BELGRADE, Sept 28 (Reuters) - Serbia got a green light from the European Union on Wednesday amid signs a solution for Kosovo is taking precedence in Western diplomacy for now over the immediate handover of war crimes fugitives to The Hague.
The EU said on Wednesday it expected Serbia-Montenegro will be set on the first rung of the ladder to membership of the bloc next week, breaking with its habit of awaiting a progress report from U.N. war crimes chief prosecutor Carla del Ponte before taking such a step.
Del Ponte is due in Belgrade on Thursday. Her assessment earlier this month of Serb efforts to cooperate with the tribunal in The Hague was still "not enough" -- a judgment that had blocked neighbouring Croatia's EU bid in the past.
Hague sources say she fears the chances of netting top Bosnian Serb war crimes fugitives Ratko Mladic and Radovan Karadzic would fade if the West eased up on Serbia, whether to advance higher strategic aims in Kosovo or for other reasons.
But major powers say Kosovo is "unsustainable" as it is and are planning to announce the launch of talks on the "final status" of the Serbian province in two weeks, with the prospect of a future EU place for Serbia a key part of their leverage.
Serbia's infant EU membership bid received a boost from Brussels with the EU prediction that talks on a Stabilisation and Association Agreement (SAA) would be launched next month.
"We'll be saying that internally, all the work is done. We are very confident," said Cristina Gallach, spokeswoman for EU foreign policy chief Javier Solana.
Serbian ministers also sounded confident, despite the fact Mladic, del Ponte's prime target, is still at large and could provoke another "failure to cooperate" report by the prosecutor.
The head of Serbia's Office for European Accession, Tanja Miscevic, said Mladic would not "at this moment" delay the talks. She said EU Enlargement Commissioner Olli Rehn would be in Belgrade on Oct. 10 to start work on the SAA.
In the Hague, however, there was no cheering.
"We are disappointed because Mladic was not delivered as expected but I'm confident that we can further rely on EU support for the Serbs to intensify their search for Mladic," del Ponte's political adviser, Jean Daniel Ruch, told Reuters.
CENTRE OF EU STRATEGIC AGENDA
In a speech on Monday that did not mention war crimes fugitives, Solana made clear that solving Kosovo was the EU's top priority in the Balkans and that the prospect of EU membership for Serbia was a vital part of the leverage needed.
Kosovo would put the Balkans "at the centre of our strategic agenda" in 2006, Solana said. "We cannot afford to fail."
Serbia has held title to Kosovo, its Orthodox heartland, for over 1,000 years. But its treatment of the Albanian majority in 1998-99 provoked NATO into a war that drove Serb forces out.
Now Kosovo has its own interim government, police, courts and currency. Only its minority Serbs look to Belgrade.
When mobs of Kosovo Albanians attacked Serb enclaves in March 2004, the United Nations realised Kosovo was still a powder-keg, with the potential to ignite new conflicts in the restive ethnic Albanian lands of southern Serbia and western Macedonia, on Kosovo's borders.
This is the risk that has injected new urgency.
Kosovo's 2 million Albanians demand independence and are 90 percent of the population, a factor analysts say could mean "people's sovereignty" will trump Serbia's legal claim.
The EU hopes the promise of membership for Serbia could mitigate what may be a painful outcome for Belgrade.
Diplomatic sources say the United Nations is expected to announce the launch of Kosovo talks possibly on Oct. 10.
Serbia-Montenegro Foreign Minister Vuk Draskovic, who had talks with the Contact Group (the United States, Italy, Germany, France, Britain, Russia) on Kosovo in New York last week, says the negotiations proper will begin in December.
Draskovic said he was also told "20 times" that Mladic had to be in jail by Nov. 20, the 10th anniversary of the Dayton accords to end the 1991-95 Bosnia war in which the Bosnian Serb general is accused of the slaughter of thousands of Muslims.
(Additional reporting by Emma Thomasson)