KEY POINTS:
The Balkans is entering a critical few days when Kosovo's push for independence, seething nationalism in a resentful Serbia and power plays by a resurgent Russia are coming together in a toxic mix.
How the situation unfolds will be a key test of the European Union's aspirations to become a major player in world diplomacy rather than just an economic giant.
The future of Serbia lies in the outcome of this weekend's runoff in the presidential elections. A pro-EU reformist incumbent, Boris Tadic, is pitched against an ultra-nationalist populist, Tomislav Nikolic, leaving voters with what Tadic calls "a referendum on Europe".
Victory hangs on a knife edge after a first round two weeks ago in which Nikolic gained a narrow lead over Tadic in an exceptionally high turnout.
Campaigning has taken place while Kosovo - the predominantly ethnic Albanian province that is part of Serbia - is gearing up to declare independence, a goal discreetly supported by the EU and the US but bitterly opposed by Belgrade and Russia.
"The country [Serbia] will have to decide what is more important: the attempt to defend something that is irretrievably lost, or the chance to benefit in the future," said the German newspaper Berliner Zeitung. "Serbia has stood at this crossroads more than once - and too often chosen the wrong direction."
Ivan Vejvoda of the Belgrade-based Balkan Trust for Democracy said: "These elections are actually a referendum on the future of Serbia."
Kosovo has been a UN protectorate since 1999, when a Nato air offensive ended ethnic cleansing by Yugoslav President Slobodan Milosevic. The campaign precipitated the final breakup of Yugoslavia as well as Milosevic's own downfall, leaving Serbia as a rump state, spiritually wounded and an international pariah.
Now the chance has emerged for Serbia to find its way back into the world community - but it comes at a price.
Less than a week before the elections, the EU dangled Serbia a rich prize: the prospect of a co-operation deal to haul one of Europe's poorest and most isolated countries out of the mire.
The accord - "a framework for making progress on a political dialogue, free trade, visa liberalisation and educational co-operation" - would be a stepping stone to full-fledged EU membership.
"We are very, very pleased with this breakthrough," Serbian Foreign Minister Vuk Jeremic said this week, hailing the deal as an invitation "to enter the European family of nations. I am actually convinced that the people of Serbia will choose to walk through that door."
The downside is that EU Foreign Ministers will sign the deal next week, which gives them time to back off if the virulently nationalist Nikolic wins the poll.
Nikolic - nicknamed "the Undertaker" because he once ran a cemetery - is the acting head of the Serbian Radical Party, whose leader, Vojislav Seselj, is on trial in The Hague on charges of war crimes committed during the Balkan wars of the 1990s. His election could entrench Serbia's isolation for years to come.
The co-operation deal is part of an extraordinary tightrope act by the EU. It has had to offer a carrot to Tadic yet avoid looking as if it is meddling in the Serbian elections.
At the same time, it has had to press Kosovo not to throw petrol on the bonfire of Serbian nationalism by proclaiming independence during an election campaign.
Although Tadic wants Serbia to join the EU, both he and Nikolic oppose Kosovo independence, and their view is probably shared by a large majority of Serbs.
"If Serbs vote for the Radicals it could be a vote against EU conditionality. It would show that EU membership as a 'carrot' has lost its appeal," said Eva Gross of the Institute for European Studies in Brussels.
Ninety per cent of Kosovo's population are ethnic Albanians, who can claim a long history of oppression under Belgrade's rule. It is the cradle of the Serbian Orthodox Church and scene of a heroic Serbian defeat of the Ottomans in 1389 that was a defining moment in statehood.
"The problem of Kosovo from a Serbian point of view is like Jerusalem for the Israeli people. If you want to take Jerusalem from the Israelis it is not just a matter of taking land from the Jewish state, it would be taking away the cradle of the Jewish people," said Jean-Yves Camus, an expert on separatist movements at the Institute for International and Strategic Relations, a Paris think-tank.
"It is the same in Kosovo, which is ascribed, quite rightly, as the cradle of the Serbian nation. If Kosovo becomes independent it isn't just like one province of Serbia saying we're independent, it is much more than that."
The EU has spent 11 months orchestrating an orderly path towards independence, but all this careful planning could be wrecked within a week if things go awry.
Years of negotiations aimed at reconciling the breakaway province with Belgrade have come to naught. The status quo cannot continue, given the risk that this could lead to fresh bloodshed.
The uncertainty surrounding Kosovo's final status has left it incapable of luring any investment. As a result, the only option on the table is a plan for "supervised independence" drawn up by UN special envoy Martti Ahtissari but rejected by Russia at the Security Council.
Under it, Kosovo could be recognised by its allies and have a constitution, flag, anthem and other tokens of statehood. It would not be allowed to join any state - that is, Albania - and there would be guarantees for the Serbian minority and cultural and religious sites.
Kosovo would be placed under the tutelage of the EU for a transition period of five to 10 years. An EU civilian mission would replace the UN interim Administration mission in Kosovo, while Nato's 16,000 troops in Kosovo would stay to keep the peace.
Under the delicate ballet choreographed in Brussels, by February 18, the EU would approve deploying 1800 police and judicial officers in Kosovo to ease the transition to local rule by helping local police and judges.
Next month Kosovo will declare its independence just before an EU summit. This would give enough time for most of the 27 EU nations to rapidly recognise the new entity. By late June, the EU mission would be in place and ready for the transfer of authority from the UN mission.
But in the Balkans, plans have a horrible tradition of swiftly unravelling. If Nikolic wins the election, the Kosovo Parliament may declare independence as early as this coming week.
"If the nationalist forces win, that will encourage the Kosovars to press for a rapid recognition," said a source, who attended a meeting in Brussels on January 24, where Kosovo's Prime Minister, Hashim Thaci, said independence was "an issue of days" although it would be co-ordinated with the EU and United States.
Albania, which is building a four-lane highway across the mountains to link up with Kosovo, is champing at the bit.
"Our strong wish is to be the first [to recognise Kosovo's independence], not only in the first seconds but in a 10th of a second," said Albanian President Bamir Topi.
The EU is having to contend not only with the powder keg sentiment in Kosovo, but also with the newly confident Russia.
Russia's new ambassador to Nato, nationalist Dmitry Rogozin, blasted the EU for offering Serbs "peace on conditions that are disgraceful and hurtful to the Serbian people".
There are also faultlines, less visible, within the EU itself.
The proposed co-operation deal with Serbia was watered down because of objections by the Netherlands, which wanted it tied to the handover of suspected war criminals, including Ratko Mladic, accused of leading the massacre of nearly 8000 Muslims in Srebrenica in 1995.
And some states are reluctant to endorse any early recognition of Kosovo. They include Greece and Bulgaria, which have historic and religious links with Serbia, as well as Spain, Cyprus and Romania, which fear a domino effect among their own separatists.
