By Aleksandar Vasovic and Gordana Filipovic
BELGRADE, Oct 18 (Reuters) - Russian President Dmitry Medvedev visits Serbia on Tuesday to discuss a promised one billion euro loan and aiming to strengthen Moscow's economic influence in the EU hopeful which already has an IMF deal.
Medvedev's one-day visit will aim to shift the focus from the two countries' traditional political ties, based on historic cultural and religious links, to more pressing economic issues.
Since 2003, Serbia has attracted almost $12 billion in foreign direct investments but Russia's contribution has been modest, with the country ranking 19th in the list of investors.
Belgrade asked Moscow for the 1 billion euro ($1.5 billion) loan in July, and aims to use about 350 million euros to cover its budget deficit in 2010 -- which it has agreed with the International Monetary Fund to curb -- with the rest for transport development.
Serbia has yet to find out the cost of the loan from Russia, although Prime Minister Mirko Cvetkovic has expressed optimism that the interest rate would be favourable.
'The Russian loan seems like a good deal; it looks better in some aspects than the one with the IMF,' a government official told Reuters condition of anonymity. 'We will be able to spend Russian money on jobs, to boost spending and local industry,' he said.
Serbia must keep its budget deficit within 3.5 percent of GDP next year to comply with a 3 billion euro deal with the IMF. Belgrade will open talks with the IMF on Oct. 26 on further tranches of the loan, which it took during an economic crisis.
However, the ruling coalition of pro-Western parties and the Socialists, has made it clear that close ties with Russia would in no way hamper Serbia's goal of joining the European Union.
'(Russian) Foreign Minister Sergei Lavrov told us several times that Belgrade will be even more valuable as an ally if it joins the (EU) bloc,' the government official said.
Serbia signed a Stabilisation and Association Accord with the EU last year, the first step towards membership. However, the Netherlands has blocked its implementation because of Belgrade's failure to arrest and hand over to the U.N. war crimes tribunal Bosnian Serb army commander Ratko Mladic.
SLAVIC MOTHERLAND
Medvedev will meet Serbian President Boris Tadic and other key officials plus top Serbian Orthodox clergy on Tuesday, and he will also address parliament.
Many Serbs still consider Russia their Orthodox Christian and Slavic motherland, a feeling revived after NATO's 1999 bombing to expel Serb forces from Kosovo.
'Russian backing was always of enormous value,' Foreign Minister Vuk Jeremic said, adding that Medvedev's visit would reinforce 'centuries-long friendship between Serbia and Russia'.
Russia, a veto-wielding member of the U.N Security Council opposed the 2008 independence of Kosovo, Serbia's former southern province. But the issue is unlikely to dominate.
'Kosovo will likely not be on the top of the agenda as Russia has already done enough by not recognising it,' said Zoran Dragisic, a lecturer with the Belgrade's School of National Security.
In 2003 Russia withdrew its peacekeeping contingent from the NATO force deployed to Kosovo in 1999, and has since shown no interest in restoring its military presence in the Balkans.
'That pullout indicated that Serbia is no longer in Russia's military focus and I expect such a Kremlin strategy will persist,' Dragisic said. 'The economy is Russian strongest weapon now.'
FOCUS ON ENERGY
As Deputy Prime Minister, Medvedev led a Russian delegation to sign an energy deal with Serbia last year.
Under this deal, Gazprom said it would develop an arm of the South Stream pipeline, allowing Russia to bypass Ukraine via Turkey, Bulgaria and Serbia for piping gas to western Europe and to avoid persistent energy rows with Kiev.
'The development of the South Stream will make Serbia attractive for investors because of its stable energy supplies and reserves,' Petar Skundric, Serbia's Energy Minister said in an interview with the Vecernje Novosti daily.
Russian investors are also considering building a gas-fuelled power plant and a 200 million euro-worth improvement of heat-generating plants in Belgrade, Skundric said.
