Since 2022, Europe’s strategic environment has undergone its most significant transformation since the end of the Cold War. Russia’s invasion of Ukraine shattered longstanding assumptions about the resilience of the post-1991 security order and reintroduced large-scale military force as a central instrument of statecraft. While institutions and governments condemned the aggression, their inability to deter or prevent it exposed fundamental weaknesses in the European security architecture. This shift has been especially consequential for Southeastern Europe (SEE), a region where historical disputes, fragile political systems, and competing external influences create fertile ground for instability.

The Western Balkans—situated at the crossroads of Central Europe, the Eastern Mediterranean, and Eurasia—remain Europe’s geopolitical fault line. Despite two decades of NATO enlargement and extensive Western engagement, unresolved tensions persist, from the status of Kosovo to the political fragilities of Bosnia and Herzegovina. Expectations that NATO membership or Euro-Atlantic integration would decisively neutralize security risks have not been met. Instead, strategic uncertainties have deepened, magnified by debates over burden sharing and the credibility of collective defense. This unease intensified in early 2025 when U.S. Vice President JD Vance questioned NATO’s Article 5 commitments at the Munich Security Conference, raising fears of potential strategic abandonment.

In response, SEE states have begun recalibrating their defense strategies. Across the region, bilateral and trilateral defense agreements—such as the 2025 Croatia-Albania-Kosovo Joint Declaration or Serbia’s expanding cooperation with Hungary—signal a move toward self-help mechanisms that operate alongside, or in place of, traditional alliance structures. These dynamics are paralleled by a sharp rise in defense spending: between 2020 and 2025, military budgets increased by 40 to 120 percent across key states. Modernization programs now include advanced aircraft, air defense systems, armored vehicles, and unmanned platforms, supported by the rapid growth of domestic industries such as Croatia’s Đuro Đaković and Serbia’s Yugoimport SDPR.

These shifts position the Western Balkans not as a peripheral zone but as an increasingly active theatre where global competition, regional modernization, and shifting alliance politics intersect. This paper examines how geopolitical uncertainty, rearmament trends, and divergent security partnerships are reshaping the region’s defense landscape, and assesses the opportunities and risks associated with deeper integration into Euro-Atlantic structures.

The Historical Background and the Current Security Situation

In the Western Balkans, a region marked by centuries-old ethnic tensions and the lingering impact of the 1990s Yugoslav wars, persistent instability has triggered strategic rethinking. The hope that NATO accession would resolve recurring security crises was a central motivation for the region’s countries. However, recent developments have not fulfilled this expectation. On the contrary, they reinforce the impression that even within the North Atlantic Alliance, national security in the region remains insufficiently guaranteed.

For this very reason, the Western Balkans, Europe’s geopolitical front yard, has once again moved into focus. The region, comprising Slovenia, Croatia, Albania, Bosnia and Herzegovina, Kosovo, Montenegro, North Macedonia, and Serbia, is home to around 18 million people and lies at a historic crossroads between Europe, Asia, and the Middle East.[1] For centuries, it has been the stage of shifting empires, trade routes, and conflicts. Today, it forms a strategically significant buffer zone along NATO’s southeastern flank. Its mountains, rivers, ports, and transport networks act as natural corridors and chokepoints connecting Central Europe to the Aegean, the Black Sea, and the Eastern Mediterranean.

The speech delivered by U.S. Vice President JD Vance at the Munich Security Conference on February 14, 2025, in which he questioned the reliability of NATO’s Article 5 (“The Parties agree that an armed attack against one or more of them in Europe or North America shall be considered an attack against them all…”) has further undermined confidence in collective defense. Vance’s remarks reflect growing U.S. concerns over NATO’s ability to respond cohesively amid rising tensions in Eastern Europe, unresolved questions over defense spending, and ongoing debates on burden-sharing and strategic priorities. Many NATO members have so far failed to meet the agreed target of spending up to two percent of their GDP on defense, signaling that the U.S. can no longer shoulder this burden alone.[2]

This is particularly concerning given the region’s strategic significance within Europe’s evolving security architecture, where it serves as a bridge between the EU, NATO, and the broader Eurasian sphere of influence.

