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What happens when your country gets cut off from the world? Just ask Alex Brkic, who has spent the past 13 years wrestling with the complex international diplomacy involved in running a small shoe store on a quiet street in Belgrade.

For most of the world, unco-operative rogue states such as Serbia are a source of global nightmares: drug smuggling; human trafficking; child prostitution; bootlegging; terrorist cells; and the endless hunt for war-crimes suspects who, like Serb warlord Ratko Mladic in recent days, seem to be hiding in plain sight.

But for millions of ordinary, non-political people inside their borders, such countries are the source of another kind of nightmare, a more personal one. And those personal frustrations seem to be making the other problems even worse.

As a handful of customers tried on low-price Chinese-made sneakers out front the other day, Mr. Brkic was in the cluttered backroom of his shop, caught in an agonizing struggle with the Italian shoe industry.

How do you persuade suppliers to send you shoes when your currency is unrecognized, your bank is unfamiliar, your credit is unheard of and you can't even visit them?

"The main problem for me is how to get a visa. I need to travel to Europe to buy shoes, but Serbians aren't allowed to travel to Europe," he said calmly. The 34-year-old has devoted almost half his life to solving this dilemma.

"When your only communication is by telephone and e-mail, you can't persuade them that you're legitimate if you can't even go visit them. And then they learn that the only currency you can send is the Serbian dinar and your banks aren't part of the European system. Most often they won't sell to you at all, or they'll give you terrible terms. It's impossible. The only people who can run a normal business here are the Mafia."

That is the crux of the problem: As Serbia remains isolated from the international community, in part as punishment for its refusal to hand over war criminals Mr. Mladic and Radovan Karadzic to the International Criminal Tribunal in The Hague, its more moderate-minded citizens become increasingly poor, their ability to do business constricted and the option of criminality and extremism more tempting.

On Tuesday, European Union foreign ministers declared that Serbia would be put on track toward normal trade and financial relations with Europe if it arrested the two men by the end of March. If that doesn't happen, some EU officials have threatened Serbia with tougher sanctions.

The lives of people such as Mr. Brkic are being closely watched, because the isolation of an unco-operative Serbia is a central plank in the peacekeeping and nation-building efforts that ended the Balkan wars of the 1990s. And as efforts in the wake of conflicts in Afghanistan and Iraq fall increasingly into question, the world is also watching to see whether stable societies can be created from countries plagued by ethnic violence.

For the 1.7 million people of Belgrade, this question is especially pointed. While most here are moderates who never supported Slobodan Milosevic's ethnic-cleansing campaigns against non-Serbs, they are finding themselves trapped in the international punishments that have made Serbia the ultimate victim of the wars it began.

Two decades ago, Mr. Brkic's mother made the equivalent of about $6.8-million selling cosmetics from this tiny store, which she inherited from her own mother. Their success was built on something shared by most small-business people in Communist Yugoslavia: their ability to travel freely to both Western and Eastern Europe, and to bring back money and goods from those countries.

Indeed, the country's period of prosperity in the 1970s and early 1980s has largely been credited to foreign-currency remittances sent from Yugoslavs working abroad. As in post-Communist East European countries in the 1990s, the ability of citizens to work in wealthier economies became a principal source of national income.

Today, people in Serbia are largely trapped at home. They can visit Turkey, Libya and other North African states, but a trip to neighbouring European countries requires an expensive short-term visa that takes months to obtain, if at all. Even neighbouring Bulgaria, set to join the EU next year, is about to ban Serbians entry without a visa. Students can't study abroad, graduates can't gain foreign experience and shopkeepers are unable to buy goods to fill their shelves.

"It leaves us stuck," Mr. Brkic said, examining the Asian shoes he's forced to carry in place of the better Italian brands. "You can't be creative, you can't start a project, a new life, a new brand. It's impossible."

It is making many in Serbia poor and desperate. According to a poll taken this year, 29 per cent of Serbians say they do not have enough money to pay for clothes and food and another 22 per cent have only enough to cover basic needs.

To make matters worse, there are some in Serbia who don't have any problems conducting business abroad. The biggest firms, such as privatized ex-communist producers and large supermarket chains -- both of which are largely owned by neighbouring Croats, Slovenes, Germans and Austrians -- are able to trade freely. And black-market smugglers and bootleggers, who have shops and market stalls in every Serbian town, easily move goods and money across borders.

Mr. Brkic was forced to stop selling cosmetics because, unlike his mother, he couldn't go to France to get desirable brands such as Lancôme. Instead, he must buy Eastern European brands from a Serbian government importer that offers poor terms, while a large, former communist Serbian chain of beauty-supply shops, owned by a government-linked businessman, has the clout to get the better brands at a low price. Mr. Brkic could have smuggled the creams and lotions or gotten out of the beauty business. He chose the latter.

