Brussels: The leaders of Serbia and Kosovo initialled a historic deal on Friday to normalise ties, a move key to the future of the Western Balkans and destined also to bring both closer to the European Union.

Ivica Dacic and Hashim Thaci signed a 15-point agreement struck after two years of tough talks to reduce mutual tension and immediately won praise from around the world.

“What we are seeing is a step away from the past and, for both of them, a step closer to Europe,” said EU foreign policy chief Catherine Ashton.

Fourteen years after the end of the war and five after Kosovo unilaterally declared independence from Serbia, hopes are that the deal will turn the page on Europe’s last Balkans trouble-spot.

“The agreement will help us heal the wounds of the past,” Thaci said. “This agreement represents the start of a new era, an era of reconciliation and inter-state cooperation.”

Dacic said: “Serbia’s proposals were accepted. I initialled a proposed text that both sides will decide upon in the following days to say whether they accept it or refuse it.”

US Secretary of State John Kerry welcomed the deal and called on both sides to “implement expeditiously and fully all dialogue agreements.”

And UN Secretary-General Ban Ki-moon said he wanted to “congratulate and commend” both sides for their “steadfast determination” and hoped the deal would “bring about a brighter future and lasting stability to the region.”

But in the northern Kosovan city of Kosovska Mitrovica, Kosovo Serbs called for a referendum and dubbed the deal “the worst surrender and betrayal” ever perpetrated by Belgrade.

The deal is expected to ease the path of both sides to the 27-member European Union.

Belgrade hopes to be given a date to launch membership talks at a June EU summit and without a deal by Monday would have seen its ambitions to join the union delayed indefinitely.

Pristina still needs to win recognition by five of the 27 EU states but hopes meanwhile to be rewarded for mending fences with Belgrade by signing a pre-accession pact with the EU — also set to be announced at the June summit.

Austrian Foreign Minister Michael Spindelegger said the accord was a “win-win” solution for all.

Meanwhile, the Vienna-based Organisation for Security and Cooperation in Europe saluted a “courageous accord” that marked “the beginning of a new chapter”.

While there had been considerable progress in the two years of talks to reduce tensions, a deal got bogged down over the fate of 40,000 ethnic Serbs in north Kosovo who refuse to recognise Pristina’s authority and have set up their own “parallel” structures.

Serbia wanted Kosovo to agree to decentralised Serb “municipalities” in the northern enclave with their own police and courts to guarantee ethnic Serbs fair representation in Kosovo.

But Pristina was wary of Belgrade meddling in Kosovo affairs through the Serb community and refused to agree to “a state within a state” in its north.

Ashton’s office would not publish the 15-point text but an unofficial version published by local Kosovo daily Express said Kosovo Serbs would be handed some positions of authority.

A Kosovo Serb would be appointed regional police commander but would follow orders from the interior ministry in Pristina, according to the agreement cited by Express.

Ethnic Serb judges would run courts and have jurisdiction over other legal issues in Serb-majority municipalities while “operating within the Kosovo legal framework.”

And the deal reportedly stresses that “neither side will block or encourage others to block the other side’s progress in their respective EU paths.”

Thaci said there would be further examination of the terms and the Serbian government website said it would respond formally to the initialled agreement by Monday.

The two premiers later met Nato chief Anders Fogh Rasmussen, who said the alliance stood ready to help implement the accord.

“I am very happy for Nato to contribute to the conclusion of an historic agreement,” he said. “Nato will continue to ensure a safe and secure environment throughout Kosovo.”

Nato intervened in the breakaway province of Kosovo in 1999 to force the withdrawal of Serb forces and once that was achieved, set up the KFOR force, now reduced to some 5,000 troops, to ensure security.