Any doubt over Article 5 contributes to a gradual erosion of collective deterrence and its credibility, which represents one of the central risks to stability in the Western Balkans. States in the region are increasingly responding by establishing their own security guarantees and engaging in new multilateral defense initiatives.

Historically, the Western Balkans has always been a geopolitical triangle of tension, and even today, unresolved territorial questions continue to simmer among neighboring states that are not members of NATO. Kosovo, Bosnia and Herzegovina, and particularly the Republika Srpska (the Serb entity within Bosnia and Herzegovina) remain in a complex relationship with Serbia, whose unresolved post-Yugoslav disputes still carry significant conflict potential. The region’s institutional fragility makes it highly susceptible to external influence, with outside powers actively fostering political polarization and electoral manipulation.

While the accession of Croatia, Slovenia, Montenegro, Albania, and North Macedonia to NATO has helped stabilize the broader region over the past decades, the underlying tensions remain palpable and are at constant risk of escalation.[3] Especially those states not integrated into NATO’s institutional framework lack any form of security guarantees or mechanisms for potential mediation by the Alliance.

Reactions to the U.S. Vice President’s statements were swift. On March 18, 2025, Croatia, Albania, and Kosovo signed a Joint Declaration on Defense Cooperation in Tirana, providing for closer coordination in training, procurement, and logistics.[4] According to reports, Bulgaria is considering joining this alliance. Only weeks later, on April 1, 2025, Serbia and Hungary signed a strategic defense cooperation agreement in Belgrade, focusing on joint military exercises and the modernization of cross-border infrastructure.[5] Prior to this agreement between NATO member Hungary and Serbia, 26 BTR-80A armored personnel carriers (with about 60 more expected) and an unspecified number of MiG-29 fighter jets were delivered to Serbia, causing considerable irritation among other NATO partners in the region.[6]

Finally, on September 5, 2025, Slovenia and Croatia signed a bilateral military and defense cooperation agreement, which, according to the Slovenian government, aims to strengthen Southeastern Europe’s regional security architecture and complement existing NATO structures.[7]

The Region’s Arms Race and Multi-Billion-Euro Defense Industry

Another direct consequence of this geopolitical uncertainty is a massive military buildup across the region. Croatia, Albania, Kosovo, Slovenia, Montenegro, and Serbia have all significantly increased their defense budgets in recent years. Croatia increased its military spending from approximately €1.5 billion in 2023 to €1.63 billion in 2024 (+8.7%), with a planned budget of €1.8 billion for 2025 (approximately +10%), and a projected increase of 18.2% according to the Ministry of Defense.[8]

Serbia spent €2.32 billion in 2024 (+10.5% over 2023), with a further 8% rise expected in 2025—mainly for drones, air defense systems, and Israeli reconnaissance technologies.[9]

Montenegro raised its defense budget to €0.25 billion (+7%) in 2024 and plans another 5% increase in 2025 to meet NATO standards in logistics and communications.[10] Albania’s 2025 budget stands at €0.58 billion (+7.4%), after €0.54 billion (+8%) in 2024, primarily for NATO-compatible equipment and training.[11] Kosovo’s budget grew to €0.17 billion (+6.25%) in 2024 and is expected to reach €0.19 billion in 2025, focusing on expanding the Kosovo Security Force and counter-drone systems.[12] Slovenia allocated €1.25 billion in 2024 (+9%) and targets 1.53% of GDP in 2025, equivalent to €1.4 billion.[13]

Between 2020 and 2025, military spending across the region has risen sharply, with individual countries increasing their budgets by 40% to 120%. Old Soviet-era inventories are being replaced by modern Western systems, strengthening national security guarantees while integrating regional industries into NATO supply chains.

Arms Imports from Abroad

Significant differences exist across the region in terms of external procurement and the nations of suppliers. Beyond pure security motives, industrial policy considerations such as job creation and technology transfer play a major role.

