged. A significant percentage of the income of the Croatian state company Janaf (Adriatic oil pipeline) it came from the contract with Nisa, approximately 30 percent. Is it possible to solve the problem through some kind of "dil" with Croatia, which is a thesis that we can find in part of the public?
I don't see why Russia would be more willing to sell Nis to Croatia, a country that is a member of NATO and much more integrated into Euro-Atlantic structures than Serbia. The same applies to any company, private or state-owned, whose headquarters are located on the territory of the Republic of Croatia. I believe that, if they decided to sell, the Russian owners would first make an offer to Serbia or a Serbian company. Also, based on the information available so far, I do not see that the Americans insist in any way that Croatia has any influence in the ownership or management of Nisa. Bearing that in mind, I do not see that any mutually initiated agreement between Serbia and Croatia could drastically change the situation.
And where did Croatian Minister of Economy Ante Šušnjar's statement that Croatia came from? "ready to buy Nis", and Vučić's counter-statement that Serbia "ready to buy Hrvatska elektroprivreda, Janaf, sve"?
It is a daily political skirmish for political points at home. It should be borne in mind that Šušnjar belongs to the extreme right-wing Homeland Movement, and I believe that it is a propaganda benefit to that party to create a story about the "subjugation of Serbia" through the ownership of a key strategic company. Vučić's statement represents the return of the "ping-pong ball" with a similar narrative.
Some say that there will be no shortage of petroleum products, but that price instability is possible, or price increases. What is your opinion?
The answer to that question depends on the interaction of the current government's economic policy and the behavior of other actors, such as alternative suppliers, Nisa management, but also the authorities of Russia and the USA. As I said earlier, there is a lot of uncertainty ahead of us regarding the specific economic consequences. I believe the risks of shortages are smaller than the risks of price increases, but neither is negligible. There is also a possibility that there will be an intervention by the Government in order to compensate for the impact on the economy and living standards due to rising prices and falling production. In that case, there is a risk of additional damage to the country's fiscal stability, which will already be damaged by the expected decline in Nisa's income and the resulting smaller contributions to the budget.
Speaking of prices, It is interesting that fuel in Serbia is also more expensive than in neighboring countries. In some cases, The price difference is huge., so citizens who live relatively close to the border fill the tanks in the neighborhood. When Nis was sold to Russian partners, the opposite was claimed - that fuel in Serbia will be the cheapest not only in the region but also in the wider area.
It is not at all unexpected that we have high prices of oil derivatives compared to the region, considering the distinct monopoly position of Nisa in the market. According to the latest data, Nis occupies as much as 80 percent of the market in the wholesale of oil derivatives and about 50 percent of the retail market. In such conditions, it is difficult to have market incentives that would lead to lower energy prices. There are other factors behind the high prices of petroleum products, such as excise taxes, but the effect of those factors can be significantly offset by greater competition.
How much, taking everything into account, from the current position, it seems a wrong political decision to sell Nis to Russia without public procurement, through political agreements, for an extremely low price? What did Serbia gain from this?, and what did you lose??
From today's perspective, it seems even more wrong than then, and even then, based on many things, that decision seemed wrong. It is true that Nis, as a company under Russian rule, helped the economic growth of Serbia, the stable supply of energy and the significant filling of the republic's budget. Nevertheless, considering its distinct monopoly position, Nis is one of the most responsible for maintaining extremely high fuel prices in Serbia. Such a position led to extremely high company profits, especially during the energy crisis of 2022. After the introduction of sanctions last week, it is more than questionable to what extent Nis will be able to contribute to economic growth, stable supply of energy, and filling the budget. Bearing all that in mind, from today's perspective, the sale of Nisa to the Russian owners seems like a move from which Serbia no longer has any economic benefits.
By purchasing Nisa, Russia achieved not only economic but also political interest. Are these events actually an opportunity for Serbia to break away from Russia??
By purchasing Nisa, Russia primarily satisfied its own political interest. Recent events have only confirmed that this company represents one of the key levers of Russian influence in Serbia, but also more widely - for example in Bosnia and Herzegovina. Now is definitely an opportunity to move away from the negative aspects of relations with Russia, which unfortunately outweigh the positive ones lately. However, I am not sure that Vučić has the will and capacity for such a turn. That is why, I repeat, I believe that the solution to the Nisa problem - as the most acutely negative consequences of the government's policy towards Russia - must be an important part of the platform of the anti-regime front for the upcoming elections.
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