The Serbian government has approved a contract with Jared Kushner on plans to build a luxury hotel on the site of the former defense ministry in Belgrade, putting him directly into business with a European state as his father-in-law, Donald J. Trump, vies to return to the White House.

Mr. Kushner is pursuing the $500 million hotel project in partnership with Richard Grenell. A former Trump administration aide, Mr. Grenell first proposed that U.S. investors attempt to redevelop the long-vacant, bombed-out site of the former Yugoslav Ministry of Defense while Mr. Grenell was still a diplomat, serving as a special envoy to the Balkans.

The deal, which provoked protests in Belgrade on Thursday, is with an affiliate of Mr. Kushner’s Affinity Partners, the three-year-old, $3 billion investment fund backed by the sovereign wealth fund of Saudi Arabia.

“The government of Serbia has chosen a reputable American company as a partner in this venture, which will invest in the revitalization of the former Federal Secretariat for National Defense complex,” a Serbian government official said in a statement released on Wednesday.

The complex was bombed in 1999 by NATO forces with the backing of the United States during the war Serbia was then waging with Kosovo. It is now considered a prime undeveloped real-estate site in the middle of a much-changed city, and Mr. Trump himself considered building a hotel on it in 2013.

For Mr. Kushner, who is also planning two luxury hotel projects in neighboring Albania, these deals in the Balkans are among the largest he has made since starting his investment firm.

“The economic progress in Serbia over the past decade has been impressive,” Mr. Kushner said in a statement confirming the approval of the deal. “This development will further elevate Belgrade into the premier international destination it is becoming.

The projects in Serbia and Albania both involve direct concessions from the governments there, meaning Mr. Kushner will be financially benefiting from foreign government acts potentially while his father-in-law is in the White House, even as these overseas officials might seek actions by the United States, such as support for Serbia’s bid to join the European Union.

The investments Mr. Kushner is making — with business partners in Israel, Dubai, Brazil, Germany and the United States, among other locations — are also backed by a fund where the bulk of the money comes from the Saudi government, again creating questions about potential conflicts of interest if Mr. Trump returns to office, ethics lawyers said.

“It is a conflict of interest in the most stark sense: The president of the United States needs to be advancing the interest of the United States and not the financial interests of family members,” said Adav Noti, executive director of Campaign Legal Center, which tracks ethics issues in the federal government.

In total, 99 percent of the money placed with Mr. Kushner’s firm by investors has come from foreign sources, according to a filing with the Securities and Exchange Commission in late March. Mr. Kushner says his overseas investments will not constitute a conflict of interest, as he has said that he does not plan to return to the White House if Mr. Trump is re-elected.

Mr. Kushner and his partners plan to build a hotel, retail space and more than 1,500 residential units. The approved plan includes a museum and memorial complex to those injured or killed during the NATO bombings. The memorial will be owned and managed by the government and designed “in collaboration with Serbian architects,” Mr. Kushner’s company said in a statement.

Mr. Kushner is working with a longtime real estate partner on the Serbia project, Asher Abehsera, who will oversee the actual development. “Reconstruction does not only mean building buildings, but also building bridges between cultures, respecting the past and creating the foundation for a prosperous future,” Mr. Abehsera said in a statement.

Mr. Grenell, in a prior interview, said his original proposal from the time he was in the Trump administration and his current involvement in the project reflect his belief that the United States should help rebuild the site that it had played a role in bombing 25 year ago. He said the redevelopment could be part of a “healing” of relations between the two countries.

The Serbian government, in its own statement, said it would retain ownership of the site and that the investor group, Affinity Global Development, has a set period of time to complete the project, or the land will be returned to the government’s control.

But the approval of the contract — which includes a 99-year lease and an agreement to share profits from the development of the three-block area with the Serbian government — has drawn criticism from opposition leaders in the Serbian parliament, among others.

Protesters blocked traffic in front of the former defense ministry headquarters on Thursday and put up signs questioning the decision, including some that said: “Stop Giving Army HQ as a Present to American Offshore Companies.”

Some in Serbia object to the plan because of the United States’ role in the bombing 25 years ago.

“Somebody is trying to clear up the mess that they did, and they are not those who should do anything in this place,” said Dragan Jonic, a member of parliament, who participated in the protest on Thursday. “We’ll use all the legal means and civil disobedience to stop this.”

The project also has drawn attention from House Democrats who asked Republicans on the House Oversight and Accountability Committee to investigate the proposed deals, though there has been no movement by Republicans to do so.

“Jared Kushner is pursuing new foreign business deals, just as Donald Trump becomes the presumptive Republican nominee for the presidency,” Representative Jamie Raskin, Democrat of Maryland, and Representative Robert Garcia, Democrat of California, wrote in March, after The New York Times disclosed details of the planned projects.

Mr. Kushner, in an interview, has said that as a private citizen he has the right to pursue international real-estate and business deals, even if they involve foreign governments.

But Mr. Kushner has played a role in the background, advising a nonprofit set up by backers of Mr. Trump that already is working on Mr. Trump’s possible transition back to the White House.

“One of the reasons I think firms like us as investors, they know that if Affinity comes in we’re a mark of kosher,” Mr. Kushner said in an interview in March. “Because again, we’re a highly scrutinized firm. We operate very professionally.”