Brief: Bosnia and Herzegovina's political scene remains deeply divided along ethnic lines, with power-sharing between Bosniaks, Serbs, and Croats creating persistent gridlock. The current crisis, driven by Republika Srpska's autonomy push, threatens the country's fragile unity. Political reform efforts are stalled, hampering progress on critical issues and EU aspirations. Corruption and organized crime continue to undermine institutional effectiveness and public trust. 

The economy shows signs of stabilization, with a growing IT sector and startup ecosystem offering potential for growth. Tourism and foreign investment are increasing, providing economic opportunities. However, significant challenges remain, including the need for infrastructure development and economic diversification. The country struggles with brain drain as skilled youth increasingly seek opportunities abroad, impacting long-term economic prospects. 

Ethnic divisions continue to shape social dynamics, with the legacy of war still influencing daily life. Environmental concerns, particularly poor air quality in Sarajevo, have become pressing issues affecting public health and quality of life. The younger generation, while eager for change, faces limited opportunities, contributing to high emigration rates. Illiberal propaganda and political polarization further complicate social cohesion efforts. 

Bosnia and Herzegovina's international position remains complex. The country has gained EU candidate status, with the EU agreeing to open accession talks. However, internal disputes pose significant challenges to this process. The United States and EU maintain engagement, crucial for regional stability. The country continues to navigate a delicate balance between internal factions and external influences, with recent high-level visits like that of the CIA Director highlighting international concern over the country's stability and geopolitical significance in the Balkan region. 

Watch Out For: Republika Srpska secessionist ambitions and stalling reforms.

Brief: Montenegro's political scene has recently stabilized after a prolonged government crisis, with the appointment of Milojko Spajić as Prime Minister. However, the inclusion of pro-Serbia and pro-Russia ministers in the cabinet has sparked debates about the country's political direction. The reported split between the Prime Minister and the President adds another layer of complexity to the political landscape. These developments may impact Montenegro's governance and its path towards EU integration, which has been a key focus of the country's political agenda.

Montenegro's economy is heavily reliant on tourism, which significantly contributes to its GDP. While this has led to a relatively high GDP per capita compared to regional neighbors, it also exposes the economy to vulnerabilities. The country faces challenges in economic diversification, with a notable dependence on regional trade. Brain drain continues to be a concern, potentially impacting long-term economic development. Environmental sustainability, particularly related to hydropower and deforestation, is becoming an increasingly important economic consideration, especially given the country's reliance on tourism.

Montenegro grapples with several domestic challenges. The ongoing brain drain is affecting various sectors of society, potentially hampering development efforts. Environmental protection has become a pressing social issue, with growing concerns about the sustainability of hydropower projects and the impacts of deforestation. These environmental challenges are closely tied to the country's economic reliance on tourism, creating a complex interplay between economic interests and environmental preservation. The country also faces the task of maintaining social cohesion amidst political changes and differing views on international alignments.

Montenegro leads the Western Balkans in EU integration progress, with 33 chapters opened in accession negotiations. However, the country still faces challenges in closing these chapters, particularly in areas of judicial reform, combating organized crime, and addressing corruption. The recent inclusion of pro-Serbia and pro-Russia ministers in the government may impact Montenegro's international positioning and its EU integration process. Relations with regional neighbors are generally cordial, focusing on economic cooperation and joint infrastructure projects. However, unresolved maritime border disputes with Croatia occasionally strain these relationships. Montenegro's ability to balance its EU aspirations, regional partnerships, and newly emerging political dynamics will be crucial in shaping its international standing in the coming years.

Watch Out For: Pro-Serbia and Pro-Russia political forces' role in shaping government agenda, challenges to the national identity, and internal hurdles on its EU accession path.

Brief: Serbia's political scene is dominated by the ruling party, raising concerns about democratic backsliding and media freedom. The recent election of a new government led by Prime Minister Milos Vucevic reflects continuity in political leadership. However, the country faces challenges in balancing its EU aspirations with internal political dynamics. The strong government control has led to questions about the health of democratic institutions and the freedom of the press. The ongoing protests against lithium mining indicate growing environmental concerns and civil society activism, potentially challenging the government's economic strategies.

Serbia's economy shows steady growth and has been successful in attracting foreign investment. However, the country faces challenges including concerns about corruption and economic vulnerabilities. The recent MOU with the EU on critical materials, particularly lithium, presents new economic opportunities but has also sparked controversy and protests. The reported indirect ammunition exports to Ukraine, worth €800 million, suggest a significant, if covert, economic activity in the defense sector. Diversifying the economy and addressing rising inflation remain crucial for long-term economic sustainability. The $3 billion deal for Rafale fighter jets represents a major investment in military modernization, which could have broader economic implications.

Serbia grapples with several domestic challenges, including concerns about democratic backsliding, media freedom, and environmental issues. The large protests in Belgrade against lithium mining activities highlight growing environmental awareness and activism among the population. The country also faces the task of addressing corruption and strengthening the rule of law, which are crucial for both domestic governance and EU accession prospects. Balancing economic development with environmental concerns and public opinion will be a key challenge for the government.

Serbia's international position is complex, characterized by its pursuit of EU membership while maintaining relationships with other global powers. The country has been an EU candidate since 2012 and has opened 18 chapters in accession negotiations. However, concerns about rule of law, judicial independence, and media freedom hinder further progress. The recent arms deal with France and the reported indirect ammunition exports to Ukraine suggest a shift in Serbia's international alignments and its approach to the Ukraine conflict. Relations with Kosovo remain tense, impacting regional stability and EU integration efforts. Despite these challenges, Serbia maintains relatively stable relations with other regional neighbors. The international community, particularly the EU and US, continues to support Serbia's EU aspirations, but this support is contingent on tangible progress in key areas like democratic reforms and rule of law.

Watch Out For: Relations with Kosovo including EU-facilitated dialogue, relations with Russia and China, freedom of speech and freedom of media, and internal opposition over a deal with the EU on raw materials, battery value chains and electric vehicles.