Teaming Up to Compete: How the EU and the United States Can Manage Geopolitics In the Western Balkans

As the EU and the United States enter new leadership cycles, the Western Balkans may not top their agendas. Ongoing wars in Ukraine and the Middle East will demand their focus, alongside domestic challenges. The United States will be consumed by forming its new administration and navigating a reconfigured Congress, while Europe’s core remains fragile, with France’s Macron struggling to stabilize yet another government and Germany’s Scholz facing elections that could spell his political downfall.

Nonetheless, the EU and the United States remain key partners for the Western Balkans. The EU accounts for over 66% of the region’s trade and maintains strong institutional ties with all six countries through its accession policy. Both powers are key security players via EUFOR and KFOR operations. While the United States has seemed less visible recently, it retains significant diplomatic influence. Last September, US intelligence exposed Serbian troop movements near the Kosovo border, forcing a stand-down. It also imposed sanctions on pro-Russian Serbian politicians in Bosnia and Serbia, leading to the (temporary) dismissal of Serbia’s sanctioned intelligence chief, Aleksandar Vulin.

In the Western Balkans, reactions to Donald Trump’s return were largely positive—hardly surprising, as leaders from across Europe are courting the president. The lesson is clear: under Trump, the United States will remain central to Europe’s security and economy, making a working relationship essential.

This relationship will be crucial for future EU-US cooperation in the Western Balkans, and for avoiding past missteps. During Trump’s first term, a controversial Serbia-Kosovo deal, clashing with the EU’s Belgrade-Pristina diplomacy, raised eyebrows: the normalization deal was not legally binding, had little effect on the ground, and committed Belgrade and Pristina to move their embassies to Jerusalem, a move that directly contradicts EU policy. 

Moving forward, tensions between Serbia and Kosovo will remain a key issue. Last year’s Banjska attack, in which Serb terrorists stormed a monastery in northern Kosovo, resulted in four deaths including that of a Kosovo police officer. More recently, an explosion hit a key aqueduct in Kosovo, an incident the EU has classified as a terrorist attack.

Aside from security, countering geopolitical competition—particularly China’s influence—was central to the first Trump administration’s approach to the region. The Western Balkans were a key part of China’s 17+1 (now 14+1) investment spree under the Belt and Road Initiative. As part of Washington’s diplomacy, Serbia pledged to exclude Huawei from its 5G infrastructure, though Huawei opened a hub in Belgrade days later. Meanwhile, the EU lost out to China in COVID diplomacy: initally excluded from the EU’s support umbrellas, the region turned to China, with Serbian President Vučić personally welcoming Chinese aid.

The EU has since course-corrected. Facing a new geopolitical reality, it has understood the urgency of updating its enlargement policy to remain appealing. It is now strengthening its ties with the region, offering new investments. Its key initiative is the Growth Plan for the Western Balkans, which aims to accelerate the region’s entry into the EU Single Market and foster economic integration. Through its Reform and Growth Facility, the EU plans to disburse €4 billion in grants and €2 billion in loans over the next three years. While critics in the region argue that this may not be enough to drive significant change, it underscores the EU’s commitment to boosting investment in the Balkans. 

This year alone, an impressive number of investment deals were announced—though many of them are hotly contested. In February, Italy’s controversial migrant return hub deal with Albania was sealed; in July, Germany brokered a deal between Serbia and the EU on lithium mining; and in August, France struck a €2.7 billion deal with Serbia for twelve Rafale fighter jets. Meanwhile, Jared Kushner, Trump’s son-in-law, made controversial real estate investments in Albania and Serbia.

Investment in the region is crucial for economic growth and integration, but such dealmaking, often lacking public scrutiny, risks sidelining efforts to improve democratic governance and emboldening autocratic leaders. The EU’s lithium mining project has sparked protests in Serbia over environmental risks, despite the EU’s criticism of Chinese investments for similar concerns. The collapse of a Chinese-built railway station in Novi Sad, which killed 14 people, has sparked widespread protests and fueled accusations of corruption, poor oversight, and substandard construction practices.

EU and US leaders must address these concerns and ensure that future investments in the region focus not just on countering competition with China and others, but also on upholding the rule of law. This is key to creating a secure investment environment and fostering long-term economic competition while improving democratic governance. Values should not be sacrificed for interests.

The EU will likely need to take the lead on the Western Balkans, using its economic and political tools, but must coordinate with the United States to align priorities: managing competition and security sustainably. The EU and the United States must pull together, not apart.

Find the recording of GMF’s webinar The EU and the United States in the Western Balkans: Aligning Priorities for Cooperation here.