On the political level, there are signs that Serbia's isolation is driving it increasingly further from being a normal European country. When asked "Who rules Serbia today?" by pollsters from the Centre for Democratic Reform, the largest number of Serbians -- 28 per cent -- answered "criminals" and another 11 per cent said "owners of big companies." Only 23 per cent named legitimate politicians.

Indeed, there are signs that international ostracism has driven Serbia's fragile government, like many of its small-business people, away from the legitimate economy. In October, 2000, when Mr. Milosevic was driven from office by a democracy-reform movement, it seemed that Serbia was becoming a normal, democratic European state. But something seems to have gone terribly wrong.

"I think the criminalization of the state is the biggest barrier for the Serbian people," says Biljana Kovacevic-Vuco, the head of the Belgrade-based Lawyers' Committee for Human Rights. "With regard to human rights and democracy, we are much worse off than October of 2000 -- it's almost as bad as it was during the Milosevic period."

While she, like most Serbians, believes that the government should hand over its war-crimes suspects, she fears that the singular Western focus on this issue, and on the issue of the independence for the contested province of Kosovo, are allowing Serbia to fall deeper into dangerous rogue-state status.

"It's scary. We are afraid. All of us. I'm afraid we moderate Serbs are the collateral damage of the West's biggest demands. If they send Mladic and Karadzic to The Hague and let Kosovo go, then they'll ignore everything else."

Paradoxically, Serbia seems unable to move away from the political radicalism that led to the Balkan wars of the 1990s in part because the world treats it like an aggressor, not a victim. Places that fell victim to the attacks begun by Mr. Milosevic, such as Kosovo and Bosnia-Herzegovina, have had their governments, economies and civil societies re-engineered by the United Nations and EU administrations that have been overseeing them.

Serbia has not had international occupiers to help it (though it does receive aid from countries including Canada). As a result, many of its people seem trapped in the 1990s.

But there is cause for optimism. Despite this radicalism, polls show that Serbians place more trust in the EU than in any of their own national institutions or leaders. "There is a real appetite among everyone here to become part of Europe, and I think people are willing to put aside their politics in order to join that club," said Stevan Niksic, an influential columnist with the Belgrade magazine Nin. "We remember being part of Europe, and we want to get there again."

It is apparent that most Serbians want to get out of the country's ambiguous situation to the point that even supporters of the war-crimes suspects want them arrested, for the indecision around Mr. Mladic and Mr. Karadzic is affecting the lives of thousands of workers, students, homemakers and small-business people.

"You can't think in advance, for the future, when you know things could get even worse," Mr. Brkic said as he prepared to shut his shop for the night. "I was 21 when I came to this shop. I'm tired now, tired of not having plans for the future. I can't make any investments, not long-term, not even medium-term. My grandmother made a million under communism, but under this democratic and reformed Serbia, I'm suffering."

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A history of violence

Serbia's brutal efforts to unite ethnic Serbs from neighbouring republics have left them isolated from the international community.

z Despite numerous rebellions, Serbia remained under the rule of the Ottoman Empire for more than three centuries.

z The Second Serbian Uprising of 1815 resulted in the establishment of the semi-independent Principality of Serbia.

z The Treaty of Berlin, signed in the wake of the Russo-Turkish War, granted full independence in 1878 to Serbia, which proclaimed itself a kingdom in 1882.

z In 1918, Serbia became a founding member of the Kingdom of Serbs, Croats and Slovenes, later known as the Kingdom of Yugoslavia.

z After German expulsion from the area in 1945, Serbia became one of the component republics of the Socialist Federal Republic of Yugoslavia, headed by Josip Broz (Marshal Tito).

z The Yugoslav federation lasted for more than 10 years after Tito's death in 1980, but fell apart under Serbian nationalist leader Slobodan Milosevic.

z In 1992, Serbia and Montenegro declared themselves a new Federal Republic of Yugoslavia.

z In an effort to unite ethnic Serbs in neighbouring republics into a "Greater Serbia," Mr. Milosevic undertook various military campaigns, leading to the suspension of the republic from the UN and eventual intervention by NATO.

z In 2003, the republic was restructured into a looser union between Serbia and Montenegro, the latter which will vote later this year on separation.

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Five-part series

This is the year much of the former Yugoslavia can settle the issues that have caused years of bloodshed and led to controversial international interventions. The Globe and Mail's European bureau chief, Doug Saunders, has spent a month touring this fast-changing region and reports all week on the state of nation-building and the tough choices ahead.

Monday: Will the Balkans remain Europe's most troubled corner or emerge as a peaceful contributor?

Tuesday: A new, impatient generation in Kosovo revolts against its liberators.

Yesterday: Distinct society or sovereignty association? Montenegro faces a familiar sort of vote.

Today: The endless hassle of life in a rogue state.

Tomorrow: Bosnia's children of atrocity come of age. Will their nation follow?

Read the series so far on-line

at globeandmail.com/balkans