The article discusses the main determinants of welfare transformation after the regime change from communism towards democracy. The states of the former Yugoslavia, notwithstanding a common welfare state structure, albeit at different quality levels, after departing communism developed diverse trajectories. In response to the wars, the war-related consequences, the growing economic pressures, the national political elites in Yugoslav successor states initially extended welfare provisions and thus thwarted popular mobilization. The international agents’ agenda gained ground in a setting characterized by nationalistic resentments, popular disorientation, and elite capture. By the use of loans the international financial institutions imposed their agenda mainly consisting of public spending cuts and restructuring of the welfare state, and in absence of their own ideas or interests as to how the states’ welfare systems should look like, the political elites tended to embrace this agenda. The European Union has so far proven incapable of enforcing a stronger social agenda. What the analysed country cases suggest is that democratization has contributed to making reforms more responsive to public concerns. On the other hand, ‘defective’ systems continue to impede economic development and compromise the welfare state’s redistributive role.
