From stabiliser to dealmaker? Trump 2.0 and the Western Balkans

First, it has bolstered security by expanding NATO membership to half the region’s states and maintaining a military presence in Kosovo. Second, it has played a diplomatic role by brokering key political agreements, such as the Dayton Accords and the Brussels Agreement, while leveraging coercive measures like sanctions. Third, it has supported economic development through government-backed investments, private sector engagement, and initiatives promoting regional trade. Together, these efforts have aimed to advance both regional stability and Euro-Atlantic integration, the latter of which is to culminate with accession to membership of the EU.

That paradigm is likely to shift under the second administration of US President Donald Trump. This is not Trump’s first rodeo. His previous administration was largely disengaged from the Western Balkans, leaving the existing framework remaining mostly intact while adopting a more openly transactional approach to authoritarian leaders. It emphasised economic cooperation – underwritten by US investment – as an incentive to normalise Serbia-Kosovo relations, while locking out Chinese competition.

In practice, the shift under Trump was tonal rather than substantive. President Joe Biden’s administration ultimately followed a similar approach but with a different spin. US engagement was framed around democracy and values, but regional stability was prioritised over democratic improvement, with governments being presented with carrots and sticks to counter Russian and Chinese influence. Values were subordinate to realpolitik and mercantilism.

Looking ahead, the second Trump administration is unlikely to show greater interest in the Wester Balkans, but broader changes in US foreign policy will have direct consequences for the region. Indeed, Trump’s long-standing hostility toward NATO, coupled with his transactional approach to diplomacy, could potentially leave the Western Balkans without an important mediator at the same time as its security architecture faces profound changes.

Security

The security architecture of much of the Western Balkans is built upon NATO, of which the US is the dominant state. Albania, Montenegro and North Macedonia are all members of the alliance, while Kosovo is a protectorate. These states may – in theory – count on the support of their NATO allies, including the US, in the event of armed conflict.

Yet the signs are that the Trump administration will reduce US military commitments abroad, including in NATO missions. The objective is to pressure Europe to assume primary responsibility for its security and that of its neighbourhood. That is already evident in Ukraine, with the Trump administration suspending the provision of military aid and sharing of intelligence.

The lowest hanging fruit for the Trump administration in the Western Balkans is the Kosovo Force (KFOR), which is the military backstop of the country – and without which it would be unable to defend itself independently. KFOR draws troops from multiple NATO countries, and US forces account for roughly 14% of its total strength, or 600 troops. The US also heads KFOR’s main military base in Kosovo, camp Bondsteel, which serves as the largest US military base in the Western Balkans and has regularly provided arms and military equipment to the Kosovo Security Force (KSF) to strengthen its security capabilities.

No announcement has yet been made nor is it a given. Matthew Whitaker, Trump’s nominee for NATO ambassador, has reaffirmed US commitment to the alliance more generally. Yet the scale of upheaval thus far as regards Trump’s policy towards Europe indicates that it is a strong possibility. Indeed, indications of US disengagement from the regional security have already materialised, with the US opting out of participation in “Steadfast Dart 2025”, a large-scale combat exercise held in the Balkans and Black Sea region which the US would either have led or played a central role in.

A US pullout would not necessarily lead to KFOR’s dissolution, but it would undermine its deterrent value and increase the burden on European NATO members. Turkey, which has the second largest contingent of troops in KFOR, would increase in importance. Already in December 2024 it deployed additional personnel and intensified training of the KSF. However, the extent to which NATO partners would fill a US-shaped void remains uncertain, particularly given ongoing security commitments in Ukraine and the Black Sea.

Elsewhere, US military aid and arms transfers to the Western Balkans have also entered a period of uncertainty. The administration’s 90-day freeze on foreign assistance, introduced by Secretary of State Marco Rubio in late January 2025, has effectively placed all security aid under review. The key programmes in this regard are Foreign Military Sales (FMS), Foreign Military Financing (FMF) and Excess Defence Articles (EDA). While FMS will continue, changes to FMF and EDA are likely given that they are based on grants, of which the Trump administration is sceptical.

These changes indicate that US engagement with regional security will be conditional and selective, at best, driven not by long-term alliance-building, but an assessment of whether such support delivers immediate and tangible returns. Yet this threatens to increase the unpredictability of the security environment as state-sponsored actors in the region are emboldened. Incidents such as the attack on Kosovo’s Banjska monastery by Serb militants in September 2023 will become more likely.