Croatia and Slovenia

Croatia has opted for powerful foreign systems, including the Leopard 2A8 main battle tank, HIMARS/MLRS (High Mobility Artillery Rocket System / Multiple Launch Rocket Systems), Bayraktar drones, and MISTRAL air defense systems. Additionally, the country is acquiring 30 CAESAR wheeled howitzers from France.[14] The last major modernization step came with the integration of 12 Rafale fighter jets purchased second-hand from France for over €1.1 billion in 2024.[15] Slovenia imported Leonardo AW139M helicopters from Italy, although these systems generate no local .value-added. In parallel, the Ministry of Defense has decided to select Diehl Defence to supply IRIS-T SLM medium-range air defense systems, thereby strengthening Slovenia’s air defense capabilities alongside its helicopter fleet. The price for the complete system, including all supporting elements and missiles, is EUR 146.82 million.[16]

Serbia

Serbia has selectively acquired advanced systems from abroad, including Russian Kh-31 air-to-surface missiles for its air force (despite embargoes) and Chinese FK-3/HQ-22 air defense systems, delivered by six People’s Liberation Army (PLA) aircraft through NATO airspace after diplomatic clearance.[17] This was the first transfer of such Chinese systems to Europe, prompting concern within NATO.

These acquisitions were a deliberate choice by Belgrade and are not compatible with NATO standards, raising significant technical and intelligence concerns, as operating or integrating such systems could potentially expose sensitive information outside the alliance. Serbia has also procured Israeli MLRS and MALE (“Medium Altitude Long Endurance”) drones.[18] Its most significant purchase is 12 French Rafale jets of the newest generation, to be delivered from 2030 onward.[19]

Albania and North Macedonia

Albania is investing in Javelin ATGM (anti-tank guided missile) systems, Sikorsky UH-60 Black Hawk helicopters, and tactical FPV (first-person view) drones, some of which are locally assembled.[20] In addition, the former Soviet Kuçova Air Base has been modernized by NATO with a €50 million investment and now serves as a regional air operations hub, capable of hosting F-16 and F-35 fighter jets. North Macedonia, meanwhile, is acquiring Oshkosh JLTV (Joint Light Tactical Vehicles) and Mistral MANPADS (man-portable air defense systems).[21]

Montenegro and Kosovo

While Montenegro primarily develops interoperability with NATO structures, especially in communications and logistics, Kosovo concentrates its modernization efforts on light armored vehicles, surveillance capacities, and tactical drone systems, including Türkiye’s Bayraktar TB2 drones.[22] This focus is reinforced by the presence of Camp Bondsteel, the largest U.S. military base in the region, which serves as the headquarters of the NATO-led Kosovo Force (KFOR) and hosts up to 7,000 troops, including a hospital and extensive recreational facilities.

Many of these systems purchased by Western Balkan states are not purely defensive: Multiple Launch Rocket Systems (MLRS), Medium Altitude Long Endurance (MALE) drones, and air-to-surface missiles provide deep-strike capability across neighboring territories, significantly altering the regional deterrence and attack balance.[23]

Domestic Production and Cross-Border Industrial Cooperation

Croatia and Slovenia

Alongside procurement programs, countries are building up their own defense industries to ensure self-reliance outside NATO supply chains, often specializing in niche sectors.

Croatia’s HS-Produkt manufactures long arms (VHS rifle) and small arms (HS200 handgun) for its own armed forces, while also exporting handguns to the U.S., where they are sold under the “Springfield Armory” brand—accounting for roughly 11% of U.S. imports in this segment.[24] DOK-ING is a world leader in robotic mine-clearing and unmanned ground vehicles (UGVs) and cooperates in turret integration. A new munitions factory and a C-UAS (counter-unmanned aerial systems) program are being developed in collaboration with Končar and the Polish company Advanced Protection Systems S.A., under the brand SKYctrl.[25]

The national production of FPV drones by ORQA in Osijek currently amounts to about 200,000 units annually, with plans to expand to 1 million. Apart from the Croatian Army, these systems are used by the armed forces of Bulgaria, the U.S., France, and Saudi Arabia.[26]

