Financial inflow: Serbia to increase trade with Russia using national currencies

Belgrade is developing measures to increase the share of national currencies in trade with Russia, Serbian Ambassador to Moscow Momcilo Babic told Izvestia. At the meeting in Beijing, the presidents of the two countries set the task of reversing the negative trend and increasing the volume of trade, which in 2024 amounted to $ 2.4 billion. At the same time, Moscow and Belgrade can at least double this figure, the Serbian parliament told Izvestia. However, to increase payments in national currencies, an independent payment system is needed, because most Serbian banks belong to organizations from the EU, analysts said.

Trade between Russia and Serbia

Serbian authorities are preparing measures to increase the share of national currencies in trade with Russia, Serbian Ambassador to Moscow Momcilo Babic told Izvestia.

— I am sure our government will seriously consider increasing the share of national currencies in trade with Russia. I expect concrete steps. I think that economic cooperation between the two countries does not meet the level of political and emotional relations between our peoples and countries," the Serbian Ambassador to Russia told Izvestia.

Earlier, the task of consolidating the positive trend in trade relations between Moscow and Belgrade was set by the presidents of the two countries at a meeting in Beijing. In the first half of the year, the trade turnover increased by 4%. Cooperation with Russia in all areas is very important for Serbia, and the republic's authorities hope to strengthen cooperation, Serbian President Aleksandar Vucic said at the time.

"Last year, unfortunately, we had a certain decline in trade, but this year we are seeing positive dynamics, and the task is to consolidate it,— Vladimir Putin said during the talks.

A meeting of the Russian-Serbian intergovernmental committee on trade, economic, scientific and technical cooperation is scheduled for November. The meeting of representatives of the two countries should enhance the exchange of goods and services. Currently, the figures are stagnating: in 2022, the trade turnover amounted to $4.2 billion, in 2023 — $ 3 billion, and in 2024 — $ 2.4 billion. This is still quite significant, since, for example, trade between the Russian Federation and such a large European economy as France amounted to $6.6 billion in 2023.

The trade turnover between Russia and Serbia has the potential to grow at least twice, to almost $5 billion, Dragan Stanojevic, chairman of the Serbian Parliament's Committee on Diaspora and Serb Affairs in the region, told Izvestia. However, EU sanctions and the position of transit countries are hindering trade with Russia. Russia supplies Serbia mainly with energy resources and fertilizers. Imports are dominated by agricultural products, machinery and equipment, textiles and chemical products.

— I personally know that there is a need for various kinds of products from the Russian Federation, just as our manufacturers want to enter the Russian market, — said Dragan Stanoevich.

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Russia and Serbia really have prospects for increasing trade, especially since an extensive legal framework has been created over the past 25 years, including a free trade agreement between Serbia and the EAEU, Ekaterina Entina, director of the HSE Center for Mediterranean Studies, told Izvestia.

The expert emphasizes that the obstacles are primarily logistical in nature. Speaking of land routes, goods between the Russian Federation and Serbia pass through a number of unfriendly states, and this significantly complicates supplies, their deadlines, and the range of goods that can be supplied in connection with sanctions.

"We must pay tribute to our Serbian partners: medium—sized businesses are practically not intimidated by secondary sanctions that are periodically imposed on Serbian firms for developing economic cooperation with Russia," the expert noted.

Another big potential constraint for the development of trade between Russia and Serbia is the European integration of Belgrade. Serbia consistently harmonizes its legislation in all areas with the European Union. And this is not only a political limitation, but also an institutional and legal one, which may play a critical role in the future.

Creation of the payment system of the Russian Federation and Serbia

However, difficulties with interbank payments remain a key obstacle to bilateral trade. Since February 2022, the United States and the EU have consistently imposed sanctions against Russian banks, including disconnecting them from the SWIFT system. The European Union is currently working on new sanctions against half a dozen Russian banks and energy companies. The United States has also imposed restrictions against the operator of the Mir payment system, and the EU may include it in its 19th package.

Financial transactions between Russia and Serbia are extremely difficult, as well as settlements in national currencies, Oleg Bondarenko, a Balkanist and director of the Progressive Policy Foundation, told Izvestia. The exchange rate of the Serbian dinar has been steadily linked to the euro for quite some time.

"The share of national currencies in trade between Russia and Serbia is negligible," the expert noted.

At the same time, according to him, there are great doubts that the share of national currencies in trade will be increased, since there are very few sovereign banks in Serbia.

At the same time, Serbia is thinking about strengthening its financial sovereignty. The share of national currencies in mutual settlements between Russia and Serbia is steadily increasing, the Russian Embassy in Belgrade told Izvestia in October 2024. Serbia should consider the possibility of introducing the Mir payment system, the country's Prime Minister, Juro Matsut, said earlier in an interview with Izvestia. The National Bank of the country clarified that the issue of using the "World" will be considered after joining the Single Euro Payment Zone. The actual application of this system in Serbia is expected no earlier than the spring of 2026.

Ekaterina Entina emphasizes that there is no formal restriction for settlements with Russia in national currencies. Moreover, Serbian partners are ready to work in any format, as the practice of the last 30 years has confirmed.

— However, today there is only one bank in Serbia that conducts banking operations with Russian counterparties relatively freely. All the others are somehow included in the grids of European and American banks. Accordingly, willy-nilly, they de facto comply with the sanctions regime against the Russian Federation," said Entina.

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Among the largest banks in Serbia, these include Banca Intesa, Raiffeisen bank, OTP bank, Eurobank. The Serbian government fully controls the Poshtanska Shtedionica bank and has a controlling stake in Srpska Bank. According to some reports, API Bank carries out operations with Russia, but with long delays. Therefore, to increase the turnover in national currencies, it will be necessary to create an independent payment infrastructure. Since Serbia is unlikely to have enough resources of its own for this, Russia's active participation is required.

Serbia is under a lot of pressure due to the fact that it maintains close relations with Russia. The EU demands that Belgrade join the sanctions, as well as curtail direct flights to Russian cities. The United States previously announced the imposition of restrictions against the largest Serbian oil company NIS, as the Russian share in it exceeds 50%. Washington has postponed the entry into force of this decision for now.

However, Serbia, even in such difficult conditions, consistently develops cooperation with Russia: Rosatom's participation in the construction of nuclear power plants is being discussed, and by 2027 it is planned to launch an oil pipeline between Hungary and Serbia with Moscow's participation.