Serbia and France recently deepened their bilateral relations by signing multiple strategic agreements during French President Emmanuel Macron’s visit to Belgrade. These agreements span multiple sectors and are poised to have profound impacts on Serbia’s economy, business environment, and legislative landscape. Doklestic Repic & Gajin Partner Slobodan Doklestic and NKO Partners Partner Petar Orlic look at these agreements and their anticipated effects.
Strategic Agreements Sealed
During President Macron’s visit, 11 strategic agreements were signed between Serbia and France, focusing on enhancing cooperation in sectors such as defense, infrastructure, energy, ecology, and technology.
“The agreements are very significant for Serbia,” Doklestic begins. He goes on to say they include a “Memorandum of Understanding between the Government of Serbia and the French Development Agency regarding mutual cooperation, Annex 2 to the Agreement between the Government of Serbia and the Government of France on cooperation in implementing priority projects in Serbia, and a contract for the procurement of Rafale aircraft and associated goods and services.”
These agreements focus mainly on “defense, infrastructure, technology, and cultural exchange,” Orlic explains. “Among these, the defense cooperation agreement stands out, as it aims to enhance military collaboration and facilitate technology transfer. Additionally, there are agreements related to infrastructure projects that will address transportation and energy needs.” Orlic believes that these initiatives “mark a significant step in deepening the economic and political relationship between Serbia and France.”
Strengthening Existing Ties
The strengthened relations between Serbia and France align with Serbia’s strategic economic and political objectives, particularly its path toward European integration and attracting foreign investment. These agreements aim to enhance bilateral relations and bring mutual benefits to both nations.
“The establishment of good and strong relations between the two countries was confirmed back in 2011 when Serbia and France signed the Agreement on Strategic Partnership and Cooperation,” Doklestic explains. “In the following years, there has been a noted rise in the relations between these two nations. President Macron’s visit, along with the signing of bilateral agreements in the fields of energy, defense, and ecology, is yet another confirmation of the good cooperation and mutual support between the two countries.” According to Doklestic, Serbia needs strong relations and support from major economies like France to “strengthen its market and continue its path toward Euro-integration. We view the cooperation between the two countries as highly beneficial for both sides – this will further stimulate the interest of French companies in investing and doing business in Serbia.”
Echoing Doklestic’s sentiment, Orlic highlights the mutual benefits and strategic importance. “For Serbia, these agreements are crucial for attracting foreign investment, especially from EU nations, which can help drive economic growth and modernization. In the first seven months of 2024, FDI inflow to Serbia amounted to EUR 2.8 billion, which is 7.2% higher compared to the same period of the previous year. Serbia wants to carry on in that direction and entice more French FDI which, according to the latest figures, was 8.5% of the overall total FDI in 2023. It also bolsters Serbia’s position in a complex geopolitical landscape,” he explains.
“For France, these treaties symbolize a commitment to promoting stability in the Balkans, which is essential for regional security,” Orlic adds. “The expected benefits are mutual; increased trade, investment opportunities, and stronger cultural ties will help both nations grow closer.”
Hopes for Economic Boost
The agreements are expected to have significant short-term and long-term impacts on Serbia’s economy and business environment, particularly in sectors like defense, infrastructure, technology, renewable energy, and ecology.
“The agreements contribute to strengthening the economic cooperation between the two countries,” Doklestic states. “French companies will be engaged in various long-term infrastructure projects of significant importance to Serbia and its citizens. Overall, the agreements will largely assist Serbia’s ecological and energy transition, which is crucial for the country.”
Orlic agrees, adding that “in the short term, sectors such as defense and infrastructure are likely to see a boost from new investments, leading to job creation and economic activity. Looking to the longer term, these treaties should help diversify Serbia’s economy, particularly through advancements in technology and innovation.” He believes the most influence will be noticed “in areas like defense technology, renewable energy, and transportation infrastructure, which will be vital for sustainable growth.”
Sustainability and Innovation
The agreements include specific legal provisions aimed at promoting sustainable development, environmental protection, and technological innovation in Serbia.
“Annex 2 of the Agreement between the Government of Serbia and the Government of France on cooperation in implementing priority projects in Serbia outlines numerous projects and their execution within Serbia,” Doklestic points out. “Among others, the projects include those that will contribute to environmental protection and the strengthening of artificial intelligence infrastructure. Especially, with significant financial support from France, Serbia will make substantial investment in a wastewater treatment and management system in Veliko Selo.”
Orlic adds that the agreements contain “important legal provisions aimed at promoting sustainable development and environmental protection. For example, there are commitments to adhere to international environmental standards and initiatives to support renewable energy projects. This focus on sustainability aligns Serbia with global best practices and shows a commitment to responsible development.”
Regulatory Overhaul Incoming
The implementation of these agreements is expected to influence regulatory oversight in sectors such as defense, leading to the adoption of new legislative measures.
“It is certain that these agreements between Serbia and France will facilitate the adoption of new legislative measures that will ensure the implementation of agreed projects,” Doklestic mentions. “Presumably, there will be a series of international loan agreements, which will be ratified in the Serbian Parliament and which will directly designate certain French companies that will be involved in the respective projects,” he posits.
“Regarding regulatory oversight, these agreements are likely to foster and encourage the enhancement of frameworks in sectors like defense and infrastructure,” Orlic notes. “Several analysts anticipate the introduction of legislative measures that will introduce stricter procurement processes and improve transparency. These steps will not only ensure compliance with regulations but also boost investor confidence in Serbia’s business environment.”
Finally, the treaties may also lead to changes in labor laws, intellectual property rights, and trade regulations in Serbia, aligning them more closely with international standards. This harmonization is expected to enhance Serbia’s competitiveness and attractiveness to foreign investors. “Expectantly, these agreements will lead to further harmonization of Serbian laws with the EU acquis communautaire,” Doklestic says. “This will unequivocally affirm France’s support for Serbia’s Euro-integration.”
“The treaties are expected to motivate the Serbian government to bring about potential changes in labor laws, intellectual property rights, and trade regulations,” Orlic provides further insight. “A variety of experts expect to see revisions to labor laws to align them with international standards and adapt to new business practices, which will help create a more competitive workforce. Additionally, strengthening intellectual property rights will be crucial for attracting technology investments.” Orlic stresses in conclusion that “trade regulations might also see adjustments to streamline processes and enhance integration with France, ultimately making Serbia more competitive in the global market.”
This article was originally published in Issue 11.10 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.
