Azerbaijan and Serbia Expand Defense Partnership

Executive Summary:

• Serbian President Alexander Vučić confirmed a new $300 million defense contract with Azerbaijan on February 6, following years of strategic agreements between the two countries.
• The new defense contract will give Azerbaijan a foothold in the Balkans, providing Baku with a path to assert soft power over the region and find new partners outside the Middle East and Russia.
• Azerbaijan and Serbia have demonstrated that, despite the defense agreement, energy remains the focal point of their cooperation, especially natural gas and electricity exports.

On February 6, Serbian President Alexander Vučić confirmed that Serbia signed a new defense contract worth over $300 million with Azerbaijan for Serbian-produced NORA B-52 (155 millimeter) self-propelled artillery (DefenseMirror.com, December 13, 2023). While Western media was surprised to hear about the new defense contract, it was not a surprise for Azerbaijani society, given the recently deepened strategic partnership between Azerbaijan and Serbia. For example, in November 2023, both countries signed a new energy deal to deliver Azerbaijani natural gas to Serbia (Balkan Insight, November 15, 2023). In the same period, Azerbaijani company AzVirt started the construction of the high-speed highway Slepcevic-Badovinci, which was 15.4 kilometers near Shabac (ABC.az, November 29, 2023). The most recent Serbian-Azerbaijani arms deal is a logical continuation of the earlier agreement regarding military-technical cooperation that consistently asserted mutual respect for each other’s territorial integrity as the framework for collaboration between the two ministries in the military-economic and military-technical sphere (The Government of Serbia, October 11, 2021).

Initial reports regarding a potential defense contract began shortly after Azerbaijani President Ilham Aliyev visited Belgrade in November 2022 upon Vučić’s invitation (Caliber.az, November 23, 2022). In 2023, Aliyev visited Belgrade again and joined a one-on-one meeting with Vučić to discuss prospects for expanding cooperation. During the meeting, it was reported that both leaders stressed the importance of the inauguration of the Serbia-Bulgaria Gas Interconnector and praised Azerbaijan’s contributions to the European gas industry. Following the meeting, Aliyev attended a weapons presentation at the Serbian capital and was shown various defense systems (President of the Republic of Azerbaijan, December 10, 2023; Defense Mirror, December 13, 2023).

The new arms deal sheds light on steadily growing bilateral ties and enables Azerbaijan to make inroads into the Serbian energy and defense market and wider Balkan region. While in Belgrade in 2022, Aliyev and Vučić announced the establishment of the Strategic Partnership Council between Serbia and Azerbaijan to establish a framework for cooperation in natural gas and electricity generation (Turan, November 21, 2022). Little has happened with the council since. Although the most recent defense contract has further contributed to the more intensive political dialogue between Baku and Belgrade, the Azerbaijani-Serbian partnership’s core element is energy, particularly natural gas and electricity exports.

Following the beginning of Russia’s war against Ukraine, European countries adopted a new energy strategy to decrease dependence on Russian fossil fuels and impose additional sanctions. Although Serbia did not formally join the sanctions, it sought alternative energy sources to diversify the energy market and distance itself from Russia. As such, Azerbaijan appeared to be a reliable energy exporter for Serbia with its extended energy infrastructure network.

In November 2023, Serbian state-owned gas company Srbijagas and the State Oil Company of the Republic of Azerbaijan signed a contract for the delivery of 400 million cubic meters of natural gas by the end of 2024 (Balkan Green Energy News, November 15, 2023). The agreement suited Serbian energy interests as it has long been planning to receive Azerbaijani natural gas through Bulgaria’s pipeline. Thus, on December 10, 2023, a 109-kilometer gas pipeline connecting Serbia and Bulgaria, co-financed by Serbia’s state budget, the European Union, and a loan from the European Investment Bank, was put into operation officially (CeEnergy News, December 12, 2023).

The inauguration of the gas interconnector enabled Azerbaijan to establish a permanent footprint in the Balkans and increase natural gas deliveries to Europe. Serbia has quickly become a key pillar of Baku’s soft power strategy in the Balkan region (Ankara Center for Crisis and Policy Studies, September 30, 2023).

Azerbaijani-Serbian relations have not been without complications. The two sides experienced a tumultuous period in 2020, shortly before the start of the Second Karabakh War between Azerbaijan and Armenia. In August 2020, during the heavy skirmishes between Azerbaijanis and Armenians in the Tovuz/Tavush regions, Azerbaijani media exposed the usage of Serbian-made weaponry by the Armenian Armed Forces, which triggered a diplomatic scandal between Baku and Belgrade (Al Jazeera, August 7, 2020). In response, the Serbian government quickly launched an investigation to fix relations with Baku. At the same time, President Vučić dispatched his special envoy to Baku to regulate the diplomatic crisis. Following intensive diplomatic traffic between the parties, relations were quickly normalized, paving the way for deeper bilateral economic, energy, and, most recently, military partnerships.

Since 2013, Baku and Belgrade have boosted bilateral trade volume, which amounted to $56.8 million in 2021. Although the volume is relatively low, Serbia plans to join the Southern Gas Corridor project in the near future, which would significantly increase trade between the two states (Republic of Serbia Ministry of Foreign Affairs, accessed February 28).

Post-2020, Azerbaijan adjusted its foreign policy priorities to pursue “multi-vector” diplomacy, establishing defense partnerships with countries outside the South Caucasus and the Middle East, including Serbia (bne IntelliNews, May 23, 2023). The defense partnership and arms deal between Baku and Belgrade is not a simple coincidence, as the two countries firmly support each other’s territorial integrity on a reciprocal basis. Aliyev asserted this support following a one-on-one meeting with Vučić during his official visit to Belgrade in 2022. Vučić confirmed this stance on the sidelines of the UN General Assembly in New York in 2023 regarding the recent conflict in Karabakh (President of the Republic of Azerbaijan, December 21, 2022; News.am, September 20, 2023). Additionally, amid talks between Vučić and Azerbaijani Foreign Minister Jeyhun Bayramov, the two reasserted their reciprocal respect for each other’s territorial integrity (Anadolu Agency, November 11, 2023) 

As Aliyev secured another term in office on February 7, 2024, Vučić was among the first foreign leaders to extend his congratulatory messages, underlining the importance of victory for further development of the Azerbaijan-Serbia partnership (President of the Republic of Azerbaijan, February 7). Undoubtedly, Serbia will keep playing a vital role as the main gateway for Azerbaijan’s soft power diplomacy in the Balkans for the next few years, thus establishing a sustainable partnership format and becoming a viable platform for Baku’s further diplomatic expansion. Such a balance of power will allow Baku to develop additional instruments of influence in Europe, explore new energy markets for exporting other gas volumes, and invest in critically important infrastructure projects. A successful partnership with Serbia could set a good precedent for establishing similar ties with other Balkan states.