On Monday, January 13, nine Ukrainian drones were launched toward Krasnodar, a city in southern Russia near the Black Sea coast. Their intended target was a compressor station along the TurkStream pipeline, the last remaining route for Russian gas deliveries to European consumers. Russian air defense systems successfully intercepted all nine drones before any significant damage could be inflicted. However, the strategic implication of this action was clear: the long-standing energy interdependence that has linked Europe and Russia since the Cold War has effectively ended, and efforts will continue to prevent its restoration.

The attack on the last remaining Russia-Europe gas pipeline came symbolically just one week before Donald Trump was set to assume the US presidency for a second time. The world he left on January 20, 2021, and the one he returns to exactly four years later bear little resemblance to one another.

While Trump was playing golf at Mar-a-Lago, Putin launched a war against Ukraine, Israel intensified its bombardment of Gaza, and European electricity prices surged—along with the explosion of the Nord Stream 2 pipeline. Gas prices reached unprecedented levels, and of the four Russian pipelines that once heated Europe and powered its industries, only one remains operational today—TurkStream, which runs through Serbia. Had Russian air defenses been less effective in recent days, even that last pipeline might no longer be in operation.

During Trump’s absence from the White House, Europe accomplished what was once considered impossible—nearly eliminating its dependence on Russian gas. However, this shift came at a high cost, as the continent now relies heavily on expensive liquefied natural gas (LNG), primarily sourced from American suppliers.

Sanctions on Russian oil, particularly the so-called “price cap” led by the Biden administration, significantly reduced Gazprom’s revenues. Additionally, just before leaving office, Biden imposed new sanctions on Gazpromneft, leaving Trump with a complex geopolitical challenge. These measures also impact Serbia’s oil industry, particularly Naftna Industrija Srbije (NIS).

Meanwhile, Putin’s standing on the global stage has dramatically shifted. Once a leader whom Western heads of state lined up to meet, he has not set foot in Western Europe since June 2021—almost as long as Trump has been out of office.

The US economy has continued its advance, leaving the EU struggling to keep pace—a reality most accurately described in Mario Draghi’s recent report.

Global inflation has come and gone, the pandemic has ended, and a right-wing wave has swept across the world, culminating in Friedrich Merz’s expected rise in Germany and, more significantly, Donald Trump’s return to the White House.

Perhaps the only constant between Trump’s two presidencies is China.

His primary geopolitical rival has sustained its rapid political, technological, and economic ascent, despite domestic challenges such as weak consumer spending and a crisis in the real estate sector. Externally, however, Beijing remains resolute. The West’s isolation of Russia has only strengthened Xi Jinping’s influence, as Moscow has become increasingly dependent on China for both energy exports and imports of sanctioned goods.

Meanwhile, China’s soft power—backed by yuan-packed investment initiatives—continues to expand across Africa. Closer to home, Beijing is displaying growing military ambitions, building bases in the South China Sea and expanding its naval fleet.

China’s global expansion has continued in Europe, both through its growing presence in the automotive sector and through investments in the so-called Belt and Road Initiative. A key focal point of these efforts has been Serbia, where China has emerged as the single largest investor between Trump’s two terms, injecting €3.38 billion over the past three years alone.

Biden largely continued Trump’s policy of countering China’s economic influence through sanctions and tariffs—one of the few areas of bipartisan continuity in US foreign policy. This stance has now been reinforced by Europe’s decision to align with similar measures.

The anticipation of Trump’s return has triggered a wave of geopolitical repositioning in recent weeks. From the swift establishment of a ceasefire in the Middle East following a single visit by Trump’s envoy to Israel, to Facebook’s abrupt shift in content moderation policies that now align more closely with Trump’s ideological stance rather than Biden’s, the global landscape is adapting in real time. On the battlefield, both Russian and Ukrainian forces are scrambling to secure as much territory as possible before Trump assumes office. Meanwhile, Zelensky is intensifying efforts to physically sever Europe from Russian gas supplies. Across multiple fronts, Trump’s second term is already being taken seriously by global actors recalibrating their strategies in anticipation of his leadership.

A similar trend is evident in Serbia, where administrative hurdles for the construction of a new Trump Hotel in Belgrade on the site of the former Yugoslav Ministry of Defense Building were swiftly cleared following his reelection. Attention is now focused on the incoming administration’s stance regarding the sanctions imposed on Gazprom.

Energy remains the most critical issue for the entire European continent, including Serbia.

Four years ago, on the TTF, Europe’s leading natural gas trading hub, one megawatt-hour of gas was priced at approximately €20. A year later, on the eve of Russia’s invasion of Ukraine, prices skyrocketed to €90 per megawatt-hour. At the peak of the conflict, gas prices surged to an unprecedented €240 per megawatt-hour. While prices have since declined, gas—an irreplaceable resource for both industry and households—still trades at €47 per megawatt-hour today, more than double the average price of the previous decade.

