The International Institute for Middle East and Balkan Studies (IFIMES)[1], based in Ljubljana, regularly monitors and analyses political, economic and geopolitical developments in the Middle East, the Balkans, Europe and across the world. Its latest analysis examines a crucial moment in the European integration of the Western Balkans, with a particular focus on Serbia as a central political and stabilising actor in the region. It further underlines that the success of the European path depends on the acceleration of reform processes, the preservation of regional stability, the normalisation of relations with neighbouring countries and a consistent and partnership-based policy on the part of the European Union. The following are the most important and relevant excerpts from the comprehensive study “The EU and the Western Balkans: Serbia at the crossroads of reforms and geostrategic interests”.
Serbia is at one of the most significant political and geostrategic junctures since the beginning of the European integration process. At a time when the European Union is redefining its security architecture and enlargement policy, the question of accelerated accession for the Western Balkan states goes beyond technical and administrative parameters and is becoming one of the central issues of European security, political stability and the continent’s geopolitical resilience.
The statement by the European Commissioner for Enlargement, Marta Kos (ALDE), that “Ukraine is implementing more reforms during wartime than the Western Balkans have in peacetime” sent a controversial political signal to the region, including Serbia. In this context, the European Union expects clear political will, institutional responsibility and faster implementation of reforms, particularly in the areas of the rule of law, media freedom and the democratisation of society.
At the same time, IFIMES notes that the European Union has not opened a single new negotiating chapter for Serbia since the start of the war in Ukraine, even though Serbia is regarded in numerous analyses as one of the key actors in the European integration of the Western Balkans. Serbia is perceived, alongside Montenegro, as one of the candidate countries ready to move forward in the accession process, provided there is greater political resolve within the Union itself.
While reform processes in the region have slowed and there is a clear need to strengthen transparency, accountability and institutional oversight within the European integration framework, IFIMES underscores that the perception of sluggish progress further reinforces the call for more precise evaluation criteria and a more consistent approach by European institutions. In this sense, responsibility for the pace of reforms cannot be attributed unilaterally and exclusively to domestic actors, but must be viewed within the broader context of the European Union’s relations with and policies towards the region.
Against this backdrop, IFIMES welcomes the messages from Belgrade expressing readiness to fully implement the Venice Commission’s recommendations on the package of judicial laws by the end of May, as confirmed by Serbia’s Minister for European Integration, Nemanja Starović. Alignment with European legal standards and institutional recommendations is an important indication of Serbia’s strategic commitment to accelerating its European path and strengthening its institutional credibility within the accession process.
At the same time, statements by the European Parliament’s rapporteur for Serbia, Tonino Picula (S&D/SDP Croatia), about the possible review of EU funds have further raised the issue of the criteria and double standards that Brussels applies to candidate countries. IFIMES points out that the perception of double standards in assessing reform results may have a negative impact on public trust in the European integration process. For this reason, IFIMES warns that the European Union should not approach the Western Balkans primarily through pressure and conditionality, as this could further fuel Euroscepticism and open the door to alternative geopolitical influences. In IFIMES’s view, enlargement policy must remain grounded in partnership, trust and a clearly defined European perspective.
Serbia remains a key factor of stability in the Western Balkans. Despite pronounced internal political divisions, President Aleksandar Vučić retains the position of the central political figure around whom the dominant political processes of both the government and the opposition continue to revolve. In the absence of clearly profiled alternative political structures capable of bringing together the opposition spectrum, Serbia’s political stability remains closely linked to the overall security and political architecture of the region.
Further political momentum has been generated by the Strength of Serbia Movement – BK, following its announcement that it will return to active participation in parliamentary elections. Following consultations with President Aleksandar Vučić, Bogoljub Karić stated that elections are needed at this moment to defuse the current political tensions and open a broader social dialogue, which should include both the opposition and the so-called Student List. IFIMES observes that broadening the political offer and the political spectrum may further contribute to institutional stabilisation and to easing social and political polarisation.
As part of the broader reform agenda, Serbian President Aleksandar Vučić presented a national development plan built around five strategic priorities: public administration reform, higher productivity, transformation of the education system, stronger energy security and accelerated technological development.
The first area concerns the rationalisation and modernisation of the state apparatus through a reduction in the number of government members, state secretaries, assistant ministers and administrative structures that lack functional justification. A particular priority is placed on deregulation and the removal of administrative barriers that affect market competitiveness and product prices in Serbia.
The second priority concerns increasing labour productivity and strengthening work discipline. In this context, Serbia needs a higher level of engagement and a more competitive economy amid intense global market competition, particularly in relation to the world’s leading economies.
