By Oana Lungescu
BBC European affairs correspondent, Bucharest
When they chose Bucharest as the venue for their 2008 summit, Nato leaders meant to send an encouraging signal to all Balkan countries.
Nato's veto has inflamed nationalist feelings in Macedonia
But the decision not to invite Macedonia along with Croatia and Albania risks sending mixed signals and raising fears of instability in a region which was already reeling from Kosovo's declaration of independence from Serbia.
Macedonia's bid was blocked by Greece because of a 17-year row over the country's name. Athens says it implies a territorial claim on its northern province - also called Macedonia - and wants the former Yugoslav republic to change its name to New or Upper Macedonia.
But the veto has only inflamed nationalist feelings.
In a gesture rarely seen at a Nato summit, a group of Macedonian journalists angrily walked out of a news conference after Secretary General Jaap de Hoop Scheffer made the announcement.
Shortly afterwards, the entire Macedonian delegation left the summit, arguing that the country's leaders had to be with their people at a difficult moment.
Striking a defiant note, foreign minister Antonio Milososki said: "It is very regretful for the principles of democracy that Macedonia's bid for Nato membership was punished, not because of what we have done but because of who we are.
"We are Macedonians and our country is the Republic of Macedonia. And it will remain so forever."
Albanian Prime Minister Sali Berisha thanked Nato leaders for the invitation to join, which he called "a miracle".
But he warned that the failure to issue a similar invitation to Macedonia - where a quarter of the country's two million people are ethnic Albanians - could encourage "radical groups".
In 2001, Nato and the EU managed to prevent a civil war in Macedonia between security forces and ethnic Albanians separatists by brokering a peace deal which granted more minority rights.
But there will be fewer incentives for the government to create a multi-ethnic society without the carrot of Nato and European Union membership. Athens could use its veto again later this year to scupper Skopje's bid to start EU membership talks.
Pessimists fear that Macedonia could break up under the strain, reviving dreams of a Greater Albania including Kosovo. Optimists argue Albania's invitation to join Nato will help to prevent the worst-case scenario.
Summit decisions were also watched closely in Serbia.
Albania leaders say Nato's invitation is a 'miracle'
"I feel sorry because Nato membership is important for Macedonia's political stability," said former Serbian foreign minister Goran Svilanovic, "but I'm also thinking about Serbia's interest. Every progress of Serbia's neighbours towards EU and Nato membership is good because it should encourage Serbia's people and politicians to achieve the same goals."
But Kosovo's secession has pushed Serbia further away from the rest of Europe, with pro-Western forces lagging behind nationalist parties ahead of next month's parliamentary election.
There was little reaction to Nato's offer of an "intensified dialogue", which was granted to Bosnia and Montenegro as a key step towards eventual membership. All former communist countries that are now part of the EU boosted their democratic credentials by first joining Nato.
Slovenia is already part of Nato and the EU. Almost two decades after the bloody break-up of Yugoslavia, Croatia also looks close to reaching that goal. It hopes to join Nato next year and the EU by 2010.
On Friday, US President George W Bush travels to Zagreb to congratulate Croatians on their success.
Only two months ago, they did not seem at all keen on Nato. But with Serbian nationalism once again on the rise, Croatians have made their choice. Prime Minister Ivo Sanader said support for Nato membership now stood at 70%.