The country’s largest defense company, Đuro Đaković Specijalna Vozila in Slavonski Brod, plays a crucial role in NATO logistics for Southeastern Europe. Once a major producer of tanks and armored vehicles for the Yugoslav People’s Army,[27] it still manufactures and services PATRIA armored vehicles (a collaboration with Finland) and the tanks of the Croatian Armed Forces.[28]

In Slovenia, companies such as Valhalla (producer of RCWS turrets and Mangart 25 AD systems), AREX (precision mechanics and components), and Guardiaris (training and simulation solutions) serve as major system integrators for mobile weapon platforms.[29] Together, they have positioned Slovenia among the global leaders in precision modular weapons technology.

Croatia and Slovenia jointly demonstrate impressive engineering capabilities with the MV-8 Komodo and Mangart 25 AD combat vehicles (a DOK-ING and Valhalla collaboration), representing some of the region’s most advanced indigenous weapon systems.[30]

Serbia

Serbia maintains the region’s broadest defense industrial base and is the largest exporter in the Western Balkans. The state-owned company Yugoimport SDPR provides armored platforms and handles modernization and MRO (maintenance, repair, and overhaul).[31] Zastava Arms produces small arms and machine guns for the Serbian Armed Forces; Krušik, Prvi Partizan, and Sloboda manufacture ammunition.[32] PPT Namenska and EDePro cover rocket propulsion and component production.

Serbia’s defense sector is one of the country’s largest employers, producing a wide spectrum of equipment for its armed forces, including armored vehicles such as the Lazar 8×8, Miloš APCs, and artillery systems like the Nora B-52 howitzer. Modern assets are continually integrated into the Serbian Armed Forces.

Verified reports show Serbia exported weapons and ammunition worth approximately €42.3 million to Israel in 2024, with exports reaching about €55.5 million in the first half of 2025.[33] The mix of domestic production and selective exports gives Serbia high operational flexibility and contributes to strategic uncertainty in the region.

Weaknesses and Opportunities in Integrating the Western Balkans into NATO Structures

Integration of the Western Balkans into NATO structures remains incomplete. NATO’s southeastern flank receives limited political attention due to the primary focus on Eastern Europe and the Russia-Ukraine conflict, allowing external actors to retain influence.

No firm security guarantees, especially under Article 5, exist for some states, complicating political and military stabilization. Potential members like Bosnia and Herzegovina and Kosovo currently have little incentive to join, while Serbia’s stance remains ambiguous: it participates in NATO’s “Partnership for Peace” program but insists on military neutrality.[34]

A striking example of NATO’s weakness in the region occurred in 2022 when a 14-meter Soviet-era drone, Type Tupolev Tu-141 “Strizh” (by comparison, a MiG-29 is 17.3 meters long), crashed in Zagreb, Croatia, near a student dormitory after flying undetected through the airspace of three NATO countries from the Ukrainian conflict zone. The drone had been launched by Ukrainian forces towards Russia but became uncontrollable due to a malfunction, veering off course.[35]

It was not intercepted, nor was any warning issued. NATO’s regional air surveillance center remained silent. Later investigations confirmed the drone carried an explosive payload, yet Western media treated the incident with notable restraint.

Economic Incentives for Deeper Integration into NATO Structures

At the same time, it often appears that Southeastern Europe is viewed primarily as a market for Western weapons systems, while its own advanced defense industries are largely overlooked—even though they can deliver state-of-the-art technologies. The ongoing rearmament and strengthening of local defense industries represent a multi-billion-euro market that benefits both domestic producers and international defense companies.

Integrating the region’s specialized industries into NATO supply chains would have far-reaching benefits for the economies of the Western Balkans, expanding industrial capacity and ensuring stability. For example, maintenance of NATO armored vehicles by Đuro Đaković Specijalna Vozila in Slavonski Brod, Croatia, could significantly boost the regional economy.

The war in Ukraine has shown that ammunition production remains a critical bottleneck for NATO’s supply chain. Establishing such a facility in a potential Western Balkan NATO member state, like Bosnia and Herzegovina, which already hosts the Igman Munitions Factory in Konjic,[36] would send a clear signal of NATO’s commitment to integrating its southeastern flank into Alliance logistics.

It is worth noting that six of the ten largest arms-exporting nations in the world—the U.S., France, Germany, the U.K., Italy, and Spain—are NATO members.[37] Thus, NATO must demonstrate that it is more than just a “domestic market” for arms rade. The gap between security policy and economic participation remains significant: many regional states seek not merely to import but to actively participate in production, maintenance, and supply.

A deeper industrial integration would provide not only economic benefits but also tangible incentives for lasting political and military alignment with NATO. Full integration would therefore generate both security and resilience for the region.

Currently, the Western Balkans still functions as a testing ground for geopolitical power projection. External influence remains visible, institutional weaknesses are exploited, and polarization continues.

Yet countries like Albania and Montenegro are of strategic importance to NATO due to their ports, Durrës, Vlora, and Bar, which are critical logistical hubs for Mediterranean operations.[38]

Furthermore, significant rare earth element deposits are confirmed in Serbia and are suspected in Croatia and Bosnia and Herzegovina.[39] NATO considers these resources security-relevant and increasingly recognizes them as strategically critical, yet they remain largely unprotected.

Whether, in the course of today’s global restructuring of security architecture, NATO will be able to strengthen its position in Southeastern Europe remains an open question—one that only NATO’s power centers and the Western Balkan nations themselves can answer. The region’s historical fault lines and the strategic interests of external actors make its stabilization complex and urgent. Effective integration requires clear and credible security guarantees, sustained investment in regional resilience, and the establishment of local weapons production, maintenance, and logistics capabilities.

Leveraging the region’s economic potential, including the secure development of rare earth element resources, would enhance technological independence and provide tangible incentives for cooperation with NATO standards. Implementing such a strategy would represent a significant step toward the full integration of the Western Balkans into NATO structures, strengthening the alliance’s strategic posture in a geopolitically sensitive region while fostering economic and technological resilience.

[1] CIA, The World Factbook: Explore All Countries, accessed November 8, 2025, https://www.cia.gov/the-world-factbook/.

[2] Munich Security Conference, Speech by JD Vance and Selected Reactions, MSC_Speeches_2025_Vol2_Ansicht_gekürzt.pdf, February 14, 2025.

[3] NATO, “NATO Member Countries,” accessed March 11, 2024, https://www.nato.int/cps/en/natohq/topics_52044.htm.

[4] Republic of Albania, Ministry of Defence, “Albania, Croatia, and Kosovo Sign Joint Declaration on Defense Cooperation,” accessed March 18, 2025, https://www.mod.gov.al/eng/newsroom/fact/1864-albania-croatia-and-kosovo-sign-joint-declaration-on-defense-cooperation.

[5] Ministry of Defence of Hungary, “Serbia and Hungary Further Strengthen Their Military Cooperation,” April 2, 2025.

[6] Hungary Today, “Defense Forces Sell Soviet-Era Infantry Fighting Vehicles to Serbia,” January 25, 2024.

[7] Republic of Croatia, Ministry of Defence, “Anušić: Hrvatska i Slovenija Otvorile Novo Poglavlje Odnosa,” September 5, 2025.

[8] Croatian Parliament, “Defence Minister Anušić Vows Continued Increases in Defence Investment,” accessed June 3, 2025, https://www.sabor.hr/en/press/news/defence-minister-anusic-vows-continued-increases-defence-investment.

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[10] Government of Montenegro, “Government Approves Use of Reserve Funds for Defence Procurement,” accessed May 24, 2024, https://www.gov.me/en/article/government-approves-use-of-reserve-funds-for-defence-procurement.

[11] Republic of Albania, Ministry of Defence, “2025 Draft Budget: Minister Vengu in Parliament Ensures Salary Increases and Continued Modernization of the Armed Forces,” November 19, 2024.

[12] Reuters, “Kosovo to Build Ammunition Factory, Drone Lab to Support Defence Industry,” November 27, 2024.

[13] Government of Slovenia, “Accelerating Modernisation of the Slovenian Armed Forces in Line with the Adopted Plans,” December 23, 2025, https://www.gov.si/en/news/2024-12-23-accelerating-modernisation-of-the-slovenian-armed-forces-in-line-with-the-adopted-plans-we-are-gradually-increasing-defence-spending-towards-2-of-gdp/.

[14] Defence Industry Europe, “Croatia to Launch EUR 1.9 Billion Defence Upgrade to Boost Army Strength and NATO Interoperability,” November 5, 2025, https://defence-industry.eu/croatia-to-launch-e1-9-billion-defence-upgrade-to-boost-army-strength-and-nato-interoperability/.

[15] Republic of Croatia, Ministry of Defence, “Final Rafale Delivered – Croatia Now Operates a Complete Squadron of 12 Combat Aircraft,” April 25, 2025.

[16] Government of Slovenia, “Ministers Šarec and Crosetto Sign Agreement for Purchase of Six AW139M Multi-Role Helicopters,” November 23, 2023.

[17] Republic of Serbia, Ministry of Defence, “Powerful FK-3 Missile System Guards Serbian Skies,” December 30, 2014.

[18] Avi Scharf and Sasa Dragojlo, “Israel-Serbia Ties Intensify: Arms Sales from Belgrade to IDF Shoot Up by 3,000%,” Haaretz, January 28, 2025.

[19] Dassault Aviation, “Serbia Acquires 12 Rafale Fighter Jets,” August 29, 2024.

[20] Republic of Albania, Ministry of Defence, “Historic Arrival of Albania’s First UH-60 Black Hawk Helicopters,” November 8, 2025.

[21] Republic of North Macedonia, Ministry of Defence, “Petrovska: 26 New JLTV Oshkosh Armored Vehicles Arrived,” May 18, 2033.

[22] Office of the Prime Minister, Kosovo, “Kosovo Security Force Equipped with Thousands of Skydagger Kamikaze Combat Drones,” October 8, 2025.

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[24] Springfield Armory, accessed November 8, 2025, https://www.springfield-armory.com/hs-produkt/.

[25] Večernji list, Šimun Ilić, “MORH Ulaže Gotovo 2 Milijardi Eura u Obranu: Donosimo Detalje,” October 30, 2025.

[26] Government of the Republic of Croatia, “Anušić: Hrvatska Spremna Godišnje Proizvesti Više Milijuna FPV Dronova,” October 1, 2025.

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[30] The Defense Post, Akshan Erido Elezhar, “Croatia and Slovenia Team Up to Turn Komodo Into an Air Defense Combat Robot,” October 29, 2025.

[31] Yugoimport SDPR, “About Us,” accessed November 8, 2025, https://www.yugoimport.com.

[32] Zastava Arms, accessed November 8, 2025, https://www.zastava-arms.com.

[33] Avi Scharf and Sasa Dragojlo, “Regardless of War Crimes Claims, Serbia’s Arms Sales to Israel Soar,” Balkan Insight, January 28, 2025.

[34] Republic of Serbia, Ministry of Foreign Affairs, “Partnership for Peace,” accessed November 8, 2025.

[35] BBC News, “Mystery Drone from Ukraine War Crashes in Croatia,” March 11, 2022.

[36] Igman Company, Igman – Since 1950, accessed November 8, 2025.

[37] Statista, “Chart: The World’s Biggest Arms Exporters,” April 13, 2024.

[38] The Transport Community, Five-Year Rolling Work Plan for Development of Indicative TEN-T Extension of Comprehensive and Core Network in the Western Balkans, accessed November 8, 2025, https://www.transport-community.org/wp-content/uploads/2025/05/Five-year-Rolling-Work-Plan-digital.pdf.

[39] Hellenic Foundation for European and Foreign Policy (ELIAMEP), “Raw Materials for a Resilient Europe: The EU’s Strategic Partnership with the Western Balkans,” November 3, 2025, https://www.eliamep.gr/en/raw-materials-for-a-resilient-europe-the-eus-strategic-partnership-with-the-western-balkans/.