The third reform track is aimed at a deep transformation of the education system, with a particular focus on greater openness to international standards and reinforcing the dual education model. This would create stronger links between education, the needs of the labour market and technological advancement.
The fourth strategic priority concerns energy security and the development of new energy capacities, including nuclear energy, infrastructure projects and the diversification of energy sources. A critical challenge will be to secure the expertise and financial capacity needed for the country’s long-term energy transformation.
The fifth part of the reform plan focuses on the accelerated adoption of modern technologies and the development of robotics, artificial intelligence and digital infrastructure. Special importance is attached to data centres and technological capacities as key elements of Serbia’s future economic competitiveness.
IFIMES believes that Serbia has a historic opportunity to further strengthen its position as a key stabilising factor in the Western Balkans through accelerated reforms, institutional alignment with the European Union and a responsible regional policy. At the same time, the European Union is called upon to show greater strategic consistency, given that enlargement policy today is not merely an administrative process, but also a matter of the long-term security, political cohesion and geopolitical stability of the European continent.
In IFIMES’s view, relations between Serbs and Bosniaks are among the most sensitive and strategically important factors of political stability in the Western Balkans. They go beyond the bilateral framework and have direct implications for the stability of Serbia and Bosnia and Herzegovina, as well as for the wider security and political architecture of the region.
The normalisation and long-term improvement of these relations are considered crucial for overcoming historical burdens, political tensions and mutual mistrust, which continue to shape regional dynamics today. In this respect, the issue is not only political, but also social, security-related and developmental, with a direct impact on the functioning of institutions and the level of regional cooperation.
IFIMES underscores that sustainable stabilisation requires continuous, institutionalised and long-term political dialogue, rather than contacts limited to occasional or crisis-driven exchanges. Mutual respect for political positions, identity sensitivities and the legitimate interests of all actors is equally important, as is the gradual de-escalation of confrontational rhetoric, which further hampers the building of trust. To this end, both sides should work more actively to launch dialogue without delay, thereby creating the necessary conditions for the inclusion of Bosnia and Herzegovina in a broader EU integration package.
Particular emphasis is placed on bolstering shared economic and development interests. In this regard, economic cooperation, infrastructure connectivity and joint regional projects serve as vital mechanisms for long-term stabilisation. Economic interdependence and shared development capacities can help counterbalance political tensions and encourage practical cooperation within a more stable regional framework.
IFIMES concludes that lasting political stability in both Serbia and Bosnia and Herzegovina—and indeed the sustainable stability of the Western Balkans at large—is unattainable without stable, predictable, and constructive relations between Serbs and Bosniaks.
Within this same framework, regional stability also remains linked to the situation in Kosovo and the continuation of the EU-mediated dialogue between Belgrade and Pristina. The announcement of early parliamentary elections scheduled for 7 June 2026 further increases political uncertainty, while a lack of institutional transparency and inclusive dialogue risks deepening existing polarisation and slowing both regional stabilisation and European integration.
IFIMES points to the importance of the recent “TradFest” conference in Zagreb, where representatives of radical right-wing circles discussed the region’s future security architecture, the position of Bosnia and Herzegovina and the possible reconfiguration of geopolitical influence in the Western Balkans. The event, organised by ultra-conservative structures with the backing of certain international and regional actors, made the issue even more politically sensitive.
Against this backdrop, the resurgence of narratives concerning “new maps”, informal spheres of influence and the political restructuring of the region poses a potential threat to long-term stability. Any renewed discussion of Bosnia and Herzegovina’s internal territorial reorganisation is particularly concerning, including ideas about the so-called “third entity”, which is viewed as a serious challenge to the constitutional and legal order and as a destabilising factor in the wider regional context. The situation is further complicated by past “non-paper” proposals, which segments of the public associated with various regional actors, including Croatia, and which opened the way to speculative interpretations and heightened political tensions.
IFIMES stresses that all political actors in the region have a responsibility to pursue de-escalation and constructive engagement, rather than deepen divisions through competing interpretations of European values. Stability in the Western Balkans cannot rest on concepts of ethnic territorialisation, but only on stronger institutions, the rule of law and consistent respect for the sovereignty and territorial integrity of states.
Attempts to establish parallel political and institutional mechanisms outside formal state frameworks are particularly concerning, especially in Bosnia and Herzegovina, as they could lead to further ethnic and political fragmentation, institutional weakening and rising regional tensions.
Consequently, there is a clear emphasis on the need to reinforce political dialogue within the region by involving parliamentary parties, the academic community and civil society, with a view to establishing a new regional platform for cooperation, anchored in European values, economic connectivity and mutual trust.
Within this framework, IFIMES views the messages from President Aleksandar Vučić as encouraging, particularly concerning the vital importance of fostering and maintaining good relations between Serbs and Bosniaks, which represent one of the key prerequisites for the stability of Serbia, Bosnia and Herzegovina and the wider region.
