The United States is repositioning its approach in the Western Balkans toward what it describes as “mutually beneficial partnerships” and away from large-scale state-building efforts, while warning that Russia and China continue to exploit regional vulnerabilities, according to a State Department report to Congress.

The report, titled Report to Congress on United States Policy to Promote Regional Stability and Prosperity in the Western Balkans, says US engagement is now focused on stability, economic cooperation and countering external interference rather than direct governance oversight.

“The US-led nation-building era has passed,” the document states. “US policy in the Western Balkans is not about rescue or reconstruction, but stability and mutually beneficial partnerships.”

It adds that Washington is pursuing a “forward-looking policy… focused on expanding partnerships, countering threats that affect the United States and regional stability, and increasing economic and commercial cooperation.”

Officials say the region remains strategically important due to its geographic position, transport corridors, natural resources and proximity to EU markets, but warn that “malign actors can exploit regional instability to the detriment of US interests.”

The report says senior US officials have maintained “a robust tempo of meetings” with all six governments since January, and outlines plans for structured 2026 dialogues with North Macedonia and Serbia.

Stability first

A key theme of the report is continuity in Washington’s support for regional stability, but with a more restrained role in direct governance intervention.

“The primary pillar of the Administration’s policy is maintaining stability in the region as a prerequisite for achieving other objectives,” it says.

In Bosnia & Herzegovina, the United States reiterates its commitment to the 1995 Dayton Peace Agreement, describing it as the foundation of the country’s sovereignty and territorial integrity.

“In 2025, decisive US diplomacy helped end BiH’s most acute crisis since the 1992-1995 conflict, while preserving the country’s legal cohesion and constitutional order,” the report says. It adds that Washington will continue to discourage “destabilising and divisive actions”. 

The document also highlights ongoing efforts to normalise relations between Serbia and Kosovo, saying the goal remains “a negotiated, durable agreement acceptable to both parties.”

The report reaffirms US participation in Nato’s Kosovo Force (KFOR), describing it as “a key component to ensuring a safe and secure environment and freedom of movement in Kosovo.”

It also signals continued support for defence modernisation across the region, encouraging countries to meet Nato capability targets, including a controversial reference to a 5% of GDP defence spending benchmark agreed at the Hague Summit.

“The Administration will leverage security cooperation activities, including joint exercises, training, and advisory programs, to advance burden-sharing with European partners and Allies,” it says.

Destabilising actors

The report is explicit in identifying both Russia and China as destabilising external actors in the region.

“Malign actors can exploit regional instability,” it says, adding that Moscow “fuels ethnic grievances, finances destabilising actors, and leverages hydrocarbon supplies to pressure politicians and weaken public confidence in Western institutions.”

China, meanwhile, is described as using “trade, state-backed loans, bribes, propaganda, and elite-level partnerships” to expand its influence in countries with weaker governance systems.

“Chinese companies often underbid on procurements, only to later reveal cost overruns and project delays that greatly increase true costs,” the report states.

Officials argue that stronger institutions, economic growth and transparency are the “most durable defense” against external interference.

A major section of the report focuses on energy security, which Washington describes as a strategic vulnerability due to continued reliance on Russian supplies.

“Energy dependence on Russia remains a strategic vulnerability in the region,” it says.

The document calls for diversification through US liquefied natural gas, nuclear technology — including small modular reactors — and renewable energy. “Diversifying energy supplies, including with abundant US energy sources, enhances regional stability and prosperity,” it adds.

It highlights a series of infrastructure priorities, including the Southern Interconnection pipeline between Croatia and Bosnia, a proposed Serbia-North Macedonia gas interconnector, and hydropower projects across the region.

The report also mentions upgrades to Kosovo’s coal-fired power plants and possible coal gasification projects, alongside electricity transmission links to European markets.

“The Department will engage actively to translate regional interest into commercial deals,” it says, stressing that US private sector involvement is central to reducing reliance on Russian gas and improving market access for American firms.

From aid to deal-making

The report places strong emphasis on commercial diplomacy, describing the Western Balkans as a region of “economic opportunity” with a population of around 18 million.

“Market access is foundational,” it states, noting ongoing negotiations on reciprocal trade agreements with North Macedonia and Serbia.

A framework agreement with North Macedonia is described as offering US exporters “unprecedented access” to that market.

The report also highlights coordination between the State Department and agencies including the US International Development Finance Corporation, the Export-Import Bank and the Trade and Development Agency to support investment deals.

It identifies weaknesses in infrastructure, digital connectivity and governance as barriers to investment.

“Physical transport networks lag European standards, raising costs for businesses and limiting market integration,” it says, while also noting “uneven high-speed broadband coverage” and “insufficient cybersecurity capacity.”

Weak governance is described as a driver of corruption and organised crime, which the report says directly affects US national security interests.

“Western Balkan criminal networks have established connections that strengthen and enrich… foreign terrorist organisation-designated drug cartels,” it says, adding that Washington will continue efforts to dismantle such groups.

Unresolved contradictions

The report has been broadly interpreted as reaffirming long-standing US policy goals, while also raising questions about enforcement and political consistency.

“The release of the State Department’s report… is the most coherent articulation of US regional policy which we have received to date,” said analyst Jasmin Mujanović in comments on social media.

He said the document largely mirrors previous administrations’ priorities. “The Europeans will be alarmed at the non-appearance of the EU in the document,” he wrote, adding that this reflects “the reality on the ground” and Washington’s longstanding view of limited EU effectiveness in the region.

He noted that themes such as stability, institutional reform, Nato cooperation and countering Russia and China remain intact, saying: “Even Nato enlargement gets a tacit nod.”

However, Mujanović questioned whether the policy outlined is being consistently applied in practice. “The central question… is whether this is, in fact, the genuine direction of US policy in the region,” he said.

He pointed to apparent inconsistencies, including Washington’s decision to lift sanctions against Bosnian Serb leader Milorad Dodik’s political network despite continued secessionist rhetoric in Bosnia’s Serb-dominated entity.

He also highlighted the lack of clarity on governance standards and legal benchmarks, asking whether Washington supports reforms aligned with European Court of Human Rights rulings or is open to political compromise deals with local leaders.

High representative's resignation

The report comes amid lingering regional uncertainty following the recent resignation of Bosnia’s international high representative, a position created under the Dayton Peace Agreement to oversee civilian implementation of the 1995 accord.

Christian Schmidt stepped down after reported pressure from Washington, according to regional diplomatic sources, marking a significant shift in the international supervisory framework that has long underpinned Bosnia’s post-war governance.

While the State Department report does not directly address the resignation, it emphasises a reduced appetite for “overreliance on international intervention or supervision” and instead encourages “locally driven solutions.”

The report concludes by framing US engagement as increasingly transactional but still strategically anchored. “Administration resources are directed toward activities that produce clear, demonstrable benefits for American interests,” it says, prioritising “deal facilitation, market access, and investment climate reforms” over open-ended institution building.