Serbia to Restart Kosovo Talks to Open EU Entry Talks

Serbia begins renewed talks with Kosovo today as pressure builds for it to make a deal with the breakaway province and keep alive hope of starting European Union entry talks this year.

Prime Minister Ivica Dacic averted a negative verdict on Serbia’s EU readiness by consenting at the last minute to meet Kosovo Premier Hashim Thaci in Brussels in an EU-brokered reconciliation bid after Serbia rejected a mediated accord on April 8. In return, EU Enlargement Commissioner Stefan Fule put off a report yesterday linked to allowing accession talks to begin in June.

Serbia, the largest ex-Yugoslav republic, has seen its EU entry bid stunted by a refusal to acknowledge Kosovo’s 2008 declaration of independence. The province was pried away from Serbia in NATO’s 1999 bombing campaign, the last of the wars that accompanied the breakup of Yugoslavia.

“It seems like a very positive development,” said Ivan Vejvoda, the Belgrade-based vice president of the U.S. German Marshall Fund. “There were indications even after the last talks failed, that the Serbian government would remain open for a new round. Of course, one has to be very cautious, but it’s still a very positive development.”

Uncertainty over a date to start talks have roiled markets in the Balkan nation. The dinar lost 0.35 percent to the euro yesterday to 111.7470, its weakest level in a week. The yield on its dollar-denominated 2021 bond reached 5.1689 percent, its highest since April 9.

‘Enlargement Fatigue’

“Serbia probably needs to be careful not to overplay its hand as enlargement fatigue in the EU has risen in recent years, and particularly in Germany,” Tim Ash, the London-based analyst at the Standard Bank Plc, wrote in a note to investors yesterday. “Serbia lacks key allies in the EU, or at least those with as much leverage as Germany.”

Fule, speaking to reporters in Strasbourg, France, yesterday called the hastily scheduled meeting between Serbia and Kosovo “a good sign” and put off a report that threatened to reject allowing Serbian entry talks to begin. The European Commission said in December that mending ties with Kosovo was key for Serbia to win a start date.

“We are confident that this dialogue on the prime ministers’ level will result in a clear agreement,” Fule said. “We hope the two leaderships will seize the historical opportunity that lies before them in the very interest of their citizens.”

‘Good Faith’

The Serbian delegation is making the trip to Brussels “in good faith and with good will,” Dacic was quoted by the Serbian state-run newswire Tanjug as saying late yesterday.

Suzana Grubjesic, Serbia’s deputy prime minister for European integration who saw the EU report’s latest version, said it has “a lot more praise than criticism” and deals mostly with “internal reforms that we have implemented for our sake.”

“I expect that resolution to be positive,” she said in a e-mailed response to Bloomberg questions, “just like the draft which recommended that the European Commission opens the process of accession talks as soon as possible.”

Serbia wants Thaci to grant Serbs in Kosovo’s northern region decision-making rights on police and the judiciary and to pledge to keep the Kosovo army out of Serbian communities.

Serbia and Kosovo have been at loggerheads since the wars of the 1990s that led to the breakup of Yugoslavia. Kosovo is recognized by the U.S. and 22 of the EU’s 27 members. Both need deeper EU ties after the civil wars stunted the region’s transition from communism.

Commission Conditions

Naz Masraff, a London-based analyst at Eurasia Group, said in an April 10 note to investors that he was still skeptical about talks beginning in the next two months.

“Barring a last minute turnaround in behind-the-scenes talks this week, it seems increasingly clear that Serbia’s prospects of securing a date in June for opening accession negotiation with the EU have largely diminished,” he said. “A date for Serbia, therefore, is unlikely before December at best.”

To contact the reporters on this story: Gordana Filipovic in Belgrade at gfilipovic@bloomberg.net; Misha Savic in Belgrade at msavic2@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net

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