Summary: Despite the presence of two large NATO-led forces in the Balkans, the security situation throughout the region remains volatile, as many difficult political, social, and other issues remain unresolved. The election of opposition members to Croatia's parliamentary and presidency during early 2000 holds the promise of positive change in the region; however, all areas of the Balkans continue to face unresolved political, social, and other problems that will contribute to regional instability during the next five years. These problems--such as differences over definitions of what territory and ethnic groups constitute a state and the difficulties associated with returning refugees and displaced persons to their homes--will take time to resolve. These problems will also require the continued security presence provided by NATO-led forces. Senior Yugoslav, U.S., and NATO officials said that several factors led to the Yugoslav decision to withdraw its security forces from Kosovo, ranging from Yugoslavia's fear of a NATO invasion to Russia's diplomatic efforts. Because the United States has important interests in Bosnia and Kosovo, other issues become relevant to the deployment of U.S. military forces there, such as the costs of U.S. military and civilian operations--pegged at $21.2 billion through 2000--and the relative contributions of U.S. and other NATO allies to recent and ongoing military operations.