Between Two Fires: How Can Serbia Navigate the US-EU Split?

Serbia is increasingly caught between diverging US and EU foreign policy trajectories, requiring a nuanced and adaptable strategic roadmap. The February 24, 2025, UN Vote on Ukraine, where Serbia initially voted in favor of an EU-backed resolution before backtracking and ultimately abstaining on both EU and US proposals, exposed Serbia’s lack of a coherent foreign policy strategy amidst a growing transatlantic rift. This diplomatic misstep, although inconsequential in isolation, served as a warning signal: as geopolitical polarization deepens, neutrality and abstentions may no longer suffice without a well-articulated strategy behind them.

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Serbia’s Misaligned Foreign Policy and Its Implications

Serbia’s foreign policy alignment with the EU has been notably inconsistent. While cooperation has advanced in trade and regional integration, critical divergences remain on major issues such as sanctions on Russia, economic cooperation with China, and Kosovo. In 2024, Serbia’s alignment with the EU’s Common Foreign and Security Policy (CFSP) was just 47%, compared to 100% for other Balkan candidates and over 85% for Ukraine and Moldova. These inconsistencies weaken Serbia’s EU accession prospects and contribute to a perception of strategic ambiguity.

At the same time, Serbia’s foreign relations are being shaped by emerging regional and global tensions. The formation of a trilateral military alliance between Croatia, Albania, and Kosovo, combined with Serbia’s growing defense cooperation with Hungary, risks escalating into a “Balkans Cold War.” Domestically, public opinion and historic ties also limit the scope for policy shifts, especially regarding Russia and the autonomy of Republika Srpska in Bosnia and Herzegovina

US-EU Divergence and Serbia’s Strategic Dilemma

Washington and Brussels diverge significantly in their approaches to China and the Western Balkans. The US favors economic decoupling from China, while the EU prefers a cautious engagement. For Serbia, moderately reliant on Chinese investment in infrastructure and technology, a forced alignment with stricter EU regulations could mean economic setbacks. Likewise, US pressure on Kosovo normalization often exceeds that of the EU, raising the risk that Serbia could be asked for major concessions without reciprocal support for EU membership.

Internal EU divisions further complicate Serbia’s path. Countries such as Hungary and Slovakia challenge mainstream EU foreign policy, particularly regarding Russia and the US. These internal contradictions, combined with Brussels’ inconsistent enforcement, such as the EU’s inability to compel Kosovo to implement the 2013 Brussels Agreement on the Association of Serb-Majority Municipalities (ASM), undermine the credibility of the enlargement process and increase strategic uncertainty for Serbia.

Scenario-Based Strategic Responses

To adapt to an increasingly fragmented international environment, the analysis outlines five potential geopolitical scenarios and tailored policy responses:

1. EU Hardens Sanctions on Russia: Serbia must prepare for mandatory alignment by negotiating phased compliance, diversifying energy partnerships (e.g., LNG from Greece, oil from UAE, and gas from Azerbaijan), and seeking EU compensation for economic disruptions.

2. US Demands Full Kosovo Recognition: Serbia should resist premature recognition, offering instead a “Special Status Agreement” based on ASM implementation. Aligning with EU member states that do not recognize Kosovo (e.g., Spain, Greece, Cyprus) can protect Serbia from disproportionate conditionality.

3. EU Restricts Chinese Investment: Serbia should diversify its financing sources, seeking EU and Gulf funding alternatives while adopting a calibrated policy of de-risking Chinese influence in sensitive sectors like telecommunications and defense.

4. US-EU Trade War Disrupts Serbian Exports: Serbia must expand commercial diplomacy with non-Western economies (e.g., Egypt, Brazil, India) and utilize Mediterranean infrastructure corridors to diversify trade routes. The IT sector should be shielded through regional innovation networks and partnerships with tech hubs like India and Israel.

5. Germany Fills the Vacuum Left by the US in the Balkans: If US presence recedes, Germany’s more rigid stance could push Serbia toward Russia and China, given strong anti-German sentiment among Serbs. With Germany likely to support the Croatia-Albania-Kosovo alliance and adopt a hardline view on Serbia’s political positions, Serbian alignment with German-led initiatives would face domestic resistance.

Core Policy Recommendations for Serbia:

1. Selective Foreign Policy Alignment
Serbia must incrementally align with EU CFSP in non-sensitive domains (e.g., cybersecurity, climate policy), while proposing symbolic sanctions on Russia and initiating gradual energy independence.

2. Engagement With Pro-Enlargement EU Members
Serbia should deepen ties with countries like Hungary, Austria, and Italy while offering strategic economic concessions to Germany to mitigate skepticism. Leveraging Cyprus’s EU Council Presidency in 2026 could offer a crucial window to push forward accession talks.

3. Pragmatic Kosovo Policy
The implementation of the ASM - backed by both the US and the EU - should be Serbia’s cornerstone proposal in normalization talks. A phased, autonomy-based agreement avoids full recognition while addressing the political rights of Kosovo Serbs.

4. Economic Diversification
Reducing dependency on China and Russia requires Serbia to expand Free Trade Agreements with Gulf and Latin American countries, enhance transparency in FDI regulations, and push for partial access to the EU single market.

5. Defense Cooperation Without NATO Membership
Despite maintaining military neutrality, Serbia is deepening its defense cooperation with the United States and the EU through joint training, peacekeeping missions, and partnerships like the Serbia-Ohio State Partnership Program, which has become a model of success. Continued engagement in UN and EU-led peacekeeping missions, bilateral drills with US forces, and interoperability efforts (without formal NATO membership) positions Serbia as a reliable but strategically independent contributor to regional and global security.

6. Leveraging US Engagement
Serbia must position itself as a critical US partner in the Balkans through energy diversification, anti-corruption reforms, and expanded business cooperation via the US-Serbia Economic Dialogue.

Strategic Roadmap for 2025–2030

To operationalize this comprehensive strategy, Serbia should pursue the following six action points:

• Step 1: Finalize energy agreements with Azerbaijan and Greece to reduce Russian dependency.

• Step 2: Propose a Special Status framework for Kosovo Serbs under the ASM.

• Step 3: Deepen bilateral relations with non-recognizing EU states to neutralize Kosovo-related pressure.

• Step 4: Secure partial access to the EU single market for early economic integration.

• Step 5: Attract transparent US investment to replace opaque Chinese infrastructure deals.

• Step 6: Obtain a formal EU accession roadmap with clear conditional benchmarks.

Serbia stands at a strategic crossroads, with its European future contingent on how effectively it manages transatlantic divides and regional volatility. By combining pragmatic alignment with careful diplomatic balancing, Serbia can advance its EU integration while safeguarding national interests. The time to act is now - through foresight, adaptability, and committed diplomacy.

Date:
April 10th, 2025

Аuthors:
Vuk Velebit, Pupin Initiative
Petar Ivić, Pupin Initiative

Researchers:
Petar Ivić, Pupin Initiative
Aleksa Jovanović, Pupin Initiative