Small State Energy Policy: The Case of Serbia’s Hedging Energy Strategy

In the context of a global energy paradigm shift, strategies for achieving energy transition targets and ensuring energy security are becoming increasingly prominent. As energy has emerged as a critical security concern in recent decades, states are carefully selecting strategies to address their energy-related interests. While great powers have extensive means to secure their energy needs, small states face unique challenge since they have limited projection of power which is, in the best case, dispersed on the neighbouring countries. In this regard, it becomes quite challenging for them to manage their energy-related interests. Small states thus need to carefully position themselves within the geopolitical environment dominated by great energy powers. The Republic of Serbia is a unique example of a small state trying to maximise its energy security amidst the influence of great energy powers. Beyond the country’s energy needs, Serbia’s energy policy is deeply shaped by geopolitical dynamics in the Western Balkans and Europe. Against this backdrop, Serbia simultaneously engages with the European Union, Russia, and China on energy issues, reflecting its multi-vector foreign policy approach. As a candidate for EU membership, Serbia has obligation to harmonise its national legislation with the EU’s energy acquis communautaire. According to Serbia’s National Security Strategy (2019), by signing the Treaty establishing the Energy Community, the Republic of Serbia opted for the establishment of a regional market for electricity, oil and natural gas and its integration into the energy market of the EU which, in turn, should contribute to a higher level of energy security. On the other hand, Russia remains dominant actor in Serbia’s energy sector, controlling the majority of its national oil enterprise and supplying all imported natural gas. Finally, China has gained prominent role in Serbia’s energy sector mainly through energy-related investments in recent years (Šekarić Stojanović and Zakić 2024). This complex situation, further intensified by the Russian invasion of Ukraine in 2022 and the energy transition targets, has resulted in Serbia’s hedging energy behaviour. This paper uses the theoretical framework of the hedging concept to analyse Serbia’s energy approach. Understood as highly pragmatic behaviour where rational states avoid taking sides in order to diversify options and mitigate risks, usually involving contradictory measures (Kuik 2010; Kuik 2021), hedging offers solid background to understand Serbia’s current energy policy. Furthermore, the paper tackles the interplay between energy security, national interest, and the security strategy of a small state. Drawing on Serbia’s key security and energy strategic documents, as well as developments in its energy sector from 2006 to 2024, this paper seeks to identify, describe and analyse the energy strategy employed by a small state within a specific geopolitical context.