This is a paper prepared by the European Stability Initiative. It states that the Western Balkans are facing a looming crisis of social and economic dislocation which puts at risk some of the European Union’s most important interests in this strategic region. It is stressed that The European Union should send a strong signal to the countries of the Western Balkans that the promise of Europeanisation is not an illusion. The present policy instruments have been built around the goal of post-conflict reconstruction and stabilisation. They have helped to push the threat of ethnic conflict into the background, making the region a far more promising place than it was five years ago. However, these instruments do not engage effectively with the underlying causes of instability. The danger is no longer ethnic hatred, nationalist extremism or military conflict, but a new crisis of economic and social dislocation. Effective government in Bosnia and Herzegovina and Kosovo, political stability and interethnic peace in FYR Macedonia, economic and political reforms and the strengthening of the rule of law across the Western Balkans are stated as the main interests.