LOST BENEATH the bloody headlines from Afghanistan, Darfur, Iraq and Lebanon is the fact that the Balkans are undergoing their most profound period of change since Slobodan Milosevic's overthrow in 2000. Last June, Montenegro declared its independence, and the process to determine Kosovo's future status has entered its last stages. New governments are also in power in Bosnia-Herzegovina, Macedonia, Montenegro and Serbia.

All of these changes are taking place at a time when strategic uncertainty in southeastern Europe is increasing because Washington and Brussels are consumed by problems elsewhere, while Russia is increasingly asserting its political and economic interests in the region. Balkan stability over the past seven years has rested on three pillars: a significant U.S. military presence, the foreseeable prospect of EU accession for the Balkan countries and the fact that political elites in Belgrade, Banja Luka, Skopje and Zagreb support the political and territorial status quo in the region. Two of these three pillars-the U.S. military presence and the foreseeable prospect of EU accession-are either being withdrawn or pushed back to an increasingly distant future. The few remaining U.S. troops in Bosnia were pulled out in 2006, and a similar withdrawal is planned for Kosovo in the near future. Both moves reveal the mindset of bureaucratic planners who know the price of everything and the value of nothing. Meanwhile, the Europeans are suffering from too many of their own problems to guide the Balkan states successfully through the transition process, so the EU is unable to provide firm assurances as to when the next round of enlargement that would include the Balkan states might take place. Hence, there is a significant danger that international policy toward the region could founder for the next couple of years.

The third pillar of Balkan stability-the status quo elites in Bosnia-Herzegovina, Macedonia and Serbia-is somewhat wobbly as well. Political forces challenging the existing state of affairs in the region-whether in the form of politicians in Sarajevo demanding a radical revision of the Dayton Peace Accords, revanchists in the Serbian Radical Party who still dream of creating a "Greater Serbia" or militant Albanian movements threatening to destabilize Macedonia, Montenegro or southern Serbia-all to greater or lesser degrees are waiting on the sidelines to see how quickly changing facts on the ground may play to their advantage.

Additionally, an important new variable has been introduced into the Balkan strategic equation-the re-emergence of Russia as an important economic and political player in the region. In Montenegro, Russians have bought the republic's largest industrial enterprise; in Bosnia, the largest oil refinery; in Macedonia, Lukoil is planning a major expansion of its operations; in Serbia, Russia is providing the capital to refurbish the hydroelectric plant at the Iron Gates of the Danube, Serbia's main source of electricity; and President Vladimir Putin has signed an agreement with his Bulgarian and Greek counterparts to build a new pipeline to carry Russian oil from the Black Sea to the Aegean.

Given all of these developments, the current political moment in the Balkans bears a disconcerting resemblance to the situation in 1991 when the Yugoslav crisis first began. Then, as now, rapidly changing political realities in southeastern Europe came at a moment when Washington and European capitals were distracted by problems elsewhere, and belated American and European reactions to the accelerating dynamic of disintegration and violence were unable to keep the lid on a volatile situation.

To be sure, there is little danger that the large-scale violence of the 1990s that ravaged Croatia, Bosnia-Herzegovina and Kosovo will erupt again in the western or southern Balkans. New security mechanisms and instruments are now in place, and there is greater recognition of the need for quick, preventive diplomacy in the early stages of a crisis than there was in the early 1990s.

Nevertheless, the problems facing the region should be neither underestimated nor dismissed, and after 15 years of intensive international engagement, there is no excuse for Washington and Brussels to be behind the curve. Moreover, it is not at all clear that the newly implemented security structures will be strong enough to counteract the powerful forces now being unleashed in the region. Maintaining peace and stability and promoting economic and political reform in the Balkans while simultaneously re-drawing borders and creating new states will be a tall order. Accomplishing this task will be especially difficult because Washington's and Brussels's ability to control developments on the ground is decreasing in direct relationship to their drawdown in troops and financial aid. Furthermore, the only carrot on offer is the increasingly distant prospect of EU accession.

