The ground shifted underfoot in Kosovo in December 2012. After years of posturing, punctuated by outbursts of violence, Serbia and Kosovo began to implement a landmark agreement on border control, opening joint posts at crossings that had been variously barricaded, circumvented or burned to the ground for much of the past two years. Bigger issues, including the courts, police and municipal structures in Serb-majority northern Kosovo, are now on the agenda of a high-level bilateral dialogue facilitated by the European Union (EU). The leaders of both states seem more ready than ever to compromise, but the northern Kosovo Serbs are staunchly opposed to integration, low-level violence is increasing, Kosovo nationalists are tense, and a spark could set off intercommunal fighting. Belgrade and Pristina should seize this chance to engage in a substantial discussion on the transformation of existing structures in the North and to offer a self-governing region that fits into Kosovo’s jurisdiction based on a flexible application of the Ahtisaari plan’s features.

Kosovo and Serbia still disagree on much. For Pristina, negotiation aims at winning Serb acceptance of the Ahtisaari plan – the framework devised originally by Martti Ahtisaari, the former UN special envoy – that set in place Kosovo’s internal structure and statehood. For Belgrade, the talks concern revision or improvement of agreements that it considers flawed or unacceptable, like the Ahtisaari plan. The gulf between the two expanded during years of little direct contact, ample mistrust and fractious domestic politics. Navigating a sure route through the waters will be hard, but recent developments provide hope, as results in the early stages of the talks have thawed some of the mutual rigidity. Serbia recently crossed a threshold by affirming, at least implicitly, Kosovo’s territorial integrity and jurisdiction over the North, though still denying its independence. Both capitals seem to have ruled out the use of force to reach a solution to their political dispute.

This report looks back at the technical dialogue conducted with EU facilitation since March 2011 and forward to the next stages of the high-level political talks that began in October 2012. The sides have resolved some practical issues: trade relations, participation in regional meetings and recognition of one another’s diplomas. Others – free movement of persons, personal documents, liaison offices, civil registry and property records – have been difficult, but some results are evident. Talks on telecommunications and energy have not led to agreement, and emotional subjects like missing persons have yet to be broached. The December opening of two jointly-managed border posts is the brightest achievement to date, and potentially an important one; the border regime touches almost every aspect of the Kosovo-Serbia dispute, from mundane practicalities to fundamental status and independence issues. Yet, the sides still have to finalise details, especially on customs controls, and Kosovo and EU police (EULEX) still must be granted full free movement to reach the Serbia border and carry out their duties.

The breakthrough was the first tangible result of talks between the two prime ministers and hosted by Catherine Ashton, the EU foreign policy chief. Until now, those meetings have been mainly about feeling one another out and making decisions on agreements framed earlier by experts. It has been possible to package results ambiguously enough to allow both sides to hold to their principles concerning Kosovo status. That period is ending, however. It will be more difficult to sustain ambiguity on the next agenda items, which deal with whose law and institutions will govern northern Kosovo.

In December 2012, EU member states set tough conditions closely tied to the gradual normalisation of their bilateral relations for Serbia and Kosovo to progress on their respective EU accession tracks. To begin membership negotiations, Serbia was asked to progressively deliver security and justice structures in northern Kosovo in cooperation with Kosovo. This means making substantial progress in discussions on how the local courts, police and municipalities are to be managed. While these institutions are currently outside Pristina’s control, solutions can be found that would affirm the state’s unity, while allowing local Serbs to retain their sense of ownership.

The transformation of northern structures into self-governing bodies that fit into Kosovo’s jurisdiction could open the way for offering the North a special arrangement as part of the overall solution. Much can be accomplished by flexible application of the Ahtisaari plan with regards to police, courts and regional government. One principle should be that Kosovo’s borders remain intact; another should be that the North govern itself as it wishes when it comes to issues of community concern, insofar as this does not damage Kosovo’s territorial integrity. Pristina also wants its status as an independent state affirmed, which Belgrade currently firmly rejects. Yet even here, there is room for compromise, with Serbia lifting its block on Kosovo’s membership in regional and international organisations and participation in international sporting and cultural events. These are complex, highly emotive issues the details of which can be worked out gradually, in step with Kosovo’s and Serbia’s EU accession processes.

But the dialogue is now at a decisive point. Belgrade’s and Pristina’s positions on northern Kosovo have never been closer. If they can finalise agreements on the border and make real progress in talks on governing institutions and the rule of law in the North before the European Council (summit) in June 2013, the EU is ready to reward both. For Kosovo, negotiating a Stabilisation and Association Agreement with the European Union would ground it as firmly as the rest of the region in the accession process. For Serbia, starting formal membership negotiations would give a huge boost to its reform efforts. Coupled with Croatia’s EU accession in July, these gains would ripple through the western Balkans. But if talks collapse in the next few months, EU member-state politics would dictate a long pause that the fragile coalitions in Belgrade and Pristina might not survive, and the low-level violence that has racked the region in early 2013 could worsen. Such a promising opportunity may not come again soon, if at all.

Pristina/Belgrade/Brussels, 19 February 2013