U.S. says Kosovo unstable, needs clarity this year

PRISTINA, Serbia, Sept 27 (Reuters) - The breakaway Serbian province of Kosovo is not stable and its future must be resolved this year, a United States envoy said on Wednesday.

"We must move ahead now," U.S. Assistant Secretary for European and Eurasian Affairs Daniel Fried told reporters in the provincial capital Pristina.

"... the present situation is not inherently stable," he said after meeting leaders of Kosovo's pro-independence ethnic Albanian majority.

The comments reflect concern in the West that delaying a decision into next year on whether to grant the United Nations-run province independence risks fresh violence, a fear underlined in late summer by hand grenade attacks on Serbs.

"We hope to have a negotiated settlement this year," he said. "The people of Kosovo deserve greater clarity and as we approach the end of the year I suspect they will get greater clarity," Fried added.

Russia, Serbia's traditional ally in the U.N. Security Council, has cautioned against "artificial deadlines" -- insisting Serbia and Kosovo's Albanians be given time to reach a negotiated settlement in talks that began in February.

Washington and the major European powers are pushing for a decision this year. They instructed U.N. mediator Martti Ahtisaari last week to draw up his proposal, which Western officials say could be submitted to both sides by November.

Diplomats say independence is the likely outcome, but will almost certainly be rejected by Serbia.

The territory of 2 million people -- 90 percent of whom are Albanians -- has been run by the United Nations since 1999, when NATO bombed for 78 days to drive out Serb forces accused of ethnic cleansing in a two-year counter-insurgency war.

In the Serbian capital Belgrade on Tuesday, Fried said Serb leaders had not lobbied Washington for a delay. Reports say Belgrade fears a Kosovo body-blow would drive voters into the arms of ultranationalists in elections that appear imminent.

At a news conference on Wednesday with Fried, the political director of the German Ministry of Foreign Affairs, Michael Scheffer, said the status solution "needs to be a solution that reflects the will of the Kosovo people ... but does not humiliate anyone in particular".

Rich in Serb Orthodox Christian heritage and still home to 100,000 Serbs, Kosovo holds almost mythic status for many Serbs.

The diplomats warned that violence would be "detrimental" and urged tolerance towards Serbs, a ghettoised minority.

"National triumphalism in the Balkans has had its day, and it was a miserable day," said Fried.

Fried visits the mainly Serb north on Thursday, where there are signs of resistance and talk of secession as a decision nears. The north already functions as a parallel system propped up by Belgrade. (Additional reporting by Shaban Buza)