For these reasons, many implicit assumptions about Balkan policy currently holding sway on both sides of the Atlantic are seriously flawed. In Washington, the prevailing sentiment is that we can grant Kosovo independence, revise Bosnia's constitutional structure, declare victory and pull out of southeastern Europe. In Brussels, many quarters believe that southeastern Europe's EU-integration aspirations can wait until the EU settles its own internal difficulties. But the new political dynamics of the region unleashed by the changes of the past year means that at this moment the Balkans cannot afford benign neglect. The International Commission on the Balkans warned in 2005 that we are as close to failure in southeastern Europe as we are to success.

The judgment still holds true, but the good news is that maintaining stability and promoting reform in the Balkans can be done for a fraction of the cost of the Afghan and Iraqi operations, and in a region where Americans are popular, and everyone wants to join the European club. Stability and progress, however, will not emerge by themselves, which is why understanding the unstable political situation in the region is so crucial.

Start with Montenegro

FOR THE past 15 years, Montenegro has prided itself, with some justification, as being an exception to the general Balkan rule that ethnic diversity leads to conflict. Paradoxically, however, the thesis of Montenegrin exceptionalism faces its greatest challenge now that Montenegro has become independent. In May 2006, Montenegrins approved an independence referendum by a 55-?45 percent margin, but a glance behind the 45,000 vote difference suggests the future of Montenegrin politics will be anything but smooth. Voting was strictly along ethnic lines, with Albanians, Croats, Muslims (recognized as a distinct ethnic group in many parts of the Balkans) and ethnic Montenegrins voting overwhelmingly in favor of independence, while Montenegrin citizens identifying themselves as Serbs (over 30 percent of the population) voted just as strongly in favor of maintaining the state union with Serbia.

Independence, however, significantly changes the political game that all of these groups have been playing in recent years. Most of Montenegro's ethnic minorities supported independence not out of any particular loyalty to the Montenegrin state itself, but primarily to break Montenegro's ties with Serbia. Now that that has been achieved, Montenegro's various ethnic groups have already begun to up the ante in Montenegrin politics by demanding more autonomy and greater collective group rights. And as repeatedly seen in Bosnia-Herzegovina and Macedonia, such ethnically based politics make it extremely difficult to achieve the consensus needed to adopt and implement political and economic reform.

Several recent events sharply bring into focus this lack of consensus in Montenegrin society. In September 2006, on the eve of parliamentary elections, Montenegrin security forces arrested over a dozen ethnic Albanians for planning an alleged terrorist attack. Two of those arrested were local municipal council members, revealing the relatively shallow support even some Albanian government officials have for an independent Montenegrin state. At the inaugural session of the Montenegrin parliament on October 2, 2006, Serb members of parliament refused to stand for the singing of the Montenegrin national anthem. Finally, in April 2007, Montenegrin security forces had to break up attempts by extreme Montenegrin nationalists to take over holy sites belonging to the Serbian Orthodox Church. All of these events reveal the lack of consensus in Montenegrin society, the numerous potential cleavages for violence in the republic and the relatively weak foundations on which Montenegrin independence rests.

Apart from the most basic question of the new state's legitimacy in the eyes of many of its citizens, Montenegro faces enormous economic difficulties. Less than a fifth of the population is officially employed, governmental corruption is high even by regional standards and there is a serious debate within the country over the wisdom of relying so heavily on Russian investment in the republic. Adding to all of this uncertainty is Milo Djukanovic's decision to step down as prime minister and retire from politics. To his credit, Djukanovic achieved many things during his 17 years in power. His decision to break with Milosevic in 1997 was an important blow to Milosevic's aura of omnipotence, and he kept his cool during NATO's air campaign against the former Yugoslavia in 1999. Crowning these achievements was his role in peacefully guiding a deeply divided state to independence.

But the price of many of these things has yet to be paid. Putting together a coalition of groups with convergent short-term tactical goals but contradictory long-term strategic goals can win an independence referendum, but it will not make for a stable state. Similarly, the costs of Djukanovic's struggle to keep himself and his party in power, in terms of the significant criminalization of the state and society, is something that Montenegro will continue to pay for many years to come.

