Serbian bilateral agreements: Benefit unknown, detriment paid by the citizens

For the past 17 years, signing bilateral agreements has been a practice of all Serbian governments. The need for signing them was justified by business projects which derived from the agreements. The projects implemented by foreign companies in cooperation with the state of Serbia usually contain a confidentiality clause and are not subject to national laws. The Government justifies the projects resulting from bilateral agreements by declaring them the projects of “national importance.”

Under the guise of “national importance,” the Government adopts special laws by emergency procedures, abolishes the bids for the sale of land, and does not apply the Law on public procurement and public tenders or other procedures foreseen by national legislation of Serbia.

For four months now, even the Constitutional Court remains silent to Insajder’s questions about whether and in what cases they have evaluated the constitutionality of ratified international treaties from 2007 until now, and what are the outcomes of such assessments.

Furthermore, none of the Governments has ever conducted an analysis of the effects of the business deals made within the bilateral agreements. The past experience has shown that some of those projects were either detrimental for the Serbian budget or the assessment was not at all possible due to data confidentiality.

According to Insajder’s investigations, the deals detrimental for Serbia are the contracts of investments in agriculture signed with the United Arab Emirates, as well as selling of NIS (Oil Industry of Serbia) below the price under the bilateral agreement with Russian Federation.

Al Rawafed: Interstate deal with no guarantees

Insajder’s investigation has shown that the company Al Rawafed Serbia did not pay a single cent to Serbia, despite having used 3,500 hectares of agricultural land for over two years. Serbia is the minor and Al Rawafed is the majority shareholder in this company. The land used by Al Rawafed Serbia is located near the town of Karadjordjevo and it is the property of the Serbian army.

The “investment” of Al Rawafed is one of the deals Serbia made with the investors from the UAE, which emerged from the bilateral agreement signed in 2013. Many legal experts said at the time that the agreement with the UAE was unconstitutional.

The company Al Rawafed Serbia, in which the foreign partner owns 80% of the shares, was privileged to use agricultural land without a public auction mandatory by the national law.
Among other, the contract stipulated that Al Rawafed Serbia gets to use thousands of hectares of agricultural land in Karadjordjevo owned by the military institution Morovic, and in return, Al Rawafed would pay 20% of the annual net profit made on that land.

After months of communication with the Ministry of Defense, the Defense Minister Zoran Djordjevic finally admitted that Al Rawafed has not paid any compensation for the use of the state-owned land in the past two years. To obtain this information, Insajder had to make an appeal to the Commissioner for Information of Public Importance and Personal Data Rodoljub Sabic.

Insajder’s findings have shown that before the deal with the UAE, the military institution was making a profit of 223 Euros per hectare annually. That means that Serbia lost at least 1,5 million Euros in two years, since Al Rawafed Serbia did not make any payments to the military institution Morovic, even though it was obliged by the contract to do so.

The continuity of special laws – from Southern Stream to Belgrade Waterfront

Signing the bilateral agreements and adopting the lex specialis, which suspends the national laws, represent a bond connecting all of the Serbian governments from 2000 to 2017.
In 2009, “the Project of national importance” for the Prime Minister Mirko Cvetkovic was the Southern Stream. The goal of this project was to transport gas from Russia to Serbia, which would bring energetic stability to Serbia. Since the Russian side announced its withdrawal from the South Stream in December 2014, the question about a possible revision of the Agreement has never been raised.

For the current Prime Minister Aleksandar Vucic, “the project of the national significance” in 2015 was, and still is, the Belgrade Waterfront. With this project, huge portions of land on Sava riverbank were “leased” to the UAE partners to develop. Parts of the contracts allowing this are still classified as confidential.

For both of these projects, the Government passed a special Law on expropriation, which means that the Government took the property from the owners “at market prices”, all in the name of public interest.
According to Insajder’s investigation revealed in its TV programs “Energetic (mis)understanding” and “Russian-Serbian deal of the century,” bilateral agreement with Russia, i.e. selling of NIS and Russia’s withdrawal from the Southern Stream project, left Serbia without its oil industry, oil and gas reserves, geothermal springs, and 30 million Euros it invested in the Southern Stream project.

Moreover, the citizens of Serbia still do not know what else was sold to Russia because the inventory of NIS was never completed. To this day, no one was held accountable for the deal of the century that went bust.

Night demolition in Hercegovacka street in accordance with Lex specialis?

The contract for the project Belgrade Waterfront was based on bilateral agreement between Serbia and the UAE, and it brought a huge debate among Serbian general and professional public.

According to the contract signed between the UAE firm Eagle Hill and the state of Serbia, this company would invest 150 million Euros plus additional 150 million Euros through loan with interest.

Serbia, on the other side, would invest 100 hectares of land, with the obligation to clear the land and build the infrastructure.

A detailed financial analysis of the deal is not possible, since the investment of the UAE partner is still classified. The business plan is declared a “business secret” of the company Belgrade Waterfront, in which the UAE partner has 68% and the state of Serbia 32% of ownership.

According to Insajder’s findings, the contract allows Eagle Hills to take over and manage the buildings in the state’s ownership, which are located on the land where Belgrade Waterfront will rise. Commercial profit made from these buildings will also be split 68 to 32 percent in favor of Eagle Hills.

Additional controversy with Belgrade Waterfront was caused by the night demolition of private objects in Hercegovacka street. In the night of 24th April 2016, a group of masked man demolished objects in this street and prevented citizens to enter the street until the demolition was over.

Although the city authorities claimed that the removal of objects in Hercegovacka street for the purposes of Belgrade Waterfront was not necessary until the end of 2019, Insajder findings showed that, under the contract, the deadline for clearing this area is 30th June 2016. It is still unknown to the Serbian public who ordered and conducted the demolitions.

Sasa Dragojlo