The presence of the United Arab Emirates (UAE) in the Balkans has come under rather intense media scrutiny in recent years. This is mainly due to high-profile investments in the construction sector, whose premier example is the controversial Belgrade Waterfront project – a luxury citadel to rise on the banks of the Sava River in the Serbian capital. In the context of the receding allure of the European model in the Western Balkans, the UAE have started to be analysed as one of those non-EU actors that could ‘fill the void’ of the value vacuum in the region.
But for the Emirati presence, this initial premise is only partially true: in the recently reinvigorated interaction between the United Arab Emirates and Western Balkan countries, ideology is conspicuously absent. The UAE are not trying to ‘steer’ the Western Balkans away from further integration with the European Union. What is present, however, is a certain meeting of minds when it comes to governing the countries. The purpose of this piece is to offer a short introduction to the nature and the philosophy underpinning the Emirati business deals in the Balkans, discussing the wider context within which they take place.
What is the extent and scope of the UAE’s investments in the Balkans?
The media attention drawn by high-profile projects such as Belgrade Waterfront, the luxury marina Porto Montenegro, near Tivat, or the ‘largest tourist city in Southeast Europe’, Buroj Ozone, to be built in the Bosnian mountains, could give the impression that the UAE have now become a dominant investor in the region. The situation is not so clear-cut. According to data released by their national chambers of commerce, UAE investment in Serbia reached over €135 million in 2017, from less than €500 thousand in 2012. But this needs to be put into context: out of the €15 billion foreign direct investments that have flowed into Serbia over the past eight years, €12 billion was from EU countries. Data for Montenegro (2017) show the UAE in 6th place – after Russia, Austria, Norway, Switzerland and the Netherlands – with €122 million invested in 2017. In Bosnia they reached 15th in 2017, investing €95 million. The UAE are therefore not a foremost investor in the region, but their importance has been increasing considerably over the past decade. In all the countries of the Western Balkans, however, the EU remains by far the dominant investor.
The chosen economic sectors of activity constitute niches in which the UAE have a strategic advantage and/or interest. As elaborated in our journal article on the topic (Bartlett et al., 2017), the UAE have focused their attention on the above-mentioned construction projects, having become skilled at building cities from scratch and tapping into what they see as an underexploited niche for high-end consumers (wealthy residents and tourists); but also on airlines, as an extension of their ‘super-connector’ strategy, with the Dubai and Abu Dhabi airports at its centre; on the defence sector, with the accumulation of weapons considered necessary given that the UAE find themselves at the centre of a highly unstable region; and on agricultural land, to guarantee food security for their countries in years to come.
Their investment philosophy is ‘geographically agnostic’ (with a presence virtually all over the globe) and it is markedly long-term, aimed at guaranteeing prosperity for the UAE in a post-oil future. As explained by an Emirati official whom I have interviewed for a research project supported by the LSE Middle East Centre, they are also counting on the eventual opening of a larger market once these countries join the EU. In a context such as the Western Balkans, this farsighted trait is particularly welcome: the small states of the region have trouble finding foreign investors, as there is little in the Balkans that can guarantee a strong return on investment in the short run.
Relations at the top
While the long-term character of the Emirati investments would be a good fit to spur much-needed economic development in the region, what is troubling is the lack of transparency that surrounds the transactions. The deals are usually closed without a tender, or with what looks like a tailor-made one; it is at times difficult to determine who the real investor is; information on the contracts is very difficult to obtain; and journalists and activists investigating these topics are frequently subjected to extreme pressure. Furthermore, Balkan governments often provide very generous subventions out of their state coffers, and in some cases even obligate themselves to change legal provisions, promising to implement “all necessary laws that would suit the investor”. Such is the case, for instance, with the aborted privatisation of Montenegro’s Queen Beach, or of Belgrade Waterfront itself, for which a lex specialis was pushed through in parliament, with the explanation that it concerns a project of national interest. It is relevant to note that most of these practices are not restricted to investments coming from the UAE, therefore telling us more about the governance of the Western Balkans than about the good or bad influence of a specific ‘foreign actor’.
The deals are fuelled by relations at the top between the political leaders of the Balkan countries and the rulers of the UAE’s most powerful emirate, Abu Dhabi. Far from being a mere business-to-business process, most of the agreements are discussed directly by the top decision-makers. Both the Serbian President Aleksandar Vucic and his Montenegrin counterpart, Milo Djukanovic, enjoy close relations with a key figure from the ruling Al Nahyan family, Crown Prince Mohammad bin Zayed. A relatively small circle of actors in each country is conspicuously involved in these arrangements, often covering several roles at once. For instance, the former mayor of Belgrade, Sinisa Mali, along with being instrumental in the launch of the Belgrade Waterfront project, sat on the board of another Emirati-Serbian joint venture: Air Serbia. Mali is no longer the mayor of the capital, partially due to the controversies that followed an illegal night-time demolition of buildings – which he might be involved in – to make space for the luxury construction project in central Belgrade. But the former mayor hasn’t disappeared from the political scene: he is now Minister of Finance.
The majlis meets informal Balkan rule
The informal way of conducting business and politics in the Balkans, whose top-down character was largely worsened by rising authoritarianism in recent years, finds correspondence in the Arab practice of the majlis: semi-informal gatherings where authorities sit down with interested citizens. Speaking of Montenegro, an Emirati official interviewed for my research directly quoted the concept of majlis, expressing satisfaction at the ease of getting through to decision-makers in the region: “Here, when you want to meet officials from the government you can just pick up the phone, and easily get to the minister you were looking to speak to.”
This ‘meeting of minds’ can be a double-edged sword: while informality is not detrimental per se and can positively influence the development of human, business and state relations, it does become a problem when the allocation of resources is done on a non-transparent, clientelistic basis. Here, too, practices align: in the UAE, oil revenues support a system of patronage in which jobs in public administration and state-owned enterprises are allocated on a preferential basis to the native population of Emiratis (Young, 2014). To anyone acquainted with the Balkans, mutatis mutandis, this will sound familiar. The risk therefore is that such non-transparent deals (including, but not only, from the UAE) may end up providing the means for a stratum of Balkan elite actors to stay in power, while further cutting out of the game civil society actors and the citizenry at large.