(This blog is from the Summer of 2016.)
Belgrade Waterfront offers a polarizing picture of the future for many Serbians. To some, the ultra-luxurious complex represents an opportunity to raise Belgrade’s global relevance, and boost the economy of the city and region. To others, the project represents a glaring example of Serbia’s political clientelism that ignores the true welfare of the general public. Although certainly transformative, the Belgrade Waterfront has faced massive public opposition due to its consistent bypassing of local building codes, neglect for its architectural and cultural context, and lack of transparency. Adding to the accusations of government misuse, the chief investor in the project, Mohamed Alabbar of Abu Dhabi’s Eagle Hills Company, has long been a friend of Prime Minister Vucic. That said, this is not the first Serbian development project that has been funded by the pockets of Vucic’s private contacts. Examining the legacy of previous projects provides an eerie prognosis for the impact this investment may have on Belgrade and the nation.
Perhaps the most notable investment from the Emirates, facilitated through Vucic’s relationship with Sheikh Mohammed bin Zayed, the Crown Prince of Abu Dhabi, has been the renovation of Air Serbia. Formerly JAT Airways, Air Serbia sold a 49% stake to Etihad Airways in August of 2013. In many ways, this has elevated the services offered by Air Serbia, revamping the airline’s old fleet of planes, extending services such as a new trans-Atlantic flight to New York, and embarking on an image-changing brand and promot ional campaigns. Without this investment, Air Serbia could never have access to Etihad’s finances and sourcing that have enabled them to purchase new aircraft, and even advertise their flights in Times Square. Ideally, these sorts of investments would help as a platform for promoting Serbia, and facilitating increased tourism and business from abroad. In 2015, Air Serbia finally managed to earn a profit in its first full-year since the Etihad rebranding. Given the poor performance and constant restructuring of its predecessor JAT Airways, the resurrection of this company represents a real success.
That said, this Abu Dhabi acquisition lead to very real local consequences in the form of layoffs and the shuttering of Air Serbia’s home office. Furthermore, in both this deal and the Belgrade Waterfront project, the Serbian government staged the projects as cost-free deals for the Serbian people. In short, they assured that these foreign investors would foot the bill. In the case of Air Serbia, the government of Serbia remains obligated to “donate,” with no expectations of return or greater ownership in the company, a total of $97 million. Furthermore, clauses in the contract between the Republic of Serbia and Etihad Airways demand further open-ended support from the government as shown by this snippet, “the Republic of Serbia (RS) acknowledges that Air Serbia (AS) will require constant support of the RS regarding the financial stability of the Company.” Further expenses accrue when Etihad’s insistence for discounts at Nikola Tesla Airport, which will be provided through subsidies from the Serbian government, are considered, as well as a contractual condition that demands all Serbian state employees fly only through Air Serbia.
On the other hand, Emitari agricultural firm Al Dhari’s investment in Serbian farm agriculture represents a project that most seem to view with less contention. Essentially, Al Dhari has partnered with the Serbian government to invest in farming infrastructure, irrigation, and export infrastructure. In turn, the company has the rights to export these agricultural products to other markets. In this way, Serbia’s large agricultural industry can access the funds it needs to modernize and increase its exporting abilities. In addition, fresh Abu Dhabi investments in Serbia’s telecom and semiconductor industry have not yet run their course, but appear promising.
Despite the less-than-democratic rule bending that has characterized the development of the Belgrade Waterfront Project, Prime Minister Vucic’s track record of foreign investment from the United Arab Emirates appears to be mostly positive. Salvaging Air Serbia and modernizing Serbian farming have empowered the two industries to reap the benefits of increased production that comes from modernization and the incorporation of foreign technologies and managerial expertise. That said, the construction of the Belgrade Waterfront carries with it the burden of cultural and architectural sensitivity. Here, success is not merely predicated on financial metrics, but a balance between the tangible economics and the more ethereal embrace of the public. Before buying more ad space in Times Square to advertise the Waterfront’s EUR 400.000 condos, the Belgrade Waterfront Project would be well-advised to invest in the support of the average Belgradian.