A similar trend can be seen in electricity prices, which also remain significantly higher than before the energy crisis.

These developments, along with other factors, have contributed to sluggish economic growth across European countries from the pandemic period to the present. The situation was further complicated by the political imperative to phase out cheaper Russian gas in favor of expensive LNG, primarily sourced from the US. Additional challenges arose from decisions made by individual countries, such as Germany’s move to shut down its nuclear power plants as part of a broader transition to “green” energy sources. However, implementing such policies during an energy crisis has largely resulted in further price pressures and an environmentally counterproductive—yet unavoidable—return to fossil fuels, including coal.

The EU currently operates 19 LNG terminals, with the closest to Serbia being the Croatian terminal in Omišalj and the Greek terminal in Alexandroupolis. With the construction of the gas interconnector with Bulgaria, Serbia has, for the first time, diversified its gas supply sources. The country has secured contracts allowing it to reserve certain LNG capacities from Alexandroupolis and access the TANAP pipeline, which originates in Azerbaijan.

However, the volumes available through these alternative sources cover only a small portion of Serbia’s overall gas demand, meaning the country remains fundamentally dependent on Russian gas.

Meanwhile, the EU has significantly reduced its reliance on Russian energy by cutting overall gas consumption. The bloc has set a target of reducing gas use by 15% compared to pre-crisis levels by March of this year, a goal made more achievable by relatively mild winters and, somewhat ironically, weaker economic growth. At the start of 2021, the EU was importing 6.69 million cubic meters of gas per week; today, that figure has dropped to 5.55 million.

Even more significant is the doubling of LNG use, which now accounts for approximately 40% of the EU’s total gas consumption. The primary beneficiary of this shift has been the US, which has more than doubled its LNG exports to Europe—from 5.945 million cubic meters in the last quarter of 2021 to 12.691 million cubic meters in the most recent quarter, according to data compiled by Bruegel.

Meanwhile, Russian gas deliveries have been sharply reduced, dropping from over 41 billion cubic meters per quarter to just 14 billion cubic meters, with more than a third of that consisting of Russian LNG.

Until the beginning of this year, Russian gas was supplied to the EU via Ukraine and Serbia (through TurkStream). However, after Kyiv refused to renew its transit agreement with Moscow, as of January 1, 2025, the only remaining route is TurkStream. This pipeline delivered record volumes of 4.5 billion cubic meters in the last quarter of 2024, supplying not only Serbia but also Hungary and Slovakia within the EU. Despite this, TurkStream represents only a small fraction of the gas volumes previously supplied from Russia.

The energy crisis in Serbia was further exacerbated by domestic challenges, culminating in a major failure at the TENT power plant, which led to extremely high electricity import costs at a time when prices were at historic highs. The situation has yet to be fully resolved, with additional, albeit smaller, failures occurring during the current winter season. However, the state-owned power utility, EPS, has addressed its financial difficulties through consecutive electricity price hikes—measures that have negatively impacted both the standard of living and the competitiveness of Serbian businesses.

In conclusion, Trump is taking office in a world that is far more divided than it was four years ago. His economic protectionist policies and socially conservative agenda have gained broader acceptance, not only among US allies but also among its competitors. Europe, meanwhile, has been drained by four years of struggling with the pandemic, inflation, the migrant crisis, and the ongoing financial burden of supporting Ukraine’s defense. The continent is now significantly more dependent on US energy and politically, as well as logistically, unable to quickly restore access to its former, more affordable energy sources from Russia. Once military operations cease, it is reasonable to expect the gradual reestablishment of oil and gas trade links that have been severed—despite Kyiv’s current determination to permanently cut them off.

The US has further distanced itself economically from Europe, strengthening its dominance while also raising concerns across the continent. Increasingly, European leaders are calling for a more independent approach in both economic and security policies.

The confrontation with China is entering a more direct phase, which, for now, remains within the bounds of escalating economic protectionism. This shift implicitly acknowledges that the West’s technological and ideological superiority is no longer sufficient to maintain the existing balance of power. Once the current wars come to an end, the new US president is expected to wield American political influence more freely to advance economic interests—not only in dealings with adversaries but also with allies, as traditional distinctions between the two become increasingly fluid. The US-China relationship will shape the direction of global politics in the coming years, and as tensions escalate, smaller nations will face growing pressure to align with one side, bearing all the consequences that come with such choices.

For countries like Serbia, this underscores the strategic importance of strengthening energy and food security, bolstering the domestic economy and workforce, and deepening regional cooperation. These measures are crucial for mitigating exposure to external shocks, which are inevitable in an era of shifting power dynamics among global superpowers.

Author: IPESE Research Team
Featured image source: Reuters