EXCLUSIVE: EIDE's REPORT SCORECARD

UNITED NATIONS, Oct 7 (Reuters) - U.N. envoy Kai Eide faulted Kosovo's provisional government on Friday for falling short in fostering ethnic tolerance and a strong justice system, but said the Serb province had made significant progress in setting up governmental and economic structures.

Eide, in a report to U.N. Secretary-General Kofi Annan, recommended the launch of international negotiations in any case on whether Kosovo should now win independence, as sought by its ethnic Albanian majority, or remain a part of Serbia, as demanded by Belgrade. Annan endorsed Eide's recommendation.

Here is Eide's scorecard on how Kosovo's local authorities have performed in meeting key international standards set by the U.N. administration that has governed it since 1999.

-- Governmental institutions: Legislative, executive and judicial institutions have been set up and systems are in place across Kosovo for providing public services. But minority Serbs have chosen to remain outside the political system and establish their own health and education services.

-- The economy: "Significant progress has been made" in creating economic structures. But the current economic situation nevertheless "remains bleak," with high unemployment and widespread poverty. Privatization of state-run firms is well under way and future prospects are positive, however, so long as job discrimination along ethnic lines is avoided.

Although the energy sector is one of Kosovo's most promising long-term assets, electric utility KEK "suffers from antiquated technology, power outages and a dramatic lack of income from its customers."

-- Rule of law: The Kosovo police service is taking on now and more demanding tasks but the police appear unable to handle organized crime, official corruption and interethnic crimes. "The Kosovo police and judiciary are fragile institutions."

-- Multiethnic society: "The situation is grim." Cases of inter-ethnic crimes and violence often go unreported, inhibiting ethnic minorities' freedom of movement and encouraging impunity among Kosovo's 90-percent ethnic Albanian majority. Property rights are "neither respected nor ensured." Serbs who fled Kosovo after a 1999 NATO bombing campaign have stopped returning and it will take a long time to change that.

-- Serbian Orthodox religious sites: Reconstruction is about to begin of many of the sites damaged or destroyed since 1999 by Muslim ethnic Albanian mobs. But they will need some form of international protection, particularly after NATO-led peacekeeping forces leave. Albanian leaders must put a halt to efforts to rewrite Kosovo's history and erase all traces of its Orthodox institutions.