DUBROVNIK – Bosnia and Herzegovina and Croatia have signed a formal agreement to construct a gas pipeline designed to eliminate Sarajevo’s total reliance on Russian energy supplies.
The deal, signed Tuesday during a summit in Dubrovnik, establishes a link to Croatia’s liquefied natural gas (LNG) terminal on the island of Krk. The project is intended to ensure energy security before a European Union ban on energy purchases from Moscow takes effect next year.
While Bosnian and Croatian officials have framed the agreement as a strategic necessity, the European Union has warned that the project’s execution could jeopardize Bosnia’s bid to join the bloc and put more than $1 billion in aid at risk.
European Union Accession Risks
The agreement, formally known as the Southern Interconnection Agreement, arrives as Bosnia and Herzegovina seeks membership in the EU. To achieve accession, candidate countries must align their national legislation with EU standards, particularly regarding energy markets, public procurement and transparency under the bloc’s internal energy market rules.
EU Ambassador to Bosnia Luigi Soreca stated in a letter earlier this month that the country must adhere to these accession obligations when passing energy sector legislation. Soreca noted that any amendments to the law must be submitted to the bloc for review, stressing that the legal framework for the project will be scrutinized as part of Bosnia’s wider alignment with the acquis communautaire.
The EU’s concerns center on a perceived lack of transparency surrounding the selection of the project’s developers, which the bloc suggests could undermine the country’s membership trajectory and trigger a review of pre-accession financial assistance earmarked for energy and infrastructure reforms.
U.S. Investors and Trump Connections
The pipeline is being developed by AAFS Infrastructure and Energy, a U.S.-based firm selected by Bosnian lawmakers earlier this month in a process critics say was tailored to a single bidder. The appointment of the firm has drawn scrutiny due to the professional and familial ties of its leadership to former U.S. President Donald Trump, injecting American domestic political baggage into a sensitive European energy project.
The company is led by:
- Jesse Binnall: A lawyer who previously worked for Trump and was involved in unsuccessful efforts to overturn the 2020 U.S. presidential election.
- Joseph Flynn: The brother of Michael Flynn, a former adviser to Trump.
The project aligns with a broader effort by Donald Trump, while in office, to encourage European nations to replace Russian gas imports with U.S. liquefied natural gas. Opponents in Sarajevo argue that this history makes it even more important that the project be demonstrably compliant with EU competition and state-aid rules, given Bosnia and Herzegovina’s aspiration to be treated as a credible, rules-based partner.
Transparency and Public Interest
The method by which AAFS Infrastructure and Energy was appointed has faced criticism from oversight groups and opposition lawmakers, who say the deal was advanced with limited public consultation and few published details on risk-sharing or long-term tariff impacts for consumers.
Transparency International warned that the move prevents other companies from bidding on the project.
The organization stated that the appointment sets a “dangerous precedent” and risks “seriously undermining the public interest,” arguing that large, cross-border energy projects should be awarded through open, competitive procedures to safeguard public funds.
Bosnian Prime Minister Borjana Kristo, who signed the agreement alongside Croatian Prime Minister Andrej Plenkovic, described the deal as a “major step forward” for diversifying supply and strengthening security. Kristo has insisted that the final contractual structure will be brought into line with EU norms and local legislation, and that parliament will retain authority over any guarantees or budget exposure related to the project.
Project Scope and Infrastructure
The initiative extends beyond the pipeline to include a broader overhaul of the country’s energy production and cross-border gas infrastructure with Croatia, a member of both the EU and NATO.
Key project details include:
- Estimated Cost: Approximately $1.5 billion, a sum likely to require a mix of private investment, potential export credit and multilateral financing.
- Infrastructure: Construction of the Southern Interconnection pipeline and new gas-fired power plants, as well as associated compression and metering facilities to handle increased LNG volumes.
- Objective: Reduction of coal-based electricity production, total removal of Russian gas dependence and closer integration with the EU’s regional gas network.
The EU has requested that all energy sector legislation and amendments related to the project be submitted for official review under the enlargement process, which is guided by the Copenhagen criteria and associated accession chapters. Brussels has signaled that Bosnia and Herzegovina’s handling of this flagship project will be treated as a test of its ability to apply EU rules in practice, not just on paper.
