The Western Balkans are back in the headlines. Not because of wars, but because of a quieter contest: a geoeconomic battle for influence that pits Brussels against Beijing, Moscow and the Gulf. Sibil Svilan, a development economist and former director of Slovenia's SID Bank, believes 2026 is "the final warning" for the region. Either it commits to the European path, or it drifts into a permanent grey zone.
The old levers of diplomacy and military posture have given way to economics as "the main weapon", Svilan argues. With transatlantic coordination weaker than at any point since the Cold War, a vacuum has opened. Third countries are filling it. Their media and services now shape the region's internal politics directly.
A new weight for old players
China, by some measures the world's largest economy since 2025, is moving in with infrastructure projects, state-backed credit and resource deals. The benefits are immediate; the risks are not. Long-term political dependence, erosion of EU reform momentum, weakened rule of law. Russia's footprint remains significant in energy and information space, particularly in Serbia. Much depends on the war in Ukraine, Svilan notes, and whether a "southern front" ever opens. That would pull the Balkans into fresh instability.
Arab and broader Muslim influence is growing too, financially and politically, and further straining Bosnia's fragile ethnic balance. Thirty years after Dayton, US attention has drifted elsewhere. The architecture that ended the war is showing its age.
The greatest strategic risk for the EU
The stall in EU accession is becoming the bloc's greatest strategic liability, Svilan warns. Slovenia is exposed too. Any talk of a "Western Balkans Switzerland", with small states carving out roles as neutral financial hubs, is wishful thinking. External pressure and a fragmented EU policy, in which member states chase bilateral interests while fixating on Ukraine, are deepening political apathy across the region.
The Balkans remain more vulnerable than stable, "fraught with pitfalls", in Svilan's phrase. But the opportunities outweigh the risks: economic development, infrastructure, rising living standards, access to EU markets and global value chains. The question is whether anyone will act in time to realise them.
What must happen in 2026
Three conditions, Svilan argues, will determine whether the region succeeds: peace in Ukraine, faster and better-coordinated Western support, and the willingness of local actors to reform and resist outside influence. Without all three, the Balkans will increasingly turn to "tempting Arab and Chinese offers".
He calls for far greater economic cooperation between the EU, the US and the region, with transparency requirements on foreign investment and consistent conditionality on environmental and social standards. Public administration and procurement need reform. Local institutions and civil society need strengthening. These are the first line of defence against corruption and hybrid interference.
Finance matters. Development banks, insurers and pension funds have a role to play. But Svilan warns of fiscal fragility across the region and the ever-present risk of a new financial crisis.
Sustainability, circularity and citizens' savings
The region has domestic resources it has not yet learned to use. Citizens' savings are substantial; so are institutional reserves. The right financial instruments could channel this capital into development projects that meet environmental and social goals. Sustainability and circularity must become organising principles: diversified energy, efficiency investment, regional connectivity. Slovenia, Svilan notes, stands to gain.
If the Balkans seize these opportunities and Europe offers a clearer path, the payoff is real: mutual benefit, long-term development, lasting peace. But the current mode of EU policy has to change. Not just for the Balkans' sake. Europe needs to understand its own geopolitical position, and right now it does not.