His statement - backed up by the signing of a new EU-Serbia visa facilitation agreement - comes after the moderate DS party of Serb president Boris Tadic, the nationalist DSS party of prime minister Vojislav Kostunica and the liberal G17 Plus faction formed a new coalition Tuesday night.

Under the deal, the hardline Mr Kostunica retains control of interior ministry security forces, the agencies responsible for catching war crimes fugitives such as Ratko Mladic. But the pro-EU Mr Tadic also gets to insert some people into senior security posts.

Mr Kostunica is known for cultivating close ties with the Serbian Radical Party, which holds a majority in parliament and also has sympathisers in Serb security structures. The prime minister told MPs Tuesday he will not make concessions on Kosovo for the sake of EU ties.

Some Serb officials were annoyed Mr Rehn did not announce the resumption of SAA talks immediately. "We were all expecting something better [than Mr Rehn's offer]. Or why would he pay the money for the plane ticket and come to say the same old thing?" a government contact told Reuters.

UN solution slipping away?

Meanwhile, US and Russian talks on the future of Kosovo saw the two UN powers move further apart this week. "We and Russia do not have agreement on this, but we'll keep working," US secretary of state Condoleezza Rice said after meeting Russian president Vladimir Putin Tuesday.

"Solutions are not visible at the moment," Russian foreign minister Sergei Lavrov said, after Russia's UN envoy Vitaly Churkin threatened to veto a new UN security council resolution on Kosovo, drafted by the US and EU. "Such a scenario is becoming more and more likely," Mr Churkin said, DTT-NET.COM reports.

Kosovo is also high on the agenda of the EU-Russia summit in Samara this Friday, but relations are at a low ebb following political rows between Russia and EU members Poland, Lithuania and Estonia. "On Kosovo, EU and Russian views diverge considerably," a pre-summit, internal EU paper states.

The US and EU's draft UN resolution says "the provisions of this resolution shall replace the provisions of the resolutions mentioned above" referring to the June 1999 UN resolution 1244, which reaffirmed "the commitment of all member states to the sovereignty and territorial integrity of the Federal Republic of Yugoslavia."

The key clause on "replacing" 1244 would legally free Kosovo to declare independence and for the US and EU states to recognise the new country. The US and EU circulated the draft text to UN colleagues last week and are hoping for adoption in late May or early June.

Threat of non-UN solution

Russia's veto threat has seen senior US diplomats suggest Washington may recognise an independent Kosovo unilaterally if there is no UN deal, in a position dubbed "political blackmail" by Moscow. EU diplomats refuse to speculate if it would be possible to get an EU-27 consensus on supporting any unilateral moves.

Kosovo fell under UN control in 1999 after NATO intervened to stop a Serb crackdown on the majority ethnic Albanian population, described in the US and EU draft UN resolution as "massive violence and repression." Thousands of NATO soldiers are to stay to keep the peace in the region, which is still awash with small arms.

"I am convinced that delay of the Kosovo issue...will increase the tensions and the risks in the region," Macedonian foreign minister Antonio Milososki told EUobserver on the situation. "If this happens it will contribute to eventual failure, and this would be the next failure of Europe."