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FT editor Roula Khalaf selects her favourite stories in this weekly newsletter.
The author is Rector of the Institute for Human Sciences in Vienna
While the world waited in suspense to see if President Joe Biden would withdraw his candidacy, German Chancellor Olaf Scholz visited Belgrade almost unnoticed. His meeting with Serbian President Aleksandar Vučić a few weeks ago was unannounced and arranged at short notice, but it was quite a celebration nonetheless.
Scholz was accompanied by high-ranking managers from Mercedes, Stellantis, the mining company Rio Tinto and three manufacturers of batteries for electric vehicles – not to mention Maroš Šefčovič, the EU Commissioner responsible for the Critical Raw Materials Strategy and the President of the European Bank for Reconstruction and Development.
They jointly welcomed the signing of a Memorandum of Understanding between the EU and Serbia to create a partnership in the field of critical raw materials and to build a value chain for the production of batteries and electric vehicles.
This is a big deal both economically and politically. The EU is lagging behind the US and China in the fight to secure supplies of critical raw materials needed for the green transition. Serbia has one of the largest lithium reserves in Europe, enough to produce an estimated one million electric car batteries per year.
The lithium in Serbia’s Jadar Valley is not Europe’s only source, but unlike the Chinese and Americans, Europeans are either more concerned about the environmental impact of large-scale mining or, depending on their outlook, are determined NIMBYists. Without better access to metals like lithium, the EU will neither meet its carbon reduction targets nor keep up with its competitors.
Scholz only agreed to his trip to Belgrade after Serbia reversed a 2022 decision to terminate a contract with Rio Tinto to exploit lithium near the border with Bosnia and Herzegovina. The renewal of Rio Tinto’s building permit came two months after Vučić rejected a request from Chinese President Xi Jinping for access to the metal. “China has already had enough,” Vučić is said to have said, alluding to Chinese control of a copper mine in Bor, eastern Serbia.
This is further evidence that while Vučić maintains close political ties with China and Russia, he is increasingly integrating his economy with Europe and the US. The Jadar Valley decision followed Serbia’s agreement to buy 12 Rafale jets from France instead of Russian MiGs and the revelation that Serbia is a major supplier of ammunition to Ukraine.
Several influential Western technology companies such as Microsoft, Siemens and the American electric truck maker Rivian have made major investments in Belgrade due to its cheap, skilled labor.
Many observers consider Serbia to be a close ally of Russia and President Vladimir Putin. But Vučić has long been the Janus of the Balkans, looking both east and west. With the lithium decision, he risks evading the issue. He faces fierce opposition from three very different groups.
Serbia’s energetic environmental activists claim that the Jadar project will harm the local ecology. They have organized protests across Serbia, pointing out the damage caused by the Chinese-run copper mine. Rio Tinto and the EU claim that the Jadar development will be subject to stricter environmental regulations.
Florian Bieber, a political scientist at the University of Graz, warns that in return for the lithium deal, the EU may ignore Vučić’s dictatorial tendencies, including his tight control of the media and his questionable electoral practices.
This has implications for the overall politics of the Western Balkans. Supporters of Kosovo and Bosnia have accused the EU of failing to respond to Serbia’s alleged attempts to undermine their territorial integrity – a claim that European diplomats reject.
But Vučić’s policies have also angered Moscow. Shortly before Scholz’s trip, Russian Deputy Foreign Minister Alexander Grushko visited Belgrade. His meeting with Vučić was described by an insider as “frosty.” According to this person, “Grushko sat down and began reading a list of 23 complaints, including the Kremlin’s anger over Belgrade’s decision to supply Ukraine with ammunition. When Grushko had gone through about half of the list, Vučić stood up, announced the meeting was over and left the room.”
Vučić is a master of gesture politics. But this goes a step further. He is taking a big risk, and so is the EU. If Rio Tinto can mine the lithium with minimal environmental impact, the reward is significant. But failure would weaken Vučić’s iron grip on power in Serbia and make the EU’s policy on critical raw materials appear, if not broken, then at least tattered.
