Amid the alleys and ancient churches of Šibenik, Croatia, the late-summer tourists look quizzical as a tough old man harangues a meeting in the public square. “In 1945, people worked for free to build factories, roads, new houses. We wanted to build a better country then,” he says. “Find me five people prepared to do that now.” The speaker is the city’s “last partisan” – a veteran of the anti-Nazi resistance movement. But such idealistic sentiments are not popular in the Croatia of today.

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In January, the country’s conservative coalition government appointed as culture minister Zlatko Hasanbegovic, a man described by the Simon Wiesenthal Centre as a “fascist”. He had lionised the country’s pro-Nazi Ustase movement as a student in the 90s and labelled Croatia’s anti-fascist history and culture “an empty phrase” with no constitutional relevance. (Hasanbegovic has since emphasised that his current party is anti-fascist.)

On Sunday, Croats went to the polls in a snap election, returning the ruling nationalist party HDZ as the biggest party, but changing nothing. Just 53% of all Croats voted: the likely outcome is a coalition of the same old “centrist” parties – nationalists and social democrats. On the face of it, the country faces the same old problems. Unemployment at 16%, rising to 40% among the young; debt at 90% of GDP; the coast dependent on tourism, the interior sending migrant workers to Germany and Austria by the coachload.

What’s new is the return of nationalism. By 2013, Croatia’s conservative nationalist politicians had made enough liberal noises to convince Brussels they could meet the basic criteria for EU membership. Since then, they’ve been sucked into the surge of nationalist rivalry that’s gripped the Balkans. Just across the mountains lies Republika Srpska – the Serb enclave created in the country of Bosnia and Herzegovina by the Dayton Agreement in 1995, after a bitter civil war. Republika Srpska’s leaders are threatening to hold a referendum on independence, which would blow up the deal that has brought peace to the region for 20 years.

In response, Croatia’s politicians have upped the rhetoric, with the leader of its centre-left party secretly recorded threatening to “act to protect Croats” if the referendum goes ahead, labelling Bosnia a “failed state” and calling the government of Serbia “miserable people”.

If this were just a recrudescence of the Balkan ethnic conflict of the 1990s, it would be bad enough. But it comes on top of years of economic failure, amid growing geopolitical tension, and rising xenophobia in the face of the refugee crisis.

Russian money has poured not just into Serbia but into Republika Srpska, too, together with increased diplomatic influence. Meanwhile, Croatia has joined the EU. As a result, the Balkans today have become a more clearly diplomatic and systemic frontline than they were in 1995, when the wars ended. The assumption that globalisation, economic growth and time would heal the region is looking more uncertain than at any point since the peace deal.

If the Serbs of Bosnia were to go for their independence referendum, and Putin were to back them, the Kremlin would have a new pawn in the same game it is playing with the west in Syria, Ukraine and the Baltic States.

Amid this, the intellectual life of the Balkans has retreated to a set of parallel compartments. There is the globalist left, applauding the partisan veterans in the squares, but insignificant in mainstream politics. There is the far right, whose main achievement in Croatia this year was to erect a statue to a convicted ethnic terrorist from the 1970s.

Many people in their 40s and 50s live a post-traumatic lifestyle: getting on with business, family or early retirement, rarely speaking about what they did, or suffered, but gripped by an innate concern that the conflict might come back.

Meanwhile, young people across the region try to live in a cannabis-softened, networked dreamworld – where electronic dance music or Pokémon Go replace the national and political identities formed 20 years ago.

If Europe wants to make the Balkans work, it needs to understand the limits of its current approach. It has lowered accession standards for countries in east and southeast Europe, in order to bring them into its enlargement project.

Albania got candidate status in 2014. Bosnia submitted its application in February this year. Macedonia, which gained brownie points in Brussels for erecting a fence on the Greek border last year, is so mired in ethnic violence and rampant corruption that EU membership is impossible. Yet there are loud voices calling for its admission.

The region’s politicians, be they corrupt, chauvinist or simply incompetent, know that by ticking a few boxes on an EU checklist they can advance the process of accession with only paper reforms. The fact that many of the region’s progressives, above all the young, yearn for EU membership is one more incentive for Brussels to look the other way.

If the EU is to live up to the hope and trust placed in it by young people in the Balkans, it needs to start by being firm with the incoming Croatian government. All cultural nods and winks towards the fascist regime in the second world war must go. Ultimately, the EU must be prepared – as it has threatened with Poland and Hungary but not done – to trigger the Article 7 processes that can see member countries warned over inadequate rule of law, and ultimately be suspended from membership, or see their voting rights curtailed.

The EU’s leaders lost no time after Brexit in reigniting the common defence and security policy process – what the Daily Mail calls the “European Army”. They are right to do so – for if the Balkans goes wrong again, Croatia as an EU member would have the right to call for support under the mutual defence clause of the Lisbon treaty, and all EU members would have the obligation to support it. But in the short term, what is vital is for western European democracies to engage with the Balkans and promote democratic culture and institutions. It was, ultimately, US diplomacy that imposed the peace of 1995. Today it is squarely the EU’s task to maintain it.