Executive Summary

As the world tends to the Middle East, Brexit, and the new U.S. administration, a potential crisis is unfolding in the countries of Southeast Europe. Corruption, growing ethnic and religious tensions, and external influences threaten to destabilize Bosnia and Herzegovina (BiH), Croatia, Kosovo, and Serbia, with possibly disastrous consequences for the region and the rest of Europe.

Although each country in the region faces specific challenges, the theme is uniform: weak and inconsistent rule of law undermines the foundation for economic growth, security, and a stable democracy. Each country’s unique and overlapping struggles manifest in the same results: high levels of unemployment, especially among youth, with serious consequences for the future; corruption that has hampered a transition to a market economy; and rekindled nationalism, often with religious undertones, that is gaining ground in government and veering from the secular European Union (EU) mandate.

The current solution—using EU accession as a catalyst for internal reforms in these countries—is a risky proposition. The timeline is too long and uncertain, the EU itself is under pressure, and when accession is achieved, as in Croatia, the reforms don’t always stick. Between rising nationalism, a meddling Russia, and the threat of Islamic extremism, the region poses a real security threat to Europe and the world if it cannot overcome political differences, work towards creating a stable economy, improve bilateral regional relations, and ensure stability and security that will ultimately benefit all countries in the region.

Bright spots exist. Growing the private sector, especially small- and medium-sized enterprises (SMEs), has the potential to provide an alternative future for the English-speaking, technologically savvy youth who can fuel it. Shifting power away from government could help create a more diversified society, unlocking opportunities outside the official bureaucracy to combat unemployment, disaffection, and the lure of extremism. Ultimately, efforts that bring all actors together to work toward a positive future based on development and coexistence will create a more stable region.

This report examines the current forces shaping Southeast Europe and identifies major challenges and opportunities, drawn from extensive interviews over the course of eighteen months with leaders in and experts on the region. The report concludes with recommendations for U.S. policymakers, business leaders, the media, and philanthropists, all of whom have a vital role to play in shoring up a region adrift.

Policymakers in Washington should stop ceding responsibility for the region to Europe; press traditional allies and other partners to respect international norms; take immediate action while opportunity still exists to stabilize Bosnia and Herzegovina; and prepare for the possibility of renewed conflict or disintegration of BiH.

Business leaders should recognize the opportunities in tech, health care, and SMEs; companies with licensable products should connect with companies in the region for local commercialization; all should look to the local IT sector as a source of affordable back-end support.

The media, educators, and civil society should recognize that the Trump administration is likely to ignore Southeast Europe as much as, if not more than, the Bush and Obama administrations and work to shore up institutions; U.S. media outlets should look for mutually beneficial partnerships with local outlets; educators and foundations should help develop training centers for IT and facilitate access to reputable news sources to counter Russia’s propaganda in the information sector in Serbia.

Next: Introduction and Scene Setter


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