By Matt Robinson and Fatos Bytyci
MITROVICA, Kosovo (Reuters) - It's a dangerous job being a municipal clerk in the Kosovan town of Mitrovica, where the Ibar river forms a natural barrier between Serbs and Albanians.
Since Adrijana Hodzic began issuing the identification cards of mainly Albanian Kosovo to Serbs on the north side of the river, her deputy has been shot in the leg and hand grenades lobbed at the homes of her staff.
"Sometimes I feel like we're fighting against everyone," said mother-of-two Hodzic, a Mitrovica native.
Serbia does not recognise Kosovo's 2008 secession, but is under pressure from the European Union to improve ties and help overcome a split between Kosovo's Albanians and a Serb enclave in the north over which Belgrade retained de facto control.
The status of the enclave is at the heart of EU-mediated talks aimed at "normalising ties" between the two countries.
Hodzic is on the frontline of a slow push by Kosovo's government to reel in the northern pocket of about 50,000 Serbs and reunite Mitrovica.
The Serb north's rejection of Kosovo sovereignty has left Kosovo split down ethnic lines, a war wound that has long dragged on the hopes of the Balkans to join Europe's mainstream and still carries the potential to destabilise the region.
Now, in the low-key talks, Serbia and Kosovo appear to be on the cusp of a deal to end the partition, at least on paper.
EU foreign policy chief Catherine Ashton wants an accord struck on Tuesday, during a meeting between Serbian Prime Minister Ivica Dacic and his Kosovan counterpart, Hashim Thaci.
That would open the door to EU membership talks with Serbia, a process that would drive reform and send a signal of stability to foreign investors looking at the biggest economy in the ex-Yugoslavia.
For Kosovo, it is about ending a process that began in 1999, when NATO went to war to halt the massacre of ethnic Albanian civilians by Serbian forces under late strongman Slobodan Milosevic.
"Kosovo will no longer be identified as a problem, but as a functional state within its entire territory," said Kosovo's Deputy Prime Minister, Hajredin Kuci. "This is a big victory."
The stakes are high. Coupled with the EU accession of former Yugoslav Croatia in July, an accord between Serbia and Kosovo "would ripple through the Western Balkans", the International Crisis Group think-tank said, by cementing stability in Serbia, the region's biggest power.
But if the talks fail, it said, "on the ground, where both sides are nervous, a spark could ignite inter-ethnic violence".
On the table in Brussels is a possible deal for Serbia to recognise the authority of Kosovo over the north, in return for some form of self-rule for the Serbs living there.
Serbia says it will never accept Kosovo as an independent state, but its offer to cede control over the north to Pristina is a dramatic shift in official policy as Belgrade seeks the economic boost of closer ties to the European Union.
The shifting sands in Serbia come with Milosevic's heirs at the helm, nationalists who fought for Kosovo but who now say the territory is all but lost.
The EU-led talks have already yielded deals on management of the Kosovo-Serbia border, recognition of vehicle licence plates and university diplomas, trade relations and other practical problems arising from Serbia's refusal to recognise Kosovo.
But the key to lasting stability is the ethnic dividing line that runs through Mitrovica and is the focus of a 6,000-strong NATO peacekeeping force.
The European Union is using the carrot of integration with the bloc to tease Serbia and Kosovo to within a whisker of a deal. It is aided by an economic slump that has left both sides desperate for stability and investment.
"LIFE IS SHORT"
In January, in remarks unprecedented by a Serbian leader, Dacic - a wartime aide to Milosevic - said Serbian sovereignty over Kosovo was "practically non-existent".
With a wealth of centuries-old Orthodox churches and monasteries, Kosovo has long held almost mythical status for Serbs who consider it the cradle of their faith.
But their reaction to Dacic's remarks has been muted, reflecting a realisation that Kosovo, 90 percent Albanian, was lost by Milosevic. Sixty-three percent of Serbs believe Kosovo is de facto independent, according to an opinion poll in March.
In Brussels on Tuesday, Ashton will prod Dacