UN pushes for deal on Serb rights in Kosovo

VIENNA, Apr 3 (Reuters) United Nations mediators struggled today for agreement on greater local powers for Serbs in Kosovo in the latest round of direct talks on the future of Serbia's majority Albanian province.

''We are so far apart,'' Kosovo deputy prime minister Lutfi Haziri told Reuters after the morning session. ''The Serbs oppose the main principles of the document.'' Kosovo Albanians are under pressure to give the diminishing Serb minority more say over its own affairs before they clinch the independence diplomats say is almost inevitable, seven years after NATO drove out Serb forces and the UN took control.

But UN mediators led by former Finnish president Martti Ahtisaari have rejected Serbia's demand for a separate Serb entity, or autonomy for the mainly Serb north.

Instead, they want to decentralise power and allow cooperation between Serb areas and Serbian authorities in Belgrade, as well as some financing from the Serbian budget.

Local self-government is seen as key to convincing the 100,000 Serbs, ghettoised and targeted by sporadic violence since the war, that they have a future in Kosovo.

Belgrade suggested the preliminary UN proposal, the fruit of the first two rounds of talks, did not go far enough.

''That document does not contain the kind of significant shift we expected to see the mediators make,'' Serb negotiator Aleksandar Simic said ahead of today's meeting.

ISSUE OF STATEHOOD The Albanians, who sense their own state is within their grasp, are trying to curtail the direct influence of Belgrade over Serb areas by making sure funding goes through the Kosovo treasury and limiting the powers given to municipalities.

UN officials say they will try for an agreement, but will move on without one if needed to meet a timetable set by Ahtisaari to wrap up talks within the year.

Ahtisaari has indicated the technical dialogue could be over within a couple of months, when talks will move on to the issue of statehood -- fiercely contested by Serbia but seemingly unavoidable given the messages coming from Western capitals.

''By the end of the next meeting, if there are certain points where there is still no agreement -- and I'm afraid that could be the case -- then we will just say: listen, these are the principles,'' said a UN official who asked not to be named.

Legally part of Serbia, Kosovo was wrested from Belgrade's control in 1999. NATO bombed for 78 days to drive out Serb forces accused of killing and expelling ethnic Albanian civilians in a two-year war with separatist guerrillas, the culmination of a decade of Serb repression.

Around half the Serb population fled a wave of revenge attacks. Those who stayed lead a grim existence on the margins of society, cocooned in a Belgrade-run world of ''parallel structures'' beyond Kosovo's Albanian-dominated institutions.

REUTERS OM RAI1923