A more realistic public attitude is considered as key to achieving a mutally satisfactory resolution of the 10-year dispute, the report says.
Serbia keeps repeating that it will never recognise Kosovo's "unilateral declaration of independence" in 2008. According to the ICG, however, the country should not bury its head in the sand and must secure closer relations with Pristina in order to support the rule of law in northern Kosovo, where a significant Serbian minority lives.
Neglecting to act in the face of such opportunity would risk freezing the conflict "for several years," according to Marko Prelec, director of the ICG's Balkans Project, who warns that the dispute would then be likely be used to "mobilise nationalist opinion and deflect criticism of domestic corruption and government failures".
Mutual suspicion and incompatible agendas were identified as the biggest stumbling blocks to the two sides deepening relations.
Serbia has tabled a request to become a candidate for EU membership and is expected to have to stop preventing Kosovo's participation in regional institutions if it is to be considered for accession. Last Thursday, German Foreign Minister Guido Westerwelle said in Belgrade that its road to EU membership passes through reconciliation with Kosovo.
The same idea is developed in the ICG report. "If Serbia really seeks meaningful progress, it will have to put its cards on the table and treat Kosovo as an equal; and Pristina should carefully consider what Belgrade has to offer," Prelec states.
One of the most controversial proposals discussed in the report is the possibility of a land swap between ethnic Serb Northern Kosovo and the Albanian portion of the Preševo Valley in Serbia, an idea supported by the ICG, despite not being on the agenda of the EU's capitals or institutions.
Greater autonomy for the north and self-governing status for Serbian Orthodox Church sites, as set out in the Ahtisaari plan, in exchange for Serbia recognising Kosovo, "should be acceptable to both sides," according to the ICG.
Sabine Freizer, director of the ICG's Europe Programme, believes that a solution to the Belgrade-Pristina deadlock is most likely to come without foreign direct mediation.
"The best policy for Kosovo's friends is to facilitate an opportunity for the sides to engage in a frank and open dialogue without coercion and without agendas imposed or limited from outside," the report concludes.
According to the ICG, nothing short of Serbia's consent to Kosovo's independence, through some form of diplomatic relations and eventually full and formal recognition, is likely to sway other EU or UN Security Council members who remain opposed, notably Spain, Greece, Russia and China.
