(Bloomberg) -- France agreed to sell fighter planes to Serbia in a €2.7 billion ($3 billion) deal as the Balkan country strengthens ties with European Union heavyweights and pivots its defense orders away from traditional partner Russia.
President Emmanuel Macron and his Serbian counterpart, Aleksandar Vucic, announced the accord in Belgrade for 12 Rafale jets made by Dassault Aviation SA. The biggest ex-Yugoslav republic is almost entirely surrounded by NATO members and has sought to juggle its geopolitical and economic interests between the east and west.
“The place of Serbia is in the EU,” Macron said at the news conference with Vucic on Thursday, calling the deal “an opening, a strategic change.”
The two sides also signed a dozen agreements on infrastructure projects, exploration and supply of critical minerals as well as on the assessment of potential nuclear energy program development in Serbia.
Belgrade has ramped up military spending in recent years, including with orders of Pantsir air defense systems from Russia and Chinese-made, short-range missiles.
The first Rafale jets will be delivered to Serbia in 2028, and the remainder in less than two years after that, Dassault Aviation’s Chief Executive Officer Eric Trappier told Bloomberg in Belgrade.
While Vucic has condemned the invasion of Ukraine, he has refused to join EU sanctions against the Kremlin, trying not to sever ties with Russia, while increasingly seeking support from Beijing.
Macron said on Thursday that he respected Serbia’s sovereignty and other partners.
“Emmanuel would like us to impose sanctions on Russia, I know that,” Vucic said, looking at his guest. “We do support territorial integrity of Ukraine” but joining the Western sanctions is not an option, he said.
‘Certain Guarantees’
The contract was finalized just hours before Macron flew in because the French sought “certain guarantees” from Serbia, Vucic said on the eve of the French leader’s visit. The purchase price was less of an issue, Serbia’s president told state broadcaster RTS.
In Belgrade, French shunned a question about potential technology transfers to Russia, saying that he trusted his guest and insisting on “state of the art” contractual provisions.
Macron’s second state visit to Serbia in five years also helped advance talks on French support to Serbia’s energy sector, including a potential nuclear power plant, projects in artificial intelligence.
Vucic-dominated governments have worked with Alstom SA on building Serbia’s first subway, in Belgrade, while Vinci Airports SAS has a 25-year concession to run and expand the country’s main airport. Macron is to address an AI forum at Schneider Electric LLC’s research center in the northern city of Novi Sad on Friday.
Still, French investment in Serbia lags bigger ventures by German and Chinese companies. Macron’s trip comes more than a month after German Chancellor Olaf Scholz was in Belgrade, along with top executives of Mercedes Benz AG, Stellantis NV and EU Vice President Maros Sefcovic, for a key deal on supply of critical raw materials, including lithium needed for production of electric vehicles.
Vucic has also sought Macron’s support in bringing Serbia closer to EU membership. Aspiring to join the bloc for more than two decades, Serbia is stuck on the path as it refuses to accept the 2008 secession of its former province Kosovo. All but five EU members have recognized Kosovo as a country and tensions between Kosovo’s ethnic Albanian majority and a Serb minority repeatedly threaten to destabilize the region.
Serbia is the “most important country” applying for EU membership in the Western Balkans, Jean-Noel Barrot, the French minister for European affairs, told France Info before flying out with Macron on Thursday.
“If we don’t take the place of Russian jets with these Rafales, this enclave that’s in the middle of the European Union will become an entry point for instability on the continent and an entry point for all authoritarian regimes, from Russia to China,” he said.
(Updates with comment from Dassault CEO in sixth paragraph.)
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