March 13 (Bloomberg) -- Aleksandar Vucic, the favorite to become Serbian prime minister after elections this month, is campaigning as the candidate who can bring home investment from the United Arab Emirates, including a $4 billion plan to redevelop Belgrade’s waterfront.
The former nationalist, known in the 1990s for his anti-Muslim rhetoric, is stressing his ties with the Persian Gulf nation’s business and political leaders as a source of investment ahead of the March 16 ballot. Critics say there’s little information about what lies behind the deals.
The project in the Serbian capital, known as Belgrade on Water, would be the biggest development in the country’s history, capped by a tower modeled on Dubai’s Burj Khalifa skyscraper. The price tag is more than six times last year’s total foreign direct investment and 138 times the 2013 tally from the U.A.E. In addition, the 44-year-old deputy prime minister and Progressive Party leader has announced another $8 billion of U.A.E. investments and loans in the past 12 months.
“They talk every day about things that have been done or will be done, but haven’t provided any specific information on what this is all about,” said Nemanja Nenadic, the program director of Transparency Serbia, a branch of Berlin-based anti-corruption organization Transparency International.
Vucic, who speaks of his personal friendship with Abu Dhabi Crown Prince Sheikh Mohammed bin Zayed Al Nahyan, has announced U.A.E. deals including $4.5 billion for a semiconductor factory, a lending program for farmers, an aircraft-component plant and $2 billion to $3 billion in sovereign loans to the government to help tackle its budget deficit. Abu Dhabi, the Gulf state’s capital, on March 6 agreed to lend Serbia $1 billion for 10 years, the two governments said in a statement.
U.A.E. direct investment in Serbia last year totaled 21 million euros ($29 million), according to the country’s central bank. The biggest investor was the Netherlands with 110 million euros. Total foreign direct investment last year was $631.5 million through the end of November, the latest data available, and the biggest total in the country’s post-Yugoslavia history was 3.24 billion euros in 2006.
Serbian President and Progressive Party founder Tomislav Nikolic ordered the early elections on Jan. 29 following a request from Vucic and Prime Minister Ivica Dacic, head of the Socialist Party. The ballot will take place two years before the government’s term was due to end.
Serbia, the biggest former Yugoslav republic with 7.2 million people, started membership talks with the European Union on Jan. 21 after years of resistance to EU demands to give up suspected war criminals, renounce claims on the former Kosovo province and bring the judiciary into line with EU norms. The economy will grow 1 percent this year, according to the central bank, after the government stepped up plans to sell assets, narrow the deficit by 2016 and renew talks with the International Monetary Fund, which cut off ties in 2012.
Belgrade on Water was announced at a Jan. 18 presentation in the Serbian capital, where Vucic was joined by Mohamed Alabbar, chairman of Dubai-based developer Emaar Properties PJSC. A new company called Eagle Hills, headed by Alabbar, will develop and finance the project, with Serbia contributing the land, the government said. The company is registered with the Abu Dhabi Chamber of Commerce as a trading company with no employees and capital of 1.5 million dirhams ($410,000).
The project is based on Serbia’s “good economic fundamentals,” Eagle Hills said in an e-mail, adding that Mohamed Alabbar will lead the company with his management team. The company didn’t respond to questions about its structure and how it plans to finance the development.
Eagle Hills plans to build 1.85 million square meters (19.9 million square feet) of residential, commercial and leisure space on 90 hectares (222 acres) of land, according to the presentation. The centerpiece will be the 210-meter (690-foot) Belgrade Tower with a design similar to Emaar’s Burj Khalifa, the world’s tallest building.
“The United Arab Emirates believes in the political stability of Serbia, in our human capital and it is the result of friendship and understanding between Aleksandar Vucic and Sheikh Mohammed,” Sinisa Mali, Vucic’s economic adviser and candidate for Belgrade’s mayor, said by phone from Cannes, France, where he was presenting Belgrade on Water to buyers and investors at the MIPIM real estate conference. “Belgrade on Water will employ the entire construction industry.”
Vucic has said the project on Belgrade’s Sava River will be completed by 2019. On Feb. 10, he said he expects Serbia to join the EU the same year, according to a government statement.
The deadline for completing Belgrade on Water is a “colossal bluff,” Nebojsa Bakarec, a member of the Democratic Party of Serbia, wrote on the party’s website on Feb. 9. “It’s very frivolous, amateur and most of all dangerous idea when it comes to its planning and construction.”
Asked about the lack of a public tender for Belgrade on Water, Vucic dismissed the need for one.
“The authorities will not heed possible obstacles and the job will be done,” he said at a Jan. 22 briefing. “What would you want, that we disrespect those who give $3 billion?”
Vucic, who said in 1995 that his country would kill 100 Muslims for every Serb who died, is trying to convince voters that his friendship Sheikh Mohammed bin Zayed will benefit the economy. Serbia’s economic growth is expected to slow this year as the government tries to narrow the budget gap, curb public debt and halt rising unemployment.
Vucic and the sheikh met “completely by accident,” the Progressive Party leader told state-owned broadcaster RTS in October.
“I was invited to a restaurant for a lunch and he was there, totally surprised that I didn’t ask for anything,” Vucic said. “We talked about history, geography, philosophy. He personally saw me off to my room and after that, our friendship started.”
Vucic traveled to the U.A.E. on March 2 to meet with Alabbar and the Abu Dhabi leader and attend a presentation for Serbian journalists of the Belgrade on Water plan.
The U.A.E. sees an opportunity to expand into the Balkan region using Serbia as a base, and it tends to favor countries where they know the leadership well, said Ghanem Nuseibeh, founder of Cornerstone Global Associates, which advises clients on risk in the Middle East.
“But if political factions in Serbia are indeed using U.A.E. investments for political gains, then they might scare off the U.A.E.”
Ahead of the election set for March 16, the Progressive Party has 42.5 percent support, followed by 13.1 percent for Prime Minister Ivica Dacic’s Socialist Party, according to a March 10-12 poll by Belgrade-based portal eizbori.com, which focuses on election reporting. Three other parties are set to enter parliament and two are struggling to pass a 5 percent threshold, the poll showed.
In February 2013, Vucic said he expected to reach a deal with Mubadala, an Abu Dhabi government-controlled investment company, to invest $4.5 billion in a semiconductor plant. Mubadala was less definite when it came to its deals with Serbia.
“There is no target figure and no specific amount agreed to,” Mubadala spokesman Brian Lott said by telephone on Feb. 26. “There is an ongoing process that’s designed to look for opportunities to invest and co-invest in Serbia. The production of semiconductors and aircraft components are some of the areas we’re considering.”
The contrasting views may reflect cultural differences between Europe and the Middle East, where negotiations are often more convoluted, according to Ghanem Nuseibeh, who created Cornerstone Global Associates to advise clients on potential risks in the region.
“In the U.A.E., like other countries in the Gulf, yes means maybe, maybe means no and no means I never want to see you again,” he said.