Diplomacy

The diplomatic approach of the Trump administration is likely to echo his past efforts, scaling back engagement unless it sees clear opportunities for quick and symbolic ‘wins.’ A precedent is this regard is provided by the Kosovo and Serbia economic normalisation agreements, which were by the Trump administration in 2020. This was a wish list of cross-border economic initiatives, the implementation of which was expected to incentivise further cooperation. Yet the agreements yielded no results. Of the 16 commitments in the 2020 Accord, only three have been fully implemented over the past five years.

Five years on, the approach of the Trump administration to peace negotiations between Russia and Ukraine is providing clues as to possible proposals. The prospect of withdrawing military support is being used to pressure Ukraine into negotiations, while there is open sympathy towards Russia despite – or even because of – its aggressor status. Occupied Ukrainian territory is being recognised as Russian, while any security guarantee likely to be enjoyed by Ukraine will at best be implicit, relying on the US stake in its mineral reserves – the exploitation of which will not yield results for a decade.

In the Western Balkans, a flashy “big deal” moment between Serbia and Kosovo could include a land swap, an idea previously mooted by the first Trump administration. This agreement would involve swapping territories based on ethnic majorities, with Serbia receiving Serb-majority areas in northern Kosovo and Kosovo receiving Albanian-majority populated areas in Serbia like the Preševo valley.

Though superficially appealing as a simple transactional fix to a frozen conflict, it would face obstacles. First, it is highly divisive even within Trump’s circle. Second, the Kosovan government is led by prime minister Albin Kurti, whose Self-Determination Movement (LVV) is vehemently opposed to any such solution. Yet following the loss of its absolute majority in parliamentary elections in February, LVV will require a coalition partner, the reliability of which is not guaranteed. Indeed, in 2020 Trump’s special envoy to the Western Balkans, Richard Grenell, colluded with LVV’s then coalition partner to form an alternative majority and oust the party from government.

Such a deal would also set a destabilising precedent for Bosnia and Herzegovina. The territorial entity of Republika Srpska, led by Milorad Dodik, continues to play a game of chicken as it calls for secession and the formation of a federation with neighbouring Serbia. Dodik previously bemoaned that he did not capitalise on the opportunity afforded by the previous Trump administration to advance his agenda. If land swaps are on the table, it will provide Dodik with diplomatic cover to terminate the post-Dayton Bosnian state.

Dodik’s persistent attempts to destabilise Bosnia resulted in his being listed under US sanctions. Across the Western Balkans, sanctions have functioned as the stick that accompanies US diplomatic efforts, pressuring political leaders to comply with peace agreements, democratic reforms, and geopolitical alignments, while also punishing corruption. The Biden administration, during its last week in office, renewed existing sanctions pertaining to the Western Balkans, broadening the criteria for blocking property and suspending entry into the US for individuals or leaders of companies involved in activities which threaten peace, security and stability in the region. Besides Dodik, noteworthy individuals and businesses listed under US sanctions in recent years include Serbian deputy prime minister Aleksandar Vulin, former Albanian president Sali Berisha, Serb Kosovan politician Milan Radoicic as well as Serbia’s main oil company NIS, which is owned by Gazprom.

Since taking office in January 2025, the Trump administration has not lifted any existing sanctions, but it has also not imposed any new ones. The tonal shift from a values-based to transactional approach to the Western Balkans could ease sanctions enforcement, giving individuals under or at risk of sanctions to operate with impunity.

The risk of such a shift becomes even greater in the context of a potential US rapprochement with Russia. Closer relations between the two countries might result in the lifting of sanctions on (pro-)Russian individuals and businesses, including in the Western Balkans.

On the other hand, it is possible that the Trump administration will use sanctions to pressure politicians into compliance with its priorities. This could extend to politicians close to the Euroatlantic orbit. Kosovan prime minister Albin Kurti, for example, is widely disliked by officials in the Trump administration and would be a prime target for pressure in this regard.

These changes would have profound consequences for Western Balkan states’ fragile progress in anti-corruption efforts and the rule of law. Enabling corrupt networks to maintain or even regain influence would significantly slow down the Western Balkans’ already complicated path toward EU accession.

Economic engagement

President Trump has consistently sought to reshape international agreements into business-like deals where the US benefits directly, typically through sales or investments rather than grants or loans. This strategy has led to a shift away from arrangements that foster long-term partnerships and development towards undisguised commercial arrangements.

Furthermore, the administration has little interest in upholding anticorruption standards. In February, it suspended the Foreign Corrupt Practices Act on the grounds of national security, which it tied to US companies’ ability to secure “business advantages” in strategic sectors such as critical minerals, deep-water ports and infrastructure. This strategy is likely to be applied in the Western Balkans as US businesses try to gain the upper hand over Chinese competitors, in particular.