In the economic sphere, IMF projections for 2026 point to Serbia’s real GDP growth of 3 to 4%, inflation ranging from 3.2 to 4.0% and an unemployment rate of between 8.4 and 8.8%. The fiscal position remains stable, with the deficit below 3% of GDP and public debt at around 46–47%. At the same time, the negative current account balance of -5 to -6% of GDP reflects the largely investment-driven nature of imports and a sizeable trade deficit. These indicators suggest a stable macroeconomic framework that could improve further in the coming period, particularly through a stronger investment cycle and the seasonal effect of summer activity.
For 2026, Serbia also has a projected economic growth rate of around 2.8%, with expectations that growth could reach 3%, supported by a stronger construction sector and continued investment momentum. In the medium term, Serbia’s economy is expected to grow faster than the global average in 2027, and even twice as fast as advanced economies. In the first quarter of the current year, growth is expected to stand at around 3%, or between 3.0 and 3.1%, while Serbia allocates around 7% of GDP to capital investment, ranking it among countries with a substantial level of public investment.
The current year is viewed as more economically successful than the previous one, confirming the continuity of positive trends, while also pointing to the need to continue structural reforms. It is stressed that far-reaching changes and demanding reform measures are necessary to maintain development momentum, particularly with regard to increasing labour productivity and strengthening workforce engagement.
IFIMES assesses that Serbia’s macroeconomic policies show resilience amid global uncertainty, but at the same time warns of pronounced geopolitical risks, external vulnerabilities and the need for deeper structural reforms, particularly in the areas of the investment climate and institutional predictability. The country’s structural potential stems from its demographic and market capacity, industrial base, export orientation, infrastructure and energy development and the continued inflow of foreign direct investment.
Serbian President Aleksandar Vučić has singled out energy security, the development of nuclear and modular power plants and reforms in the education and security sectors as particularly important. He also points to the pivotal role of foreign direct investment, which surpassed €3.5 billion in 2025.
IFIMES maintains that stabilising the energy sector and finalising key strategic arrangements, including the issue of the Petroleum Industry of Serbia (NIS), are crucial for further growth in living standards and the planned increase in pensions. In this regard, resolving the ownership and governance structure of NIS is essential to safeguarding the state’s long-term energy and economic stability.
Viewed through a wider analytical lens, Serbia is carving out a position defined by three primary roles: as a political stabiliser in the region, as a subject of European transformative policy and as a geopolitical factor in the broader European stage. IFIMES concludes that 2026 may offer a relatively positive economic outlook, albeit against the backdrop of an increasingly complex and volatile global landscape.
Recent analyses by the International Institute for Middle East and Balkan Studies (IFIMES) characterise Serbia as a state navigating a phase of marked strategic ambivalence, in which the process of internal political consolidation intersects with the complex dynamics of foreign policy positioning. Especially notable is Serbia’s balancing act between the European integration agenda and functional relations with alternative centres of power, alongside the gradual thawing and improvement of relations with the United States of America, while maintaining good relations with Russia and China. While this multi-vector foreign policy affords a degree of diplomatic flexibility, it also generates long-term uncertainty concerning Serbia’s full alignment with the European Union’s Common Foreign and Security Policy.
Domestically, the political climate is defined by centralised decision-making, an asymmetrical relationship between the executive branch and institutions and persistent challenges related to the rule of law, media freedoms and the functioning of the opposition spectrum. In IFIMES’s analyses, these factors are associated with a slower pace of democratisation and institutional consolidation.
The process of normalising relations between Belgrade and Pristina occupies a special place. It is regarded not only as a pivotal test of the credibility of Serbia’s European path but also as a fundamental factor shaping regional stability in the Western Balkans. The persistent implementation gap between agreements reached and their application in practice remains a primary obstacle to further progress.
On the economic front, Serbia demonstrates relative macroeconomic stability and growth. However, this is tempered by notable structural vulnerabilities, reflected in dependence on foreign direct investment, significant regional disparities and underdeveloped institutional capacities. Consequently, economic progress has yet to translate into a comprehensive structural transformation of both the economy and society.
The International Institute IFIMES considers that Serbia’s defining feature is its ability to balance diverse geopolitical and domestic pressures. This prolongs the country’s transitional political and economic character, while at the
[1] IFIMES - International Institute for Middle East and Balkan Studies, based in Ljubljana, Slovenia, has a special consultative status with the United Nations Economic and Social Council ECOSOC/UN in New York since 2018, and it is the publisher of the international scientific journal "European Perspectives." Available at: https://www.europeanperspectives.org/en
