At first glance the crisis in Kosovo looks like yet another deep-rooted Balkan ethnic problem with the potential to escalate into a generalised Balkan war.
Such a nightmare could arise if demands for independence for Kosovo, the majority Albanian-populated province of Serbia, were taken up by the Albanian minority in neighbouring Macedonia, sparking demands for the union of all Albanians in a greater Albania, which Tirana would find hard to resist.
But any redrawing of borders in this region could reawaken other latent or historical territorial claims, which in the past have provoked conflict between Bulgaria, Greece and Turkey.,
There is a need to remove the slightest risk of such a conflict erupting between two NATO states, Greece and Turkey. This explains why preventing the clashes between Serbian policemen and angry Kosovars from spreading through the Balkans is the immediate aim of European and US diplomacy.
But there is another way of looking at these events. The calls for caution by Serbia's immediate neighbours - Albania, Macedonia and Bulgaria - reveal how much the wider Balkan region has changed in recent years. Country after country has embarked upon economic and political reforms inspired by the desire to join the mainstream of Europe.
The process is incomplete, indeed only falteringly started, and is still prone to derailment - as the violent reaction to the collapse of pyramid-selling schemes in Albania demonstrated last year.
Nevertheless, democratically elected governments of newly independent countries are now committed to policies aimed at securing the earliest possible membership of the EU and NATO. They are trying to find better things to do than pursue the kind of historical vendettas that sparked off three Balkan wars this century.
In this new regional context, Serbia stands out as something of an anachronism - isolated internationally, with an unreconstructed socialist economy and still under the control of Slobodan Milosevic, whose main concern is self-preservation. From this point of view, the real problem is not ethnic hatred in Kosovo; it is the nature of political power in Serbia.
Since winning their independence, most countries in the region have embraced privatisation and market-oriented reforms, which are slowly creating the economic basis for what has long eluded the region - the emergence of a self-confident and responsible middle class.
The process is fastest in Slovenia and Croatia. But it has also resumed in Albania after last year's violent hiccup and is gathering pace in Bulgaria and Romania after setbacks in both countries two years ago.
At the same time, Greece, which is a member of both the EU and NATO, has also shifted towards a more constructive economic and political role in the region after imposing a damaging economic embargo on Macedonia and encouraging anti-government sentiment among the ethnic Greek minority in southern Albania.
But in Serbia economic and other reforms have stalled, because power still lies with Mr Milosevic and the enterprise bosses who enjoy privileged access to hard currency from the Serbian central bank and benefit from running lucrative special deals.
Perhaps the most illuminating comparison is with Bulgaria, which only 18 months ago under a socialist government was heading for bankruptcy and possible civil war. Its prospects have been transformed since the election of a new, democratic government open to foreign investment, dedicated to transparent cash privatisation and working under the discipline of an International Monetary Fund-backed currency board regime.
Bulgaria is a model for what can be achieved by a combination of domestic political will and international assistance. Its transformation was achieved through the ballot box, by a people tired of being robbed and cheated by survivors of the old regime and presented, for the first time, with a credible alternative.
The tragedy of Serbia is its inability to date to put up a credible alternative to Mr Milosevic. His ability to survive is now a function of negatives. The confiscated money salted abroad has been spent. His army has been outmanoeuvred and humiliated. The repressive police force, his main support, is facing a Palestinian Intifada-type armed revolt in Kosovo, which is financially and morally unsustainable.
But the domestic opposition remains weak and divided and the international community, which encouraged Mr Milosevic's transformation from warlord to peacemaker, has done little more than wring its hands over decades of repression in Kosovo. As with Saddam Hussein, reluctance to press for the removal of Mr Milosevic reflects uncertainty about how to replace him and fear that the alternative could turn out worse. The disintegration of the "democratic" Zajedno alliance in mutual recrimination underlines the dilemma.
Many Serbs say they would welcome an opportunity to change course and join the central European mainstream, which has been flowing strongly in the direction of greater wealth and freedom since the collapse of the Soviet empire. Their bitterness at the failure of months of Zajedno-led street demonstrations to topple the regime a year ago is openly expressed in the streets and cafes of Belgrade.
Despite the exodus of educated professionals over the last decade, despite the continuing weakness of civil society and the inability to create an effective home-grown opposition, there are reform-minded people in Serbia and the diaspora, including a minority in government, in economic institutes and among the struggling owners of private companies and the remaining intelligentsia. They have not yet been able to get rid of the Milosevic regime on their own. But they would probably be capable of leading Serbia in a new direction if the international community came up with concrete offers of financial and technical assistance tied to an internationally monitored reform agenda.
That is what is helping to transform other former Balkan trouble spots. With Mr Milosevic in charge, however, repression is likely to continue in Kosovo while Serbia continues its descent towards bankruptcy and desperation.