Economy and trade focus of Medvedev's Serbia visit 00000401903958, others, available (Roundup)

Oct 20, 2009, 14:16 GMT

Belgrade - Russian President Dmitry Medvedev arrived in Belgrade on Tuesday with several major projects in the energy sector to demonstrate Moscow's economic support and interests in fellow Christian Orthodox nation Serbia.

   After meeting with Serbian President Boris Tadic, Medvedev said that the two leaders agreed on several projects that will further strengthen already 'excellent' ties between the two countries: modernization of Serbia's oil company NIS, investment in a natural gas storage facility and Serbian participation in the South Stream gas pipeline project.

Russia bought a majority stake in NIS in early 2007. The South Stream pipeline is to pump natural gas from under the Black Sea to Western Europe.

   'We are on the right track, and these projects prove historical ties between Serbia and Russia,' Medvedev told reporters. 'Europe's energy security depends on these projects,' he added.

   On the day of what the media described as Medvedev's 'historical visit,' Serbia's NIS signed a 100-million-dollar loan with the Bank of Moscow. The money will finance current NIS activities, NIS said.

Medvedev, who also paid tribute to Soviet soldiers who fell in the liberation of Belgrade 65 years ago Tuesday, said Russia supports Serbia's desire to join the European Union and its stance on Kosovo.

   Kosovo, with its mostly ethnic Albanian population, declared independence from Serbia last year and was quickly recognized by major Western nations. It remains barred from United Nations membership, however, due to Russia's veto.

   'Russia supports Serbia's territorial integrity,' Medvedev said.

Moscow and Belgrade had been expected to sign a deal for a 1- billion-euro (1.5-billion-dollar) Russian loan to cash-strapped Serbia. Although Tadic indicated Tuesday that Serbia received a 'positive response' from the Russians regarding the loan, Medvedev did not comment.

Local media indicated that a deal had been reached on the loan but for a smaller amount, 1 billion dollars. They also said that some 200 million dollars of this loan would be used to cut Serbia's 2010 budget deficit.

The deficit reduction is required by the International Monetary Fund (IMF) for the continuation of a standby facility.

   A larger part of the Russian loan is intended for the construction of the highway ring around Belgrade and other infrastructure projects.

   The IMF withheld the second, 1-billion-dollar tranche of a two- year, 4-billion-dollar standby loan because of Serbia's inability to cut the anticipated 2010 budget deficit.

   Medvedev's single-day visit was accompanied by high security measures. Some 5,000 Serbian policemen and 1,000 Russian security experts were deployed on the streets of Belgrade, while traffic in main Belgrade streets was blocked.