Bosnia's Uncertain Future

THE SPILLOVER effects of Montenegro's independence referendum were immediately visible in its northern neighbor, Bosnia-Herzegovina. In 2006, eleven years after the signing of the Dayton Peace Accords, Bosnia had its most heated election campaign since the end of the country's civil war. Within days of the Montenegrin referendum, Milorad Dodik, the prime minister of the Republika Srpska (RS), the Serbian entity in Bosnia, aired the possibility of the Bosnian Serbs' holding their own referendum on independence if Bosniak politicians in Sarajevo continued their attacks on the legitimacy of the RS. Dodik's threats clearly struck a nerve among Bosnia's Serb population, as Dodik and his Independent Social Democratic Party scored a huge victory in Bosnia's October presidential and parliamentary elections, becoming by far the most important political force in the Serb half of Bosnia. Elections in the other half of Bosnia-Herzegovina, the Muslim-Croat Federation, produced minor political tremors of their own. Haris Silajdzic, the Bosnian-Muslim wartime prime minister, was elected to the tripartite state presidency after several years out of politics, while a Croat from Sarajevo, Zeljko Komsic, was elected as the Croat member of the presidency, apparently with the help of thousands of Muslim votes and without the support of Bosnia's leading Croat political parties.

Political tensions in Bosnia are sure to increase over the next few years as Dodik and Silajdzic-two sharp-tongued, strong-willed individuals-fight over their contrasting visions of Bosnia's future. There is clearly still no consensus among the peoples of Bosnia as to how their state should be organized or governed. Moreover, the intrusive role international actors play in Bosnia's domestic politics has often convinced Bosnia's Croat, Muslim and Serb political leaders that it is more important to gain the support of international officials than that of their fellow Bosnians. The perverse result has been the introduction of a negative dynamic into Bosnia's political life, preventing Bosnia's Croats, Muslims and Serbs from developing the habits of mutual trust, cooperation and compromise needed for the country to progress on its own, and absolving Bosnia's politicians of responsibility for the country's future.

Kosovo: Toward Independence?

OF ALL the problems facing southeastern Europe and the international community, the most difficult and potentially dangerous remains deciding Kosovo's future status, and despite Washington's protestations to the contrary, whatever is done in Kosovo is almost certain to have widespread ramifications, both throughout the Balkans and further afield. Putin has publicly warned that whatever happens in Kosovo could serve as a precedent for similar unresolved territorial conflicts in the post-Soviet space, especially in Georgia's breakaway provinces of South Ossetia and Abkhazia and in Moldova's Transnistria region, and Putin has specifically called for the application of "universal principles" to the Kosovo case. Many regional leaders, especially in Romania and Greece, have also raised concerns about plans to impose a solution that has not been agreed to by the two parties.

More immediately, however, whatever legal form Kosovo's future status takes, it will do little to resolve Kosovo's fundamental internal problems: extremely weak governmental capacity; a moribund economy with few serious opportunities for growth; pervasive corruption and organized crime; a fractionalized political system based on regional and clan loyalties and an intolerant nationalist xenophobia against non-Albanian ethnic communities that has produced the worst human-rights situation in Europe. In 2005, Kosovo registered negative economic growth, and a reduced international presence in Kosovo will only worsen economic conditions. Moreover, with half of Kosovo's population under the age of 26 (and one-third under the age of 17), the vast majority of whom account for the 50-60 percent of Kosovo's population that is officially unemployed, the potentially explosive social consequences of the situation are clear. Compounding all of these problems is the fact that Kosovo already has its own frozen conflict-the Serb enclave north of the Ibar River, anchored by the divided city of Mitrovica. Here, in territory adjoining Serbia proper, some 80,000 Serbs are practically more a part of Serbia than they are of Kosovo.