Although it is an Anglo-Australian venture, Rio Tinto’s lithium mine in Jadar, Serbia, is a key example of the kind of projects that align with the strategic priorities of the Trump administration. The project provides Western investors control of critical minerals which will supply Europe. It has also been controversial, prompting nationwide public protests due to concerns over environmental damage, lack of transparency, and the perceived prioritization of corporate and geopolitical interests over local communities.

The Trump administration will also continue to create opportunities to facilitate the entry of liquified natural gas (LNG) into the region. For example, it is likely to push for the realisation of the proposed LNG terminal in the port of Vlora in Albania, the development of which has stalled.

Projects which the Trump administration deem to be of limited strategic value face the risk of revision or cancellation, especially if they are funded by federal grants and target areas such as climate resilience and governance. Many are already being axed with the abolition of most programmes under USAID, which alone provide $400 million in funds annually to Western Balkan states. Projects under financing agencies such as the Development Finance Corporation (DFC) and the Millennium Challenge Corporation (MCC) are at risk, including those of large-scale. An example is the MCC-Kosovo Compact, a $200 million grant that was launched in 2024 to fund the development of a battery energy storage system to improve the reliability of electricity while integrating renewables into the grid.

More generally, as the Trump administration deprioritises standards of good practice, bribery and corruption may increase. Investments could become less transparent, with businesses colluding with local stakeholders to circumvent regulatory processes. If this occurs, US investments in the Western Balkans risk becoming “corrosive,” exploiting governance gaps in a way that reinforces state capture and ignores wider institutional and social impacts. Corrosive capital is typically associated with authoritarian regimes, such as Russia, China and Turkey, but may equally apply to states such as the US.

Indeed, the Western Balkans has emerged as a key hub of Trump’s family interests. In 2024, Affinity Partners, the investment vehicle of Trump’s son-in-law Jared Kushner, received a 99-year permit to develop a luxury hotel in Belgrade on a site that was bombed by NATO in 1999. Elsewhere, in January 2025, Affinity Partners received Strategic Investor Status from the Albanian government, allowing it to proceed with the development of a $1.4 billion luxury resort on the island of Sazan. Then, in March, Donald Trump Junior conducted a televised interview with Serbian President Aleksandar Vucic as a show of political support.

These indicators are far from combining into a systemic issue for US state-backed investments. Yet if the US neglects to promote transparency in investments, as it has done traditionally, the Western Balkans may face a competitive environment where American, Chinese, and Russian investments operate with equally weak governance safeguards.

Outlook

In one sense, the Western Balkans is of limited interest to the Trump administration as its combined economic clout is modest. Yet it is also of strategic significance because of its proximity to the EU as well as the keen interest that states such as China, Russia and Turkey have in the region.

The policy changes enacted by the Trump administration reduce the incentive for states in the region to improve their governance and institutional quality. This does not mean that the regional policy of past administrations was ever perfect. In most cases, the status quo has been accommodated as autocratic or otherwise corrupt politicians have disingenuously positioned themselves as guarantors of stability.

Yet with Trump’s approach, there is a risk of a race to the bottom in the Western Balkans as the US competes in a way that is cynically as well as aggressively commercial. This is not inevitable. Other foreign powers, chief among them the EU, as well as local actors have the power to prevent this.

Indeed, the region is at a critical juncture. In Serbia, the position of President Aleksandar Vucic is in deep peril as students lead nationwide protests over the corruption that led to a fatal accident at Novi Sad train station in November. In Bosnia, Republika Srpska leader Milorad Dodik faces a one-year prison sentence over his attempts to undermine the constitutional order. In Montenegro, a fractious but pro-European coalition defeated longtime leader Milo Djukanovic in 2023.

Though welcome for the prospects of reform, such upheavals do pose risks to stability. If the result is widespread violence, it is unclear how the Trump administration will respond, assuming it has any interest at all. As the situation stands, the ball is firmly in the court of the EU, which cannot any longer rely on strategic caution in the region.

The second Trump administration is set to reshape US engagement in the Western Balkans, creating a more volatile investment climate where political access will outweigh institutional stability. Sanctions policy will be unpredictable, potentially easing restrictions on some actors while selectively enforcing economic pressure elsewhere, requiring careful compliance monitoring.

Meanwhile, US investment is likely to become more corporate-driven, with high-profile deals in energy and infrastructure but fewer governance safeguards. Investors should prepare for a higher-risk environment, where navigating political alignments will be key to securing opportunities and mitigating exposure to geopolitical shocks.

Marcus How is head of research & analysis and Benedetta Locatelli is junior analyst & researcher at ViennEast Consulting in Vienna. This article was originally published on SeeNews.