A long-delayed gas pipeline intended to loosen Bosnia and Herzegovina’s dependence on Russian energy has become a test of something larger: whether US-backed infrastructure diplomacy can move faster than the legal and regulatory standards demanded by Brussels.
At the centre of the dispute is AAFS Infrastructure and Energy LLC, a US company now designated as the investor and developer of the Southern Interconnection, a pipeline that would connect Bosnia to Croatia’s gas network and the liquefied natural gas terminal on the island of Krk. Croatia and Bosnia signed an agreement for the project in Dubrovnik on April 28, in the presence of US energy secretary Chris Wright.
The strategic case is straightforward. Bosnia currently imports practically all of its gas from Russia through routes crossing Serbia and Bulgaria. The new link would give the country access to LNG arriving through Croatia, turning Krk into a southern gateway for non-Russian gas into one of Europe’s most politically fragile states.
The controversy lies in how the project was awarded. In April, the parliament of Bosnia’s Bosniak-Croat Federation amended the law governing the pipeline and named AAFS as the main investor and leader of the project. The same changes removed BH Gas, the Sarajevo-based state company that had previously been attached to the scheme.
For Washington, the project fits a broader push to expand US energy influence in south-eastern Europe. Reuters reported that the pipeline will be financed and led by AAFS, a company run by Jesse Binnall, a former Trump lawyer, and Joseph Flynn, brother of former US national security adviser Michael Flynn. AAFS has said it would invest about €1.5bn, or roughly $1.8bn, in the project.
For Brussels, the designation of a private US company directly in legislation has raised alarms. The EU ambassador to Sarajevo warned that the lex specialis approach could undermine Bosnia’s EU accession path and put at risk about €1bnin funding under the EU Growth Plan for the Western Balkans.
The numbers themselves illustrate the uncertainty. The Western Balkans Investment Framework’s earlier project profile described a 236km bidirectional pipeline, with 162km in Bosnia and 74km in Croatia, and showed total financing of just under €100mn, including an EBRD loan of €66.3mn. That is a very different scale from the newer AAFS-era investment figures, suggesting that the project may now include broader infrastructure, power generation or concession economics beyond the original interconnector.
Environmental and governance groups argue that the process is being rushed. Bankwatch said the proposed amendments were submitted under an urgent procedure and would introduce fundamental changes, increase project costs and shift key decisions into non-transparent negotiations between the Federation government and AAFS. It also said AAFS was founded only in November 2025 and had no energy or infrastructure track record.
Supporters counter that Bosnia does not have the luxury of delay. Its existing gas system is small and exposed, and the current interconnector is ageing. The WBIF says the Southern Interconnection is intended to provide an alternative supply route and increase the country’s gas capacity by linking its transmission system to Croatia’s.
Yet the financing structure remains the critical unknown. Public materials identify the intended strategic route, the political sponsors and the headline investment values. They do not yet show a completed bank syndicate, final EPC contractor, binding gas supply agreements, transportation-capacity bookings, tariff methodology or offtake contracts sufficient to make the project bankable.
That matters because gas pipelines are financed less on political enthusiasm than on allocation of risk. Lenders will want clarity on who carries construction overruns, whether revenues are protected by regulated tariffs or ship-or-pay contracts, whether LNG capacity at Krk and Croatian transmission capacity are secured, and whether Bosnia’s institutions can guarantee the legal stability of the concession.
The project therefore sits between two competing logics. One is geopolitical: replace Russian gas with US-linked LNG, deepen American influence in the Balkans and give Bosnia a second supply route. The other is institutional: a candidate for EU membership should not award strategic infrastructure through opaque legislation that may conflict with EU market rules.
That tension is now the real risk premium. If the project is regularised through transparent contracts, credible lenders and EU-compatible rules, the Southern Interconnection could become one of the most important energy-security projects in the western Balkans. If not, it risks becoming another Balkan infrastructure deal trapped between geopolitics, procurement disputes and unresolved financing.