Macedonia after Kosovo

IN MANY ways, the political logic of Balkan nationalism-succinctly summed up in the saying, "Why should I be a minority in your state when you can be a minority in mine?"-suggests that Macedonia will have the most difficult time dealing with the new strategic environment in the southern Balkans if and when Kosovo is granted independence. With three million Albanians living in an independent state to its west and a further two million Albanians living in an independent state to its north, it is difficult to see why 500,000 Albanians in Macedonia will remain satisfied in a state in which they claim they are discriminated against and treated as second-class citizens.

Macedonia's parliamentary elections in July 2006 showed how fragile Macedonia remains five years after a civil war between Albanians and Macedonian Slavs was narrowly averted. When the right-of-center Internal Macedonian Revolutionary Organization-Democratic Party of Macedonian National Unity chose to invite a smaller Albanian party to join its ruling coalition in place of the largest Albanian political party in Macedonia, Ali Ahmeti's Democratic Union for Integration (DUI), Ahmeti's followers took to the streets, raising roadblocks in many parts of the country and boycotting parliament for months. On the other side of the ethnic divide, later in August, the Macedonian government again arrested an Orthodox cleric, Bishop Jovan Vranisevski, who had re-established ties with the Serbian Orthodox Church in Belgrade. Bishop Jovan, named a prisoner of conscience by Amnesty International, has been subject to various forms of intimidation and harassment over the past several years, including being charged with "crimes" as petty as performing a baptism in his apartment. As these events suggest, Macedonia's social and political cohesion remains weak, and without strong international support it is doubtful that Macedonia would have the internal strength to weather the changes facing southeastern Europe in the coming years.

Stabilizing Serbia

ANY AMERICAN policymaker who has bemoaned the fact that Washington is a one-crisis-at-a-time town should have some sympathy for the problems confronting Belgrade politicians. As a result of Montenegro's declaration of independence, Serbia has involuntarily become an independent country, and a decision which grants Kosovo some form of independence will reduce its territory by a further 15 percent. Meanwhile, the EU has suspended talks with Belgrade because of its failure to apprehend Hague indictee Ratko Mladic, the former Bosnian Serb general held to be most responsible for the Srebrenica massacres in July 1995. And these are just the "big" problems; others, such as reforming the judicial and security sectors, providing for the largest refugee population in Europe, rebuilding an economy in which unemployment hovers at 30 percent-and which needs another decade to raise per capita GDP to 1989 levels-also remain to be solved.

In addition, trouble is brewing in the Sandzak region-a mainly Muslim area straddling the Serbia-Montenegro border and adjoining Bosnia to the north and Kosovo to the south. All the elements needed for a potential crisis are currently present in the Sandzak: increasingly violent conflicts within rival Sandzak Muslim political elites, an economic depression and a low but still palpable amount of ethnic tension between Muslims and Serbs in the area-all exacerbated by the small but highly visible presence of local Wahhabists, indoctrinated and financed by outside patrons.

Given these realities, what is noteworthy is not that reform in post-Milosevic Serbia has been slow, but that the post-Milosevic reform effort is making any progress at all. In many ways, however, the coming years will be the most severe test of Serbia's nascent democratic institutions, which is why there is an urgent need to rethink current U.S. and EU policy towards the country.

For the past several years, much of Washington's and Brussels's relations with Serbia-such as negotiations with the EU over a Stabilization and Association Agreement or Serbia's membership in NATO's Partnership for Peace-have been reduced to the fate of one man: Mladic. But while the morality of insisting on Mladic's arrest is unassailable, the consequences of freezing Serbia's Euro-Atlantic integration efforts because of one individual have become detrimental to long-term stability in the Balkans. As one op-ed contributor in The New York Times asked, "How important is Mladic's arrest balanced against the integration of eight million people in a region that badly needs stability?"¹