(Editing by David Stamp) ($1=.6702 Euro) Keywords: SERBIA RUSSIA/ (aleksandar.vasovic@thomsonreuters.com; +381 11 3044902) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
BELGRADE, Oct 18 (Reuters) - Russian President Dmitry Medvedev visits Serbia on Tuesday to discuss a promised one billion euro loan and aiming to strengthen Moscow's economic influence in the EU hopeful which already has an IMF deal.
Medvedev's one-day visit will aim to shift the focus from the two countries' traditional political ties, based on historic cultural and religious links, to more pressing economic issues.
Since 2003, Serbia has attracted almost $12 billion in foreign direct investments but Russia's contribution has been modest, with the country ranking 19th in the list of investors.
Belgrade asked Moscow for the 1 billion euro ($1.5 billion) loan in July, and aims to use about 350 million euros to cover its budget deficit in 2010 -- which it has agreed with the International Monetary Fund to curb -- with the rest for transport development.
Serbia has yet to find out the cost of the loan from Russia, although Prime Minister Mirko Cvetkovic has expressed optimism that the interest rate would be favourable.
'The Russian loan seems like a good deal; it looks better in some aspects than the one with the IMF,' a government official told Reuters condition of anonymity. 'We will be able to spend Russian money on jobs, to boost spending and local industry,' he said.
Serbia must keep its budget deficit within 3.5 percent of GDP next year to comply with a 3 billion euro deal with the IMF. Belgrade will open talks with the IMF on Oct. 26 on further tranches of the loan, which it took during an economic crisis.
However, the ruling coalition of pro-Western parties and the Socialists, has made it clear that close ties with Russia would in no way hamper Serbia's goal of joining the European Union.
'(Russian) Foreign Minister Sergei Lavrov told us several times that Belgrade will be even more valuable as an ally if it joins the (EU) bloc,' the government official said.
Serbia signed a Stabilisation and Association Accord with the EU last year, the first step towards membership. However, the Netherlands has blocked its implementation because of Belgrade's failure to arrest and hand over to the U.N. war crimes tribunal Bosnian Serb army commander Ratko Mladic.
SLAVIC MOTHERLAND
Medvedev will meet Serbian President Boris Tadic and other key officials plus top Serbian Orthodox clergy on Tuesday, and he will also address parliament.
Many Serbs still consider Russia their Orthodox Christian and Slavic motherland, a feeling revived after NATO's 1999 bombing to expel Serb forces from Kosovo.
'Russian backing was always of enormous value,' Foreign Minister Vuk Jeremic said, adding that Medvedev's visit would reinforce 'centuries-long friendship between Serbia and Russia'.
Russia, a veto-wielding member of the U.N Security Council opposed the 2008 independence of Kosovo, Serbia's former southern province. But the issue is unlikely to dominate.
'Kosovo will likely not be on the top of the agenda as Russia has already done enough by not recognising it,' said Zoran Dragisic, a lecturer with the Belgrade's School of National Security.
In 2003 Russia withdrew its peacekeeping contingent from the NATO force deployed to Kosovo in 1999, and has since shown no interest in restoring its military presence in the Balkans.
'That pullout indicated that Serbia is no longer in Russia's military focus and I expect such a Kremlin strategy will persist,' Dragisic said. 'The economy is Russian strongest weapon now.'
FOCUS ON ENERGY
As Deputy Prime Minister, Medvedev led a Russian delegation to sign an energy deal with Serbia last year.
Under this deal, Gazprom said it would develop an arm of the South Stream pipeline, allowing Russia to bypass Ukraine via Turkey, Bulgaria and Serbia for piping gas to western Europe and to avoid persistent energy rows with Kiev.
'The development of the South Stream will make Serbia attractive for investors because of its stable energy supplies and reserves,' Petar Skundric, Serbia's Energy Minister said in an interview with the Vecernje Novosti daily.
Russian investors are also considering building a gas-fuelled power plant and a 200 million euro-worth improvement of heat-generating plants in Belgrade, Skundric said.
(Editing by David Stamp) ($1=.6702 Euro) Keywords: SERBIA RUSSIA/ (aleksandar.vasovic@thomsonreuters.com; +381 11 3044902) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.