The Balkans at Expo 2020: A Geopolitical and Economic Opportunity for the UAE
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The Balkans at Expo 2020: A Geopolitical and Economic Opportunity for the UAE
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By Syeda Saniya Fatima, Analyst, Botho Emerging Markets Group
July 16, 2021
In March 2021, Serbian president Aleksandar Vučić announced that the UAE and China are set to jointly produce the Sinopharm vaccine in Serbia during his recent visit to the UAE. The vaccine, scheduled to be available for use by mid-October, aims to inoculate not just the Serbs but also its neighboring Balkan countries, Vučić noted. A much-touted success of Serbia’s “Vaccine Diplomacy,” the partnership offers a glimpse of the potential impact of strengthened multilateral ties between emerging markets, particularly between the UAE and the Balkans.
As Serbs and other Balkan nations, like Montenegro and Slovenia, participate in the upcoming Expo 2020, the UAE should consider deepening its ties in the Balkan region — both for economic opportunities and geopolitical gains. The Balkans, on their part, should fuel their economy by leveraging Expo 2020 to showcase their geostrategic value.
An Immense Geostrategic Opportunity
The Expo 2020 Dubai will convene global business leaders and policymakers, providing a critical opportunity for political cooperation and economic exchange between emerging markets. As the host country, the UAE finds itself an immense geopolitical and economic opportunity — the Emiratis will be planning to leverage the event to boost their image from a regional powerhouse to a preeminent global power that serves as the “business capital” of Africa on the one hand, and an alternate gateway to Europe through the Balkans, on the other. Replicating their diplomatic tact and geopolitical forethought in the Balkan region, the UAE is likely to mobilize its logistics and energy expertise to gain long-term strategic dividends.
Geopolitically, the Balkans provide the Emiratis an important opportunity vis-à-vis Turkey and Europe. While Turkey, the UAE’s geopolitical rival, is traditionally the dominant Middle Eastern power in the Balkan region, the region’s investment opportunities offer UAE a potential foothold. Like Turkey, the UAE can drive the growth of the Western Balkan region’s Islamic economy and expand its role as a Muslim leader — three of the Western Balkan nations, namely, Albania, Bosnia and Herzegovina, and Kosovo, have significant Muslim populations. But beyond cultural relevance, the UAE’s domestic success in tourism, technology, and logistics, lends it an advantage in the region over Turkey.
Moreover, the Balkan countries, all at different stages of accession to the EU, allow the UAE to expand its presence in the world’s largest economic bloc. Growing ties with the Balkans should form a major part of the UAE’s future UAE-EU long-term strategy, as the region offers a gateway to the continent’s 500 Million consumers. As such, the Emirates must use Expo 2020 as a platform to solidify its existing relations in Serbia and deepen its ties in Montenegro and Slovenia at a state level--and look to tap its private sector to harness the region’s full potential.
For the Balkans, Expo 2020 gives the Balkan participants Serbia, Montenegro, and Slovenia an opportunity to highlight their attractiveness as an FDI destination, their innovative capability, and in time, market growth owing to their position with the European Union. The Balkans are at a crucial juncture as they aim to break away from the political instability that has long impeded its economic potential despite having a robust geostrategic location and a largely literate population set. The event also offers an opportunity for the Balkans to deepen ties with other major geostrategic players like Saudi Arabia and Qatar during the Expo — two countries with diplomatic and economic might and global political ambitions.
Growing Trade Ties
Beyond the geopolitics, the Balkans offer opportunities for public-private sector cooperation as the region is ripe for greenfield investments. The Balkan region’s limited energy reserves and its reliance on thermal energy provide the UAE with an opportunity to leverage its growing renewable energy expertise. The global shift towards greener forms of energy has multiple implications for countries like Serbia, Montenegro, and Macedonia. For Serbia, this shift serves as an opportunity to expand Serbian trade and influence amongst the Balkans by mobilizing its hydro-electric expertise, akin to the recent hydroelectric trade exchange in Republika Srpska. These investments in green energy are also likely to aid the energy insecurity in the region as well as accelerate the Balkans’ respective accession negotiations with the EU. The UAE, too, stands to gain, as it could potentially influence Europe’s emerging energy corridor through the Balkans. The UAE’s public and private enterprises should consider investing in the region’s energy sector and exploring other forms of collaboration, benefitting from the presence of countries like Serbia, which has low operating costs, hydroelectric expertise, and are increasingly major destinations for FDI.
Supply chain infrastructure is another area that the UAE can look to expand its presence in the Balkan region. The Mediterranean region is significant for global trade, as trade flows within the region account for 25% of all international seaborne trade. While Dubai’s DP World has made strategic investments across Africa, South America, and Europe, the company has the potential to expand its presence in the infrastructurally deficient but strategically potential Mediterranean coastline countries. The partner pavilion holder at the Expo 2020, DP World, aims to transform itself into an “infrastructure-led end-to-end logistics provider” and is likely to be UAE’s investing arm in the sector. This provides an opportunity to Montenegro and Slovenian ports that offer strategic locations as well as growth potential. Montenegro’s favorable geographical location at the Mediterranean Sea will look to deepen its ties after investments from DP World’s subsidiary, Drydocks World. Logistics and distribution have been identified as Slovenia’s most promising sector too. With Slovenia’s strategic location at the intersection of Central, Eastern Europe, and the Mediterranean, the industry churns out EUR 3.6 billion in turnover and EUR 1.6 billion in export sales. It is also home to major hubs of international supply chain giants like UPS and DHL. The UAE can further explore Slovenia’s logistical market, deepening its connectivity to the Middle East to further extend Dubai’s claim as the world’s logistic hub.
Another Balkan country that has drawn attention for its investments from the UAE is Serbia. As of recent figures in 2018, the UAE invests over 180 million euros annually in Serbia — a rate that has grown 269 times over the last decade. Although the EU remains the top investor in Serbia, the massive increase in trade between the Emirates and Serbia shows scope for the UAE to deepen further its investments in the country and the surrounding region.
Notwithstanding the Balkans’ turbulent internal politics, the region offers tremendous economic potential; and the opportunity for the UAE to extend its ties in the region is considerable as Balkans nations participate at Expo 2020. These economic ties have the potential to serve UAE’s diversification goals as well as geostrategic ambitions.
Syeda Saniya Fatima is an Analyst at Botho Emerging Markets Group
For more information, contact Saniya here.