^In similar instances, Washington and Brussels have both shown greater understanding for the wider strategic issues at stake. In October 2005, the EU gave Croatia a green light to proceed with accession talks only days after International Criminal Tribunal for the Former Yugoslavia (ICTY) Chief Prosecutor Carla Del Ponte announced her disappointment with the Croatian government's lack of cooperation in the case of fugitive Hague indictee Ante Gotovina. Similarly, the ICTY is allowing another indicted war criminal, former-Kosovo Prime Minister Ramush Haradinaj, to await trial from his home in Kosovo (despite the fact that Haradinaj has reportedly been intimidating and harassing potential witnesses against him) because of the belief that Haradinaj can reign in extremists in Kosovo. In both cases, larger strategic concerns have required that some unpleasant compromises be made between the just and the good. Washington, Brussels and the ICTY now confront the same situation with regard to Mladic. Fortunately, Washington made a good move in this direction at NATO's November summit in Riga when it agreed to invite Serbia (along with Bosnia-Herzegovina and Montenegro) to join the Partnership for Peace. The EU now needs to show similar pragmatism in supporting democratic forces in Serbia by restarting accession talks with Serbia as soon as possible.

Serbia's neighbors certainly understand the importance of such pragmatism. As Kosovo's Prime Minister Agim Ceku recently noted, "[T]he international community needs to find a way to stimulate democratic Serbia while sidelining the radicals." Sidelining the "radicals" in this case most especially means that Washington should reconsider its policy of avoiding all dealings with the Serbian Radical Party (SRS), whose leader, Vojislav Seselj, is currently on trial for war crimes in The Hague. The SRS is known for its extremist rhetoric and little else, but in a country with so many refugees and a devastated economy they can count on the support of anywhere between 30-35 percent of the electorate. The SRS is not monolithic: It has extreme and moderate factions, and initiating even low-level contacts with the party will move the moderates into a more responsible, mainstream direction and marginalize the extremists, which will be of considerable benefit to domestic Serbian politics.

Stabilizing Serbia-and, by extension, southeastern Europe as a whole-requires a new approach to dealing with Belgrade. Just like generals fighting the last war, however, far too many policymakers in Washington and some European capitals have yet to recognize that Slobodan Milosevic is dead. The challenge is no longer to contain a malevolent dictator but to foster an international environment that will guarantee the success of the democratic transition in the strategically most important country in the Balkans. The assassination of former-Serbian Prime Minister Zoran Djindjic in March 2003 should be a tragic reminder of the dangers post-Milosevic political forces face.

WESTERN ENGAGEMENT in the Balkans is about more than altruism. Problems in southeastern Europe quickly become European problems, and European problems, sooner or later, create problems for America. To take but one example: Several of the 9/11 hijackers had been trained or fought in Bosnia in the 1990s.

Getting the western and southern Balkans through a successful democratic transition, however, will require devoting more attention to the region than either Washington or Brussels currently seem willing to do. Former-Macedonian Prime Minister Vlado Buckovski echoed the concerns of many Balkan political leaders when he noted that absent a clear timetable from the EU as to when the various countries of the western Balkans may join, "It will be very difficult for us pro-Western and pro-European reformers to continue the political fight."

At the moment, many regional leaders are closely watching to see how the EU deals with Croatia's membership bid. Croatia is by most measures a more suitable candidate for EU membership than either Bulgaria or Romania, so the problem of integrating Croatia is more a matter of internal EU politics than of Croatia's political or economic suitability. All of these things combined-making Croatia an example for the region that quick EU accession is still possible, despite the EU's own internal difficulties, stabilizing Serbia and providing support to its democratic forces and continuing to provide strong security guarantees to all the states in the region-will go a long way to ensuring that the transition process in the Balkans is successful.

While much can still go wrong in southeastern Europe, the current political moment also presents a very rare historical opportunity. For the first time in centuries, the region is not divided between rival empires or power blocs, and all the Balkan states share the same domestic- and foreign-policy goals-internally, political democratization and the creation of market economies and externally, integration into NATO, the EU and other Euro-Atlantic institutions. Whether these efforts succeed or fail largely depends on decisions that will be made outside the region. What is clear, however, is that this is a rare political moment when historical change can be accomplished in the Balkans for a relatively modest price.

Gordon N. Bardos is the assistant director of the Harriman Institute at Columbia University's School of International and Public Affairs. He recently returned from a fact-finding visit to the region.

¹ See Timothy William Waters, "Why Insist on the Surrender of Ratko Mladic?", The New York Times, May 12, 2006.