Unlock Editor’s Digest for free
FT editor Roula Khalaf selects her favourite stories in this weekly newsletter.
The author is rector of the Institute of Human Sciences in Vienna.
While the world was anxiously awaiting whether President Joe Biden would withdraw from his candidacy, German Chancellor Olaf Scholz visited Belgrade almost unnoticed. His meeting a couple of weeks ago with Serbian President Aleksandar Vučić was a real treat, even though it was unannounced and organised at short notice.
Scholz was joined by top executives from Mercedes, Stellantis, mining company Rio Tinto and three electric vehicle battery makers, not to mention Maroš Šefčovič, the EU commissioner in charge of the critical raw materials strategy, and the president of the European Bank for Reconstruction and Development.
Together they celebrated the signing of a memorandum of understanding between The EU and Serbia forging a partnership in critical raw materials and establishing a value chain for battery and electric vehicle manufacturing.
This is a matter of great importance, both economically and politically. In the struggle to secure the supply of raw materials essential for the ecological transition, the EU has lagged behind the United States and China. Serbia has One of the largest lithium deposits. In Europe, enough for around one million electric vehicle batteries per year.
Lithium from Serbia’s Jadar Valley is not the only source of the mineral in Europe, but unlike the Chinese and Americans, Europeans are either more concerned about the environmental impact of large-scale mining or are determined Nimbys, depending on one’s attitude. Without greater access to metals like lithium, the EU will fail to meet its carbon reduction targets and keep pace with its competitors.
Scholz only agreed to go to Belgrade after Serbia reversed its 2022 decision to cancel a contract with Rio Tinto to exploit lithium located near the border with Bosnia and Herzegovina. The renewal of Rio Tinto’s planning license comes two months after the Vucic Vučić rejected a request from Chinese President Xi Jinping for access to the metal. “China has had enough,” Vučić reportedly said, referring to Chinese control of a copper mine in Bor, eastern Serbia.
This is further proof that while Vučić continues to enjoy close political relations With China and Russia, it is integrating its economy ever more closely with Europe and the US. The Jadar Valley decision follows Serbia’s agreement to buy 12 Rafale jets from France instead of Russian MiGs and the revelation that Serbia is a key supplier of equipment To Ukraine.
Several influential Western tech companies, including Microsoft, Siemens and US electric truck maker Rivian, have invested heavily in Belgrade, attracted by a cheap and skilled workforce.
Many observers consider Serbia to be a close ally of Russia and President Vladimir Putin. However, Vucic For some time now, he has been the Janus of the Balkans, looking both east and west. With the decision on lithium, he is taking a risk, as he faces stiff opposition from three very different groups.
Environmental activists in Serbia say the Jadar project will harm the local ecology. They have organised protests across Serbia, pointing to the damage caused by the Chinese-run copper mine. Rio Tinto and the EU argue that the Jadar development will be subject to stricter environmental standards.
Florian Bieber, a political scientist at the University of Graz, warns that in exchange for the lithium agreement, the EU could ignore Vučić’s dictatorial tendenciesincluding its strict control of the media and its dubious electoral practices.
This feeds into broader Western Balkan politics. 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 rejected by European diplomats.
But Vučić’s policy has also irritated Moscow. Shortly before Scholz’s trip, Russian Deputy Foreign Minister Alexander Grushko visited Belgrade. His meeting with Vučić was described as “cold” by a close source. According to this source, “Grushko sat down and began reading a list of 23 complaints, including the Kremlin’s fury over Belgrade’s decision to supply ammunition to Ukraine. When Grushko got halfway through the list, Vučić stood up, announced that the meeting was over and left.”
Vučić is a master of gesture politics, but this goes deeper. He is taking a huge risk, as is the EU. If Rio Tinto can exploit lithium with minimal damage to the environment, the rewards will be considerable. But failure will erode Vučić’s iron grip on power in Serbia and leave the EU’s crucial raw materials policy looking, if not broken, certainly in tatters.