Ilija Čvorović (Bata Stojković), a former Stalinist who spent several years in a prison in Goli otok, is contacted by the police to routinely answer questions about his sub-tenant, Petar Markov Jakovljević (Bora Todorović), a businessman, who spent twenty years living in Paris, and has now returned to Belgrade to open a tailor shop. After only a couple minutes, Ilija is free to go, however he starts to suspect that his sub-tenant, Petar, might be a spy.

As time passes, Ilija becomes convinced that Petar, a modern man from a capitalist country, represents a great threat to national security and the socialist system, and begins spying on him. Ilija's wife Danica (Mira Banjac) is more concerned about the future of their daughter Sonja (Sonja Savić), who, although holding a degree in dentistry, is unable to find a job.

After a bout of spying, Ilija phones inspector Dražić (Milan Štrljić), claiming that Petar was meeting with "suspicious people" (actually Petar's intellectual friends), but Dražić does not take him seriously. Ilija decides to take matters into his own hands. He begins his own surveillance operation against the innocent man and his friends. Eventually, he bars his house, buys a guard dog, arms himself with munition, and even gets help from his brother Đura (Zvonko Lepetić), who also becomes convinced that Petar is a foreign agent.

One evening, Ilija is accidentally hit by a car, which he sees as an assassination attempt. Soon, even Danica starts to believe Ilija, but Sonja believes that her father is suffering from paranoia. Đuro manages to capture several of Petar's friends, holding them in his basement, beating them up and making them "reveal their terrorist plans". Petar comes to Ilija's house, where he finds Danica. Petar says that he wanted to say goodbye, as he is traveling to New York, and asks Danica why Ilija and his brother are following him, thus revealing that he was aware of their "surveillance operation".

Ilija and Đura crash into the house, sending Danica away, tying Petar to a chair, beating him and forcing him to "confess". Petar keeps claiming that he is not a spy, but the brothers do not believe him. Đura leaves the house for a while, to bring one of Petar's friends who "admitted everything", and Ilija continues to interrogate Petar. However, Ilija gets too excited and has a heart attack. Petar manages to get to the phone and call the ambulance, and then, still handcuffed to the chair, he leaves the house to try to catch his plane. Ilija, while in severe pain, phones Đura's house and tells his wife to tell him to "block the airport". He then crawls out of the house, and starts crawling after Petar, with his dog following him.

Kovačević's work talks about the relationship between the individual and the government, individual and totalitarian consciousness, and the consequences of a system that demands absolute obedience, which are primarily manifested in the loss of reason and the disintegration of the family. Because of such contradictions, such a system is an idea that destroys itself, and sees its survival in the search for "invisible enemies". The main character, Ilija Čvorović, who was a victim of such a political mechanism and tyranny, now takes on the role of the persecutor and becomes an instrument of that very system as he pursues and spies on Peter, a completely innocent person, in order to prove his obedience to the authorities. Thus he turns out to be a tragicomic figure who completes a full circle of infernal insanity of an order that promotes paranoia, fear, hatred and loss of reason.

• Montréal World Film Festival, 1984 - Best Screenplay^[4]
• Pula Film Festival, 1984 - Best Film, Best Actor (Bata Stojković)^[4]

The Yugoslav Film Archive, in accordance with its authorities based on the Law on Cultural Heritage, declared one hundred Serbian feature films (1911–1999) as cultural heritage of great importance on December 28, 2016. Balkan Spy is also on that list.^[5]

• List of Yugoslav films

• Balkan Spy at IMDb  
• Balkanski špijun at AllMovie