Serbia offers Kosovo everything but independence

BADEN, Austria, Nov 27 (Reuters) Serbia appealed to Kosovo Albanians today to accept its offer of nearly all rights and symbols of an independent state, short of the republic they are demanding.

President Boris Tadic tabled the proposal at talks on the fate of the breakaway province, in a bid to head off a unilateral declaration of independence.

But Serb sources said the Albanians immediately rejected the idea, which appeared to resemble previous Serb offers of broad autonomy short of the independence Kosovo demands.

Tadic said Serbia was offering Kosovo most rights ''and symbols that are normally reserved only for sovereign states,'' according to a copy of his speech.

As in past offers, it included access to international financial institutions such as the International Monetary Fund, considered crucial to the territory's future development.

But Tadic said Serbia ''reserves the right to exclusive representation'' in the UN, the Organisation for Security and Cooperation in Europe (OSCE) and the Council of Europe.

Serbia would also ''maintain the right to associate herself with the province's foreign policy, defence, border control and the protection of Serbian heritage'' - all red lines for Kosovo.

The province's two million Albanians say they will accept nothing less than full statehood, eight years after NATO bombs wrested control of the territory from Serbia. Backed by Russia, Serbia refuses to let Kosovo go.

The two sides were holding a second day of talks in the Austrian spa town of Baden, their last before American, Russia and European Union mediators report back to the United Nations on December 10.

RUSSIA URGES MORE TIME The Albanians say they will declare independence with Western backing after these talks end, a move diplomats say could come in January or February.

Backed by Russia, Serbia is pressing for an extension of the talks to head it off. Tadic said the Serb framework could provide the necessary basis for further negotiation.

''The choice is between unilateral action or some form of negotiated solution,'' he said. ''I hope I have made clear the risks of unilateral action.'' Russian envoy Alexander Botsan-Kharchenko said Moscow would ''insist'' on continuing the negotiations after December 10. ''But we need strong, good arguments to do this,'' he told reporters.

There is, however, no deal in sight, with just two weeks to go. The Baden meeting is due to end tomorrow. European Union mediator Wolfgang Ischinger said on Monday he saw no justification for extending the talks.

Serb ally Moscow this summer blocked a Western-backed plan granting independence at the UN Security Council.

Diplomats say the major Western powers, who bombed in 1999 to end a wave of ethnic cleansing by Serb forces trying to crush a guerrilla insurgency, are now determined to recognise Kosovo.

The two sides shared a cordial dinner after talks yesterday, but remained totally opposed on the question of Kosovo's future.

Kosovo spokesman Skender Hyseni said Serbia had offered ''nothing new''. Serbia's hardline prime minister, Vojislav Kostunica, did not attend the dinner.

REUTERS RJ AS1800