Guy Delauney
BBC Vulcan correspondent
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Bomb-damaged Ministry of Defense can be replaced with apartments and luxury hotels
One of the first sights to arrive in the heart of Belgrade, the Serbian capital, is a government building in a state before its collapse. The NATO planes bombed them in 1999 – and they remained roughly the same.
The message they convey to visitors is, “Welcome to Serbia. Recent history has been turbulent and complicated, but it has not yet been completed.”
Like a smile with broken teeth, the Ministry of Defense building still stands. However, they were clearly hit with a severe blow when NATO intervened and stopped Serbia’s then-military operations in Kosovo.
As a member of the Western Military Alliance, the United States was involved in bombings.
Given its history, it was shocking to Serbs last year when the government signed a contract with a company called Affinity Global and redeveloped the site into a $500 million (£370 million) luxury hotel and apartment tower complex.
Not only because the business involved is American, its founder is Jared Kushner, the most famous son-in-law of Donald Trump. And the planned development will be called Belgrade at Trump Tower.
These now make the plan a major twist in the suspicious story, but the decision to hit the Serbian government’s deal was not so surprising.
Before he became President of the United States in 2016, Donald Trump himself expressed interest in building a hotel on the site.
The move also fits the government’s pattern of allowing foreign investors to benefit from public property.
They cite as a major example the Belgrade waterfront residential and retail project built by the Emirati developers on land owned by the Serbian railway.
Where once rusty cave stocks and abandoned siding were once, there is now a swish shopping centre, a smart restaurant and a strangely huge 42-storey Belgrade Tower. That’s not everyone’s preference.
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The development project is led by Jared Kushner
But it was a Brownfield site, not a city centre landmark. The Ministry of Defense complex is a completely different proposition. Especially because it serves as a memorial to the victims of the 1999 bombing campaign.
It is also a very visual reminder of why the majority of Serbs continue to oppose NATO and feel sympathy for Russia.
In that context, granting a US developer a 99-year lease on the site is reportedly a bold move with no upfront costs.
But Serbian President Alexander Vic is acquiesced. “It’s important to overcome the burden that has been in 1999,” he tells the BBC.
“We are ready to build a better relationship with the US, and I think this is very important to this country.”
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Serbian president Aleksandar Vucic says the site’s sales are totally beyond the board
That view attracts some degree of sympathy from the international business community in Belgrade.
The inflow of foreign direct investment has more than tripled over the past decade. However, per capita GDP remains low compared to EU member states. It’s only one-third of the average block.
Attracting new investors is essential to keep these numbers moving in the right direction. And while details of the Ministry of Defense’s Ministry of Development’s finances have not been revealed, the New York Times reports that the Serbian government will win 22% of its future profits.
“In the small and concrete markets of Exogoslavia outside the EU, all advertising is good advertising,” says James Thornley, former senior partner at KPMG Serbia.
“If a major international player comes in, it’s drawn, it’s a draw. You’re getting a name and an opportunity there.”
Thornley has lived in Serbia for 25 years and is fully aware of the sensitivity surrounding the Ministry of Defense complex. But he believes that after people see the benefits of development, their opinions change.
“The site is an eyelash and needs to be resolved,” he says. “Nothing happened in 26 years. Let’s sort it out.”
However, not everyone involved in international investment in Serbia is so enthusiastic.
Andrew Peirson is Managing Director of Global Real Estate Giant CBRE in Southeastern Europe and currently plays the same role at IO Partners, with a full focus on the region.
He acknowledges that the condition of the crushed Ministry of Defense complex is “not good for the city’s image,” and that the deal to develop the site is “probably good news.”
However, he is very concerned about how the government has launched a deal with Affinity Global. Pearson says there was no open bidding process that allowed other companies to bid on the site.
“In state-owned land, you should be able to prove that your site has market value, usually doing the right bidding process,” says Pearson.
“If it was in the UK, Germany, Hungary, and even Romania and Bulgaria, then there would have been a process, and it would have passed the open market.
In 2023, Wüch met with Kushner and said he had a “great conversation” with Jared Kushner about “the possibility of a large-scale, long-term investment.”
And Donald Trump Jr. made a follow-up visit to Belgrade after Affinity Global announced that Trump International Hotel would form part of the development. The role of Trump JR and family business is believed to be limited to hotels.
While Donald Trump was in the White House, questions were raised about Trump’s commercial deals, but his spokesman rejected the proposal that benefits from the presidency.
Pearson is concerned that the nature of the Ministry of Defense’s Building Ministry could irritate businesses that are already committed to Serbia.
“If I’m an investor, if I’ve already put tens of millions or millions of people in the country, I’d be saddened that I wasn’t given the opportunity,” he says.
Both Affinity Global and the Serbian government did not respond to requests for comment on how transactions through the site were agreed and whether there was an open bidding process.
Next comes the question of whether commercial development should be carried out at all. The site remains of architectural and historical importance, even in its current state.
The building was originally built to welcome visitors to the Yugoslav capital of the Socialist Federal Republic of Tito. Architect Nikola Dobrovich created two structures on either side of Nemina Street.
The design also reflects the outline of Sutjeska Gorge, the site of the highly victory of Yugoslavian partisans over the Nazi forces in 1943.
“A serious city will never build a modern future by destroying its historical centre and cultural monuments,” says Estella Radnik Zhivkov, former deputy director of the Institute for the Republic of Serbia for the Preservation of Monuments.
“In order for Serbia to make progress, it must first respect its own laws and cultural heritage,” she argues. “According to Serbian law, the protection of this site cannot be revoked.”
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Belgrade was bombed by NATO in response to Serbia’s actions in Kosovo
But when the fate of the site appears to have been sealed, the Serbian organized crime prosecutors gave a fitting twist to a Hollywood thriller.
On May 14, police arrested an official who gave him a green light to lift the protected status of the Ministry of Defense complex.
Prosecutors said Goran Vasic, acting director of the Cultural Monuments Conservation Institute, allowed him to develop the opinions of experts that were used to justify the change in status. He faces allegations of job abuse and forgery of official documents.
The entry was seized by people opposed to the project as evidence that Kushner received priority treatment. The Serbian government has denied this.
If this leaves the Trump International Hotel, the affinity global project, then everything is not entirely clear.
Although repeated efforts to arrange interviews with the company have failed, Vasic issued a statement claiming that it “has no connection with our company,” adding that he “will review this issue and decide on the next step.”
Meanwhile, Vucic denies there is a problem with development. During a meeting of European leaders in Tirana, he said, “There was no counterfeiting of any kind.”
Still, the shattered face of the Ministry of Defense doesn’t seem to change for at least a while. And thanks to Trump’s connection, it will provide first-time visitors with more talk to Belgrade.
