Serbia and its one-time province of Kosovo reached agreement Friday on two key issues that will significantly enhance Serbia's chances of becoming an official candidate for EU membership next week.
The agreements allow Kosovo to represent itself in international conferences and spell out the technical details of how Serbia and Kosovo will manage their joint borders and border crossings.
EU foreign policy chief Catherine Ashton and enlargement commissioner Stefan Fule welcomed the agreements as "a major step forward."
The EU wanted Belgrade to make new progress in the talks with Kosovo before backing its bid to join the bloc. EU foreign ministers will meet next week to consider whether Serbia has fulfilled conditions required to be a candidate for membership.
"These agreements ... are particularly welcome in view of the deliberations (of EU ministers) next week regarding candidate status for Serbia," Ashton said.
Kosovo, which declared independence in 2008, used to be a province of Serbia. Belgrade has vowed to never recognize its secession but the two sides have been in regular talks for the past year on normalizing ties.
One of the key sticking points has been Kosovo's insistence that it be represented in international forums as an independent state, something Serbia has opposed.
A compromise proposed by the EU and accepted by both sides states that Kosovo's nameplate at meetings will be followed by an asterisk. This would have a footnote attached referring to a U.N. Security Council resolution that makes no mention of Kosovo's independence, and a ruling by the International Court of Justice saying Kosovo's declaration of independence is legal.
U.S. Secretary of State Hillary Rodham Clinton thanked the EU for its efforts to bring the two rivals together.
"Today, Kosovo and Serbia have taken another important step toward their common European future," she said in a statement. "Kosovo will now sit at the table in regional fora as an equal partner."
"We also hope these agreements will open the door to Serbia's EU candidacy. Serbia's progress toward European integration is good for Serbia, good for Kosovo, and good for the future of the entire region."
Kosovo's Prime Minister, Hashim Thaci, said he was aware the move was not popular among Kosovo's majority ethnic Albanians who fear the agreement dilutes Kosovo's 2008 secession from Serbia, but insisted it was "a temporary formula."
"With this agreement Kosovo chose integration and not isolation," a statement from Thaci's office quoted him as telling reporters at a news conference in Pristina.
"Kosovo can become a member, represent itself, speak for itself and have the power and authority of signature in all multilateral institutions as an equal state."
Thaci says Kosovo's independence is irreversible and that Serbia will have to recognize its statehood at some point.
In Belgrade, Serbia's President Boris Tadic hailed the agreement saying it showed that "Serbia is a factor of stability in southeastern Europe."
"We never wanted to boycott or hinder the participation of Pristina in the international forums," he said in a statement.
The EU says it is not necessary for Serbia to recognize Kosovo, but there must be an easing of tensions with Kosovo's government before Belgrade can be given EU candidate status _ which paves the way for negotiations on eventual accession into the 27-nation bloc.
Serbia had expected to be granted that after it captured Bosnian Serb warlord Ratko Mladic earlier this year and delivered him to a war crimes tribunal in the Hague. But Germany blocked that in December, saying it wanted to see more progress in talks between Serbia and Kosovo.
On Friday, however, German Foreign Minister Guido Westerwelle welcomed the agreement as "a big step in the right direction," adding that it "would be very important in setting the course for the EU's discussions next week on Serbia's accession prospects."
Kosovo has been recognized by more than 80 nations, including 22 of the EU's 27 nations. But Serbia _ which considers Kosovo the cradle of its statehood and religion _ has blocked Kosovo's membership in the U.N., where many countries also reject unilateral declarations of independence by separatist regions.
The United States and many in the EU insist Kosovo's statehood is a special case because it is the result of a brutal Serbian ethnic cleansing campaign against Albanian separatists that led to an international administration in 1999, when NATO ejected Serb forces.
NATO still maintains about 5,000 troops in Kosovo to provide security.
Associated Press correspondents Don Melvin in Brussels, Dusan Stojanovic in Belgrade, Nebi Qena in Antakya, and Geir Moulson in Berlin contributed to this report.
Slobodan Lekic can be reached on Twitter at http://twitter.com/slekich