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Trump Card

Serbian President Aleksandar Vucic hasn’t had an easy time of late. Anti-government protests are still going on after six months, he had to end a trip to the US early after falling ill and cracks are appearing in the economic dynamo that’s underpinned his success. Throw in a new 37% tariff on Serbian exports to Donald Trump’s America and the challenges look formidable.  

Vucic, though, does have one key card to play: his cultivation of ties with the Trump family and its interest in doing deals in the Balkans.

As reported before, the US president’s son-in-law, Jared Kushner, has the government’s blessing to develop a $500 million hotel on the bombed-out site of a former army headquarters in Belgrade. Trump’s eldest son, Donald Jr., was back in Serbia last month as part of a tour designed to expand business links.

The aim for Serbia is to reap the rewards of keeping on good terms with the MAGA movement while Trump was out of power, and also as a sort of home away from home for a family with strong bonds to the region.

During his 12 years in power, Vucic has been adept at playing different sides of the geopolitical divide. China is a key investor, while Russia remains an ally. Membership of the European Union, meanwhile, is the ultimate goal, albeit one that requires reconciling with Kosovo and that’s not happening anytime soon.

Some helpful mood music from the US around jobs, investment and the economy might just be what the president needs right now.

A tram passes by the former army headquarters in Belgrade, destroyed during NATO's bombing campaign in 1999. It’s slated to become a hotel complex. Photographer: Oliver Bunic/Bloomberg

Around the Region

Ukraine: Donald Trump said there’ll be no resolution of Russia’s war until he meets with Vladimir Putin. Russia’s president didn’t show up in Turkey for direct talks on Thursday with Trump and Ukraine’s Volodymyr Zelenskiy. A delegation from Kyiv, though, set off for Istanbul for potential negotiations with Moscow counterparts.

Romania: Investors are treating the country’s eurobonds as if they are junk-rated debt after months of political turmoil and ahead of a tight runoff for president this weekend.

Slovakia: KBC Group agreed to buy Slovakia’s 365.bank to expand in the region. The Belgian bank is paying €761 million ($853 million) in cash. 

Hungary: Eastern European countries are expected to be among the economies worst hit by risks related to trade tariffs, according to the European Bank for Reconstruction and Development.

Bulgaria: The speaker of parliament dismissed an initiative by President Rumen Radev to hold a referendum on euro adoption as the nation moves closer to joining the single currency next year. 

Charts of the Week

Rather than a reprieve for the political mainstream, the rerun of Romania’s presidential election has only polarized the country even more. Far-right leader George Simion is neck and neck with Bucharest Mayor Nicusor Dan in a vote that has big implications for Europe.

Poland, meanwhile, votes in the first round of its presidential election on Sunday with Warsaw Mayor Rafal Trzaskowski leading opposition candidate Karol Nawrocki by seven percentage points in the latest polling. The two also look set for a runoff.  

By the Numbers

• Albanian Prime Minister Edi Rama won an unprecedented fourth term by taking 52% of the vote in an election last weekend, as people bought into his pledge to take the nation into the EU by 2030.
• Poland’s armed forces have ordered three satellites from Iceye Oy in a bid to bolster their surveillance and intelligence capabilities. The contract is worth 860 million zloty ($227 million).
• The cost of Czech services means the central bank is taking a cautious approach to monetary policy, it said. Core inflation, a measure of underlying demand pressures in the economy, accelerated slightly in April to 2.6%.

Things to Watch

• PPF Group, led by Czech billionaire Renata Kellnerova, has challenged MFE-MediaForEurope NV’s move to tighten its grip on German broadcaster ProsiebenSat.1 Media.
• Hungary and Slovakia called on the EU to explore ways of compensating countries as part of the bloc’s effort to end imports of Russian fossil fuels.
• Investors are keeping an eye on Hungary’s budget after the government racked up a deficit of more than 2.9 trillion forint ($8 billion) in the first four months of the year, the worst on record for that period.

Final Thought

Romania’s presidential election is also making waves across the region. Simion traveled to Poland to boost fellow nationalist Nawrocki. In Hungary, Prime Minister Viktor Orban set off a firestorm by offering to work with Simion, long-known for his anti-Hungarian politics. The result was that the main party in Romania representing the million-strong Hungarian minority — loyal to Orban until now — endorsed Simion’s centrist rival. Orban’s opponent at home, Peter Magyar, saw a chance to benefit. With a backpack and flag, he set off on a march from Budapest to Romania to heal the rift caused by Orban’s “betrayal.”

George Simion could be on course to become Romania’s president. Photographer: Ioana Moldovan/Bloomberg

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