By Giles Elgood

BELGRADE (Reuters) - A multi-billion euro plan to turn a rundown area of Belgrade's riverfront into a glitzy business and tourism hub has turned into a political headache for the Serbian government.

Prime Minister Aleksandar Vucic has had to defend himself against widespread criticism of secretive midnight demolitions to clear part of the site, carried out by masked men while the nation's attention was distracted by a parliamentary election.

Thousands of Belgraders have staged street protests against the 3 billion euro ($3.3 billion) Belgrade Waterfront project, espoused by the pro-Western Vucic as a way to transform the city into the unofficial capital of the Balkans.

The scheme is a test of Belgrade's involvement with Gulf Arab investors, seen as a vital means of promoting growth in a country with high unemployment and low wages. The protests, being staged every two weeks, pose the first major challenge to Vucic's authority since he became prime minister in 2014.

On Saturday, demonstrators waving flags, blowing whistles and banging drums positioned a giant rubber duck - the word also means fraud in Serbian - outside the interior ministry.

The official Ombudsman has spoken of police complicity in the demolitions and the ambassador of the European Union, which Serbia hopes to join, has told the government it must take the investigation of the case seriously.

Vucic, who backed the scheme from its inception, told a news conference this month that police would determine any criminal responsibility for the demolitions and he would deal with any politicians involved.

He accused protesters of "opening a space for a political assault on the government and me. This is a political issue par excellence".

The issue is a distraction for the prime minister, engaged in forming a coalition government to share responsibility for unpopular reforms he must implement as part of a loan deal with the International Monetary Fund.


While some critics dislike the scheme on architectural grounds - offices, luxury apartments, hotels and a shopping mall are planned around a 200-metre (650-feet) Dubai-style tower - others complain that Belgraders' views were ignored.

Dobrica Veselinovic of the "Don't Let Belgrade Drown" protest group said the project would be like a "big spaceship" landing in Savamala, a Bohemian district of cafes and bars.

"The citizens of Belgrade were never consulted about the development," he told Reuters.

He said the 20,000 jobs promised by the project were of low value and questioned the level of investment behind it.

Belgrade Waterfront General Manager Nikola Nedeljkovic said the developer, Dubai-based Eagle Hills, "has sufficient resources and expertise to financially manage a project of this magnitude".

The demolitions were "not part of Belgrade Waterfront's scope of work", and suggestions that planning rules had been ignored were wrong, he said.

Not all are angry at the prospect of a revamped Savamala.

Djordjije Stajkic, who runs the Tranzit bar near the Waterfront site, understands why people want to protest. But his bar is not scheduled for demolition and he expects more customers in future.

"I wouldn't have such a smiling face otherwise," he said. 

($1 = 0.9032 euros)

(Additional reporting by Aleksandar Vasovic and Ivana Sekularac; Editing by Mark Trevelyan)