Kosovo declared independence in 2008 with the backing of the Western powers which waged a NATO air war in 1999 to wrest control of the territory from late Serbian strongman Slobodan Milošević.
Recognised by roughly half the world but not yet a member of the United Nations, Kosovo is one of the poorest countries in Europe, its government still challenged by minority Serbs in the north who reject the secession.
But Western diplomats say a new push by EU foreign policy chief Catherine Ashton to 'normalise relations' between Belgrade and Pristina, and integrate the north, is bearing fruit.
"We are seriously committed to normalising relations with Serbia," Hashim Thaçi, Kosovo's prime minister and a former guerrilla commander, told reporters. He and his Serbian counterpart, Ivica Dačić, meet again in Brussels on 19-20 February.
"We will move swiftly towards membership of NATO and the European Union, but also the United Nations," Thaçi said.
The national flags of Kosovo, Albania and the United States flew from lampposts and balconies in the capital, Pristina.
Members of the Kosovo Security Force, an embryo army, marched through the city, where huge yellow letters spelled the word 'Newborn' and were painted with the flags of the 98 countries so far to have recognised Kosovo.
Serbia says it will never join them, while its ally Russia, a veto-holder in the UN Security Council, stands in the way of Kosovo winning a seat at the United Nations.
EU brokering talks
But Serbia is under pressure from the EU to cooperate with its former province and loosen its hold on the northern Serb pocket if the bloc is to move ahead with Belgrade's bid to join.
With fellow ex-Yugoslav republic Croatia set to join the EU on 1 July, Dacic's government has signalled greater flexibility on Kosovo, determined to clinch EU accession talks within months and send a signal of stability to much-needed foreign investors.
The EU-led talks have yielded agreement on the exchange of liaison officers to improve communication and joint management of their border, including a customs regime. Belgrade has also agreed to recognise Kosovo vehicle licence plates, identification papers and university diplomas.