Serbia and Kosovo's EU future clouded as court rules

Kosovo Serbs cross the road near the Serbia-Kosovo border crossing of Jarinje February 22, 2008.

PRISTINA (Reuters) - Whatever the International Court of Justice rules on Kosovo's independence from Serbia on Thursday, it is clear that both sides need impetus to move beyond posturing toward some kind of reconciliation.

When ethnic Albanian-dominated Kosovo, which most Serbs see as the Jerusalem of their Orthodox religion, declared independence in 2008, Belgrade asked the International Court of Justice to rule whether the action was legal.

The ICJ's opinion is only advisory, but the long wait for a ruling has prevented any serious attempt to find an accommodation. This in turn has blocked the EU membership prospects that both parties need to attract foreign funds to alleviate poverty and popular frustration.

Whether that process can start after Thursday is anybody's guess, as neither side has seen any advantage until now in offering compromise.

"Both parties are willing to talk but on different topics," said Predrag Simic, a professor at Belgrade Faculty of Political Science. "Belgrade wants to negotiate about the status and Pristina wants to end the status negotiations."

Kosovo has been recognized by 69 countries, and is looking for more to secure United Nations membership.

"I hope that Serbia will finally recognize that Kosovo is a fact, Kosovo is a state recognized by so many countries around the world," Kosovo Foreign Minister Skender Hyseni said.

Meanwhile Serbia wants to renew negotiations on the status of its former province -- a process that could slow down or freeze its EU membership drive.

"At the moment, the Balkans are not very attractive, but there will be available capital at the end of crisis," said Gabriel Dielacher of Vienna Capital Partners, an investment advisory company. "If the EU integration process slows down, it will make investors more hesitant."

DEADLOCK BETWEEN PAST AND FUTURE

Serbia lost control over Kosovo in 1999 when NATO bombed it to halt the killing of ethnic Albanians in a two-year counterinsurgency war.

After nine years under an international mandate, the Albanian majority, backed by the United States and most EU member states, declared independence -- which Belgrade pledged never to accept.

Serbia hopes the ICJ decision, followed by a United Nations resolution, can restore its claim on the Balkans' smallest country, one of the poorest corners of Europe.

Since the ICJ opinion is only advisory, EU diplomats will use the legal conclusions to try to create the basis for a practical relationship, without which future European integration will be blocked.

"Serbia knows that it cannot complete its European accession without resolving its relationship with Kosovo," said Marko Prelec of the International Crisis Group think tank.

"Kosovo likewise knows it cannot become a member of the United Nations, much less a member of the EU, without obtaining recognition from Serbia, or at least the consent of Serbia."

A source close to Brussels said EU ministers did not debate Serbia's candidacy in June, waiting instead to see progress in relations with Kosovo. The EU has told some of its diplomats to delay summer vacation plans to begin lobbying Serbia and Kosovo immediately after the ICJ ruling.

"No one expects Serbia to recognize Kosovo immediately, but they can at least stop blocking Kosovo's participation in regional initiatives," said Alexandra Stiglmayer of the European Stability Initiative think tank.

In recent days, Serbian officials -- anxious to continue shaking off the status of global pariah that Serbia acquired over its role in the Balkan wars of the 1990s -- have said they are open to compromise, but remained vague on details.

"We believe that a compromise solution on future status is needed and such a solution can only be found through negotiations," Foreign Minister Vuk Jeremic told Reuters.

Kosovo, which promotes itself as "Young Europe" because of its high birth rate and 30,000 young people entering the job market every year, also badly needs an economic boost. Nearly half its workforce is unemployed.

Its northern border, the shortest route to the EU market, is blocked as Serbia does not allow goods and vehicles from Kosovo onto its territory. Serbian officials typically boycott regional meetings attended by Kosovo representatives, and any support for compromise with Kosovo is still tantamount to political suicide.

(Writing by Adam Tanner; additional reporting by Ivana Sekularac and Aleksandar Vasovic in Belgrade; Editing by Kevin Liffey)