Former Finnish President Marti Ahtisaari appointed as Special UN Envoy to lead Kosovo final status talks. Contact Group elaborated guiding principles which process and outcome must satisfy. Ahtisaari travelled to Pristina, meeting with Kosovo Albanian and Kosovo Serb leaders, as well as Belgrade, where President Tadic proposed reshaping Kosovo within Serbia along dual entity model of Bosnia. Belgrade also announced negotiating team for talks: President Tadic and PM Kostunica to be co-presidents; minimal Kosovo Serb representation. U.S. Under Sec. State Burns called on constructive participation of all sides, emphasised Kosovo Albanians responsible for making convincing case for independence, warned against use of violence. 4 injured in market bomb in mainly Serb town Strpce 17 November.

UN Security Council recommended 24 October that talks to determine Kosovo’s final status should begin “soon”, echoing conclusion of report submitted to SG Annan by Special Envoy Kai Eide 7 October. Report found high-levels of inter-ethnic and organised crime, unemployment and corruption in province. Former Finnish President (and Crisis Group Chairman) Ahtisaari likely to be UN envoy for status process. Kosovo Albanian negotiating team stalled by impasse over Assembly draft independence resolution proposed by opposition PDK party as precondition of participation; coordinator warned of “complete breakdown” in negotiation preparations after second meeting failed. Kosovo Serbs unclear over role in negotiations while Belgrade uncertain who will lead negotiating team. EU foreign policy chief Solana suggested possible EU police role. Hague tribunal relaxed conditions of former PM Haradinaj’s provisional release allowing for limited political activity. UNMIK confirmed new armed group, Kosovo Independence Army, present in west. Bombs planted under 2 UN cars early October. Police arrested dozens of young Albanian activists who sprayed graffiti on 20 UN cars in Pristina 19 October. Police (KPS) car carrying Serb border officers attacked near Strpce, 26 October.

Uncompromising, nervous mood among Kosovo Albanians as key status discussions approach. UNSG envoy Kai Eide’s assessment on whether progress in institution- building, rule of law, decentralisation, and treatment of minorities sufficient for start of final status negotiations expected early October. Eide hosted Vienna meeting between Kosovo and Serbian ministers to discuss decentralisation, 16 September. Final status talks expected by end of year; former Finnish President Martti Ahtisaari tipped as status envoy. President Rugova diagnosed with lung cancer; launched proposal for composition of Kosovo status negotiating team. Opposition PDK demurred, proposed resolution for independence in parliament. New head of Serbia’s Kosovo co- ordination centre Sanda Raskovic-Ivic called on Serbs working in UNMIK institutions to return to Serbian state and structures. New Serb regional police commander of Gjilan/Gnjilane wounded in 28 September shooting. Gracanica Serbs held roadblock protest after 4 Serbs arrested for war crimes 18 September. International Telecommunications Union declined UNMIK’s request for separate Kosovo telephone code.

UN special envoy Kai Eide visited Pristina and Belgrade in third visit to region since appointment - expected to submit recommendations in September on whether to start final status talks. Kosovo Serb politicians rejected provisional government’s so-called “Plan B” for decentralisation pilot projects, although endorsed by UNMIK: plan’s enlargement of pilot project territories reduced local Serb majorities over Albanians to bare minimum. Serbs preparing “Plan C”. Albanian politicians displeased by UNMIK chief Jessen- Petersen’s call for “compromise” over final status; meanwhile, their efforts to agree format of final status working groups bogged down. KFOR launched TV advert campaign warning that in case of new riots it would use lethal force to defend sensitive sites. 2 Serbs killed and 2 wounded in 27 August car shooting. President Rugova seriously ill; flown to U.S. military hospital in Germany.

UN Special Envoy Kai Eide held high-level meetings with all sides, stated major problems as decentralisation, freedom of movement and refugee repatriation. Contact Group warned PM Kosumi insufficient progress made in letter 22 July. UNMIK chief Soren Jessen-Petersen gave 5 decentralisation pilot projects go-ahead, presented Kosumi with plan for transfer of authority of police and judiciary, announced security review. Kosovo’s Serb leaders decided to continue 16-month boycott of Kosovo’s institutions. Mitrovica bridge formally opened 24 hours per day for traffic; UNMIK police clashed with Serbs near it 24 July. 3 coordinated explosions shook Pristina 2 July, 1 at UNMIK headquarters.

UNSG Annan appointed Kai Eide special envoy for evaluating Kosovo’s implementation of democratic standards. UNMIK chief Soren Jessen-Petersen convened first long- delayed meeting of Political Forum, aimed at building consensus among Kosovo politicians for final status process. Tensions rose in Mitrovica after UN formally reopened symbolic bridge across river Ibar; Serbs maintained human blockade to deny Albanians entry to Serb-dominated North Mitrovica; clashes between demonstrators and nearby Albanian residents ensued 19 June. Controversial journalist for Bota Sot daily, Bardhyl Ajeti, died following shooting near Gnjilane 3 June. Former PM Ramush Haradinaj returned to Kosovo 8 June, granted pre-trial release by Hague tribunal. Efforts by “Serb List for Kosovo and Metohija” to persuade Serbian government to allow them to take up Kosovo Assembly seats agreed to by Serbia-Montenegro FM Vuk Draskovic but rejected by Serbian PM Kostunica’s adviser Prorokovic 23 June.

UN Security Council meeting 27 May gave green light to proceed with mid-year review of progress on standards, to be initiated “this summer” under duly appointed special envoy. Improvements noted in outreach to minority communities and recent smooth transition of government though concerns raised over progress on government decentralisation and municipal pilot projects, inter-party rancour and violent incidents. Kosovo Assembly held first debate on decentralisation and pilot projects 19-20 May - government agreed to review plan after all parties expressed concerns. Thaci’s PDK party held out against participation in Political Forum for final status questions proposed by UN Special Rep. Soren Jessen-Petersen; submitted new dossier to UNMIK with evidence of governing LDK party private intelligence structure; police raided office of presumed LDK intelligence service 10 May. Kosovo’s President Rugova and PM Kosumi refused to meet Serbian counterparts.

Intra-Albanian political tension grew after opposition PDK accused government ministers of largest party, LDK, of links to secret security organisation: explosion at headquarters of ORA opposition party 17 April; police takeover of President Rugova’s security from private force. Enver Haradinaj, brother of former PM Ramush Haradinaj, shot dead 15 April. Final status preparation among Kosovo politicians stalled, but Contact Group (U.S., UK, Russia, Italy, Germany, France) and EU representatives held talks with Belgrade and Pristina: Contact Group publicly announced principles that Kosovo will not be partitioned, form union with any other state or return to pre-1999 status. Serbian PM Vojislav Kostunica called for solution of “more than autonomy, less than independence”. International Commission on the Balkans presented report suggesting Kosovo status progresses in 4 stages culminating with independence in EU.

Hague tribunal’s long-speculated indictment of PM Ramush Haradinaj for war crimes announced 8 March. Haradinaj resigned and turned himself in immediately. Despite annual KLA commemoration and anniversary of March 2004 riots, Kosovo’s subdued reaction, aided by Haradinaj’s calls for calm, surprised many: NATO had deployed additional 1,000 troops to bolster KFOR in anticipation of large demonstrations. Violence limited to grenade attacks – none fatal – and bomb scares, some claimed by new “Albanian Liberation Army”. Roadside bomb hit President Rugova’s motorcade 15 March. Haradinaj's home region of west Kosovo (Dukagjini) remained security concern; head of UNMIK Soren Jessen-Petersen’s offer of guarantees in support of Haradinaj bail release reduced tensions. Bail decision, due in several weeks, will mark next test of stability. Bajram Kosumi, deputy leader of Haradinaj's Alliance for the Future of Kosovo (AAK) party, elected PM 23 March – vowed to follow Haradinaj’s policies. New government maintained narrow AAK-Democratic League of Kosovo (LDK) coalition despite EU, U.S. and UK pressure for inclusion of Hashim Thaci’s Democratic Party of Kosovo (PDK).

Serbian President Boris Tadic made first visit by head of state to Kosovo since 1999 war, touring Serb enclaves. Avoided meeting interim government and repeatedly stated Kosovo independence unacceptable. For first time EU Council (foreign affairs ministers) stated Kosovo will not return to pre-1999 situation, but stopped short of explicitly ruling out partition - Head of UN Mission in Kosovo Soren Jessen- Petersen fully opposes partition. Kosovo government objected to UN Secretary-General Annan’s 24 February report to Security Council that Kosovo Serbs “live in fear”. Jessen-Peterson more upbeat; reported “tangible progress” on minority rights, praised PM Haradinaj, and castigated Belgrade’s representative for painting Kosovo black. Haradinaj launched decentralisation program, calling upon Serbs to return and for Albanians to be tolerant. Kosovo Serb official Oliver Ivanovic’s car blown up 8 February in Serb-dominated North Mitrovica; no casualties.