Risks and perceptions in the Western Balkans amid the Middle East crisis

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We live in an interconnected world where each international and regional crisis has far-reaching consequences. Every region, no matter how peripheral or small, can experience the repercussions of such geopolitical and geoeconomic pressures. 

Affected regions are compelled to assess possible risks arising from external threats while preparing strategies for further diplomatic actions aimed at alleviating negative consequences.

The Western Balkans is not immune to global or regional political and economic crises. This often overlooked region tends to be more impacted by international politics and crises and endures the consequences longer.

The 2008 financial crisis had devastating consequences for economies around the world, including the Western Balkans. However, while developed economies managed to recover more easily, the markets of the Western Balkan countries experienced prolonged and harsher repercussions.

Grappling with the consequences of the global financial breakdown, the Western Balkans encountered the COVID-19 crisis in a highly vulnerable and unprepared state. The Russo-Ukrainian conflict further deepened political instability and economic uncertainties in the region.

In such a turbulent environment, the recent Middle East crisis justifiably causes new fears and calls for risk assessments, especially given the unprotected position of the region, which, in addition to external pressures, is still struggling with unresolved internal quarrels.

The ongoing Middle East crisis quickly turned into a wider regional and international crisis. Iran began targeting Israel, U.S. bases, and Gulf allies with drones and missiles, causing widespread chaos in the region.

The Iranian government has also tightened control over shipping in the Strait of Hormuz, impacting global trade.

Disruption of global supply chains, especially oil and gas shipments, has already increased energy prices and caused an economic slowdown, which may lead to worldwide inflation and a drop in global real GDP growth.

A crisis with such a global impact on political, security and economic levels is certainly of concern and interest to the Western Balkans, as the region’s already fragile landscape might be at risk of further destabilisation.

Political stance

Depending on their foreign policy alignments and interests, each Western Balkan country has had a specific response to the current Middle East crisis. Serbia’s official stance toward the conflict revolves around de-escalation and a peaceful resolution, aligning with the country’s broader foreign policy approach.

Serbia remains “non-aligned” between the East and the West, balancing among major powers while promoting its own interests, which influence the country’s political and diplomatic narrative in global and regional crises.

In the context of the ongoing confrontation, Serbia has interests on both sides. The country continues to cooperate with Israel, especially in the defence sector, but it also values Iran’s firm stance on the non-recognition of Kosovo seeking to preserve friendly bilateral relations.

Serbia advocates for settling the disputes through dialogue and diplomatic means, as it is not in its interest to face a destabilised energy market or heightened geopolitical and geoeconomic tensions.

Albania has strongly supported the U.S. due to historically good bilateral relations, making the country one of the strongest U.S. allies in the region. The Albanian government has officially supported Israeli and U.S. strikes on Iran and has labeled Iran’s Islamic Revolutionary Guard Corps (IRGC) as a terrorist organisation.

Even before the current confrontations, political relations between Iran and Albania had been severely strained. In 2013, the Albanian government agreed, at the request of the United States and the United Nations, to host a large Iranian opposition group. This act led to worsening relations between Tirana and Tehran.

Both North Macedonia and Montenegro, as members of NATO, hold a strong Euro-Atlantic orientation and condemn Iran’s actions. Montenegro has been more supportive of the affected Gulf countries, in particular the United Arab Emirates, labelling Iran’s attacks as unprovoked and calling for calming the heightened situation in the Middle East.

North Macedonia has strongly supported the U.S. and Israel, describing Iran as a destabilising threat in the region.

Bosnia and Herzegovina’s response to the confrontations has been somewhat complex and unclear. The country still grapples with internal divisions that are reflected in its foreign policy, where any unified stance is difficult to achieve.

While Bosniak leaders criticise U.S.-Israel intervention, the Republika Srpska leadership is leaning toward the Israeli position. As the country’s different ethnic groups have divergent views on foreign policy matters, including the current crisis, its official political stance remains conflicting but, in general, calls for de-escalation. 

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Security risks

Recent Iranian attacks on Cyprus and Israel's official claims that Iranian missiles are able to reach Europe certainly invoke serious security risks and trepidation across the Western Balkans.

Although immediate security risks are less likely, Albania closely follows developments surrounding the confrontations, especially due to the previous cyberattacks in 2022 orchestrated by Iran’s regime as retaliation for Albania hosting Iranian dissidents (MEK - Mujahideen-e-Khalq).

There are two potential hot spots in the Western Balkans vulnerable to physical Iranian attacks. One is the U.S. base in Kosovo, and the other is the approximately 3,000 MEK members based in Manëz near Tirana.

However, such direct security attacks are highly unlikely and only theoretically discussed, and the region remains more prone to economic repercussions and possible security spillovers.

Meanwhile, Iran has consistently and "decisively" rejected accusations of involvement in cyberattacks against Albania, including the 2022 and 2026 incidents.

Potential indirect security consequences of the current U.S.-Israel and Iran confrontations in the Western Balkans could include increased radicalisation, intensified polarisation along the lines of Middle Eastern power rivalries and the possible emergence of a new migrant crisis.

If such risks were to occur in the region, Albania, Bosnia and Herzegovina and Serbia could be among the most affected, considering their internal political challenges and external alignments.

Economic risks

For the Western Balkan countries, the main repercussion of the current crisis in the Middle East is of an economic nature. Rising energy prices have already affected the region, which has been forced to introduce several measures to counter the consequences of the strained fuel trade in the Strait of Hormuz.

In order to alleviate the effects of spiking fuel prices, the Serbian government has prohibited fuel exports and reduced excise duties on fuel. According to officials, the government is ready to cut excise duties further, even if that leaves the country without state revenues.

Albania has decided to introduce a 20% reduction in the oil excise tax every time the price increases above a set ceiling of 220 ALL (approximately €2.29), revoking a mechanism used in 2022 following the country’s protests against high oil prices. The Albanian government has also reactivated the Transparency Board to help monitor prices without harsh market intervention.

Montenegro has responded to the fuel crisis with “maximum measures” that reduced excise duties on Euro diesel by 50% and on Euro super 98 and 95 by 25%.

North Macedonia cut taxes on petrol and diesel fuels from 18 to 10%, stating that lowering the taxes is the most effective way of tackling current price shocks. Bosnia and Herzegovina has proposed tax cuts and stricter market controls, but the measures are still limited.

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Indirect but significant consequences

Although it is unlikely that the Western Balkans will be directly involved militarily in the U.S.-Israel and Iran confrontation or experience physical attacks on its territory, economic repercussions remain the main issue.

External diplomatic pressure and the need for clearer positioning in the region may become stronger, especially if the crisis continues.

Western Balkan countries have already started assessing possible risks and applying necessary measures, especially against rising energy prices.

As the current confrontations have an international impact, the region remains vigilant, particularly considering its vulnerability to global shockwaves.

Tags

Opinion Western Balkans Middle east crisis Iran energy crisis Fuel Prices Russia Ukraine war Strait of Hormuz