PODGORICA, Serbia and Montenegro, Feb 28 (Reuters) - The Adriatic coast republic of Montenegro will hold a referendum on on May 21 to determine if it remains in a union with much larger Serbia or strikes out on its own as an independent state.
"It has been agreed to hold a referendum on May 21, 2006, and to postpone regular local elections until autumn, and to hold them together with a general election," Montenegro's three pro-Serbia opposition parties said in a statement on Tuesday.
The ruling parties, which favour independence and have long campaigned for the referendum, declined to say officially that a date had finally been set. But government sources confirmed it.
Both sides held talks on Tuesday with a European Union envoy, Miroslav Lajcak, who has been brokering an accord on the rules of the plebiscite. Terms and date were to expected to be endorsed by the 77-seat parliament on Wednesday and Thursday.
Montenegrins will be asked to decide whether to declare independence or remain linked to their much larger neighbour in the three-year-old State Union of Serbia and Montenegro, a body critics say is totally dysfunctional.
If Montenegro chooses to quit the union, it could leave Serbia even before Kosovo, the Albanian-dominated province whose future status is now the subject of U.N.-mediated talks, wins a widely predicted "conditional independence".
EU THRESHOLD AGREED
On Monday the pro-independence ruling party and the pro-union opposition agreed to EU-proposed referendum rules, which set a threshold of 55 percent of over half the electorate for a Yes vote for independence to be ruled valid.
"Montenegro has sent Europe a very responsible and very European message and that is very good for Montenegro," Lajcak said.
Serbia and Montenegro are all that is left of the six-member Yugoslav federation which broke up in war in the 1990s.
The EU persuaded them to stay together three years ago, fearing a split would create further instability in the Balkans. But it conceded Montenegro could ask its people this year to decide this year whether to stay in the union or break away.
The latest opinion poll, carried out in December, showed 41.4 percent support independence, 32.3 percent oppose it, 14.9 percent are undecided and 11.4 percent would not say.
Present-day Montenegro was populated by Slavs in the sixth century, and later came under Byzantine and Ottoman control. It became de facto independent in the late 18th century and proclaimed a kingdom in 1910, but was incorporated into Serbia after the First World War.
Of Montenegro's 650,000 people, some 62 percent say they are Montenegrin, some 10 percent Serb, 15 percent Muslim, 7 percent Albanian and the rest 'other'.
Roughly the size of Northern Ireland, it got its name -- which means Black Mountain -- from the thick forests that cover almost 55 percent of the land. (Additional reporting by Ellie Tzortzi)