Clinton, Ashton push Balkans on reforms

Bosnian Foreign Minister Zlatko Lagumdija walks with U.S. Secretary of State Hillary Clinton after she arrived on official visit at the airport in Sarajevo, October 29, 2012.

SARAJEVO (Reuters) - The United States and the European Union combined on Tuesday to push Balkan states to resolve festering political and economic disputes obstructing more integration with the rest of Europe.

U.S. Secretary of State Hillary Clinton and EU foreign policy chief Catherine Ashton began a three-nation Balkan trip in Bosnia, where a power struggle between ethnic Serb, Muslim and Croat parties has stymied progress since their 1992-95 war.

Clinton's Balkans trip, probably her last before stepping down early next year, represents her final effort to settle some of the legacies of the bloody break-up of federal Yugoslavia in the 1990s, when her husband Bill Clinton was president.

"We're disappointed that the leaders of Bosnia and Herzegovina have not put the interests of the country first," a senior U.S. official told reporters travelling with Clinton.

In similar vein, Clinton and Ashton will urge Serbia and majority-Albanian Kosovo, which broke away from Belgrade in 2008, to improve their ties further, U.S. officials said.

Bosnia has been governed along ethnic lines since the war, which killed an estimated 100,000 people and split the country into two autonomous regions joined by a weak central government, under the U.S.-brokered 1995 Dayton Peace Accords.

Intense political infighting has slowed reforms, leaving Bosnia lagging its neighbours on the road to EU membership.

Clinton and Ashton were likely to remind Bosnian leaders that they must stick with the Dayton agreement.

"Party leaders can obviously work out, within that framework, the relationships they want, but there should be no questioning of the basic fundamentals of the Dayton peace arrangement," the U.S. official said.

Leaders of Bosnia's Serb Republic do not hide their contempt for the joint state and say it is doomed to disintegrate.

KOSOVO TENSIONS

Clinton and Ashton were due later in the day in Belgrade, where they will encourage nationalist Serbian President Tomislav Nikolic and Socialist Prime Minister Ivica Dacic to make good on promises to improve ties with Kosovo, the U.S. official said.

Serbia, a pariah under the late Slobodan Milosevic in the 1990s, has made some progress on reforms since his ouster in 2000, arresting war crimes suspects and overhauling the economy.

But tensions with Kosovo, which seceded with the help of a NATO air war in 1999, are holding Belgrade back and the EU says accession talks cannot start until they are resolved.

Nikolic and Dacic, whose coalition took power this year, say they are ready for more normal ties with Kosovo, but that Serbia will never recognise Kosovo as independent.

"Obviously there's much work that remains to be done and significant differences remain," the U.S. official said.

Clinton and Ashton plan to hold meetings in Kosovo on Wednesday, before Clinton goes to Albania and Croatia, both members of NATO. The West hopes Croatia's scheduled accession to the EU in 2013, following fellow ex-Yugoslav Slovenia in 2004, will encourage its neighbours to redouble their efforts.

(Editing by Matt Robinson and Alistair Lyon)