The scene is both inspiring and oddly disconcerting. Three years ago these were mostly burned-out shells. Nearly 500 people died in the 1999 war that ravaged this place. At the center of town stands a shattered storefront, windows broken and walls pockmarked by automatic rifle fire. Serb forces executed half a dozen men across the street. When 40 women and children sought refuge here, the Serbs came and killed them, too. The youngest victim was 7 months old, the oldest more than 70.

Today this mute memorial is the only outward evidence of that ugly past. Finishing touches are being put on the town’s mosque, whose minaret was toppled by a tank shell. Workers tell of finding a body moldering in a corner when they began the restoration: “Here, see the bloodstains under this carpet.” An old man recounts how his family fled through the surrounding hills, villages burning behind them, as they made their way to Albania. Now they are back, rebuilding their houses and lives and finding a surprising measure of prosperity.

As a model for nation-building, Kosovo must be counted a success–but it is by no means assured. In late October, Kosovars voted for the third consecutive year in an election run by the United Nations mission, choosing local leaders to tend to municipal affairs–roads, sewers, health and education. Turnout was low–about 55 percent of registered voters–but even that was a sign of returning normalcy. The next day the leader of the victorious party–Suva Reka’s mayor–was gunned down by a political rival.

Clearly, Kosovo has far to go. Yes, democracy has taken hold. The ethnic violence among Serbs and Albanians that once seemed epidemic has all but disappeared. Yet a shadow hangs over Kosovo, as it does over much of the Balkans. It has little to do with the challenges of reconstruction, substantial as those may be. It grows instead from the fact that the region’s future lies increasingly in the hands of Europe–and that the EU may not be up to the task.

Blerim Shala, publisher of a leading Kosovo newspaper, sketches out a worrisome scenario. Iraq, Afghanistan, the war on terror: with so much happening elsewhere, he says, the United States no longer pays much heed to the Balkans. Even before 9-11, it was disengaging. Aid was cut by 10 percent last year and will fall by 20 percent next year, from $621 million to $495 million. U.S. troops are being withdrawn. Washington no longer considers it necessary to post a special emissary to the region.

The question, says Shala, is whether Europe can step into the breach, as the United States hopes it will do. He’s skeptical, and he’s not alone. Consider the big issue of Kosovo’s “final status,” as diplomats delicately call it. Will the province become independent, as its 92 percent Albanian population is determined to be, or will it legally remain part of the rump Yugoslavia? No one wants to decide any time soon, but events may force things. Europe successfully coerced Montenegro and Serbia into preserving the fiction of union last year. But elections in Montenegro recently turned up a majority favoring a split. Those separatist sentiments will likely grow, and the picture is similar in Serbia. “A breakup is inevitable,” says Shala. If so, what happens to Kosovo?

Anyone with experience in the region knows that Kosovo’s Albanians can never again be ruled from Belgrade. Nor do any but the most nationalist Serbs see much good in holding onto the province. Yet without strong outside leadership, neither the Albanians nor the Serbs nor the Montenegrins will be able to work out their future. The great fear among all of them, according to Shala, is that “the United States won’t lead–and the Europeans can’t.”

There are many reasons. Like America, Europe is deflected by its own problems: enlargement, crafting a new constitution, economic malaise–and, of course, the diplomatic crises that currently obsess Washington. But beyond that, there’s also the fact that Europe’s way of dealing with problems is not well suited to Balkan realities. Europe’s entire raison d’etre is rooted in consensus and compromise and incrementalism. Faced with nettlesome imponderables, it usually opts to fudge, to let time take its course. Europe’s internal factionalism–French Serbophiles versus, say, more pro-Albanian Brits–will in itself stymie bold solutions. Rather than ensure progress, Europe’s management in the Balkans may well retard it. The dangers of drift might be hard to appreciate in sunny Suva Reka, suffused with so much optimism. But they are real even so.