Phil Cain in Graz, Austria -

Kosovo and Serbia on Friday, February 24 agreed how Kosovo will be referred to at international meetings, removing the last significant obstacle to Serbia's EU candidacy and opening the possibility of pre-accession talks for Kosovo. This is real progress in a region hitherto resistant to it.

Serbia does not recognise the independence of its erstwhile province, which Kosovo declared in 2008. Serbia insist Kosovo delegates be accompanied by representatives of the UN, appointed administrator of Kosovo in 1999, and has sat out of meetings in which Kosovo participated.

The negotiations in Brussels, which began on the previous Wednesday, gained fresh momentum on Thursday when German Foreign Minister Guido Westerwelle paid a surprise visit to Belgrade. He brought with him news of a dramatic softening of the German position over Serbia's EU ambitions. In December, Chancellor Angela Merkel had insisted Serbia must dismantle all "parallel structures" in the Serb-dominated north of Kosovo before it could be granted EU candidacy. Such conditions were conspicuously absent from Westerwelle's hearty assurances of German backing on Thursday.

It seems Germany flinched in the face of possible open conflict with Austria, France and Italy, which sent a note intended for German ears to EU foreign policy chief Catherine Ashton on Wednesday. The three said EU members should "honour our promises made in December, give credit to Serbia's recently redoubled commitment and efforts, and grant Serbia candidate status," according to Reuters reports.

Ashton and EU enlargement commissioner, Stefan Fule, issued a statement saying Friday's deal was "a major step forward". Kosovo, they said, will now be "a full participant in its own right in regional meetings and events and will allow for further progress to contractual relations with the EU".

In any case, Serbian President Boris Tadic might have found it impossible to comply with Merkel's ultimatum. On February 14, North Kosovo (ethnic Serb) municipalities openly defied him by holding a referendum to express their dissatisfaction at the idea of being ruled from Pristina, Kosovo's capital. Over 99.7% said they disapproved. More significantly, however, with a turnout of 75%, they showed that Belgrade does not call the shots.

Kosovo's diplomatic footnote will read: "This designation is without prejudice to positions on status, and is in line with UNSC 1244 and the ICJ Opinion on the Kosovo Declaration of Independence." The reference to UN Security Council Resolution 1244, which gave the UN administrative powers in Kosovo, comes at Serbia's insistence. Kosovo pushed for the advisory opinion of the International Court of Justice in 2010, which said the independence declaration was legitimate.

The two-and-a-half-day meeting in Brussels also delivered agreement on patrolling the Serbia-Kosovo border, which Serbia considers an internal one while Kosovo considers it an international customs border.

The deal is a boost for President Tadic who faces an uphill battle in elections taking place before May 6th. Serbians, facing growing economic misery, are deeply disenchanted. Only 26% said they would back the Tadic's Democratic Party, while 33% said they would opt for the centre-right (and formerly part of an extreme nationalist party) Serbian Progressive Party, according to a poll by Partner Consulting.

Hashim Thaci, prime minister of Kosovo, can also make hay from the deal, saying it is something it is close to Serbian recognition of Kosovo's independence, while making much of the European Commission's undertaking to look into Kosovo and the EU signing a Stabilisation and Association Agreement.

So far, the EU and Kosovo have been able to have no legal relationship because five EU members – Cyprus, Greece, Romania, Slovakia and Spain – do not recognise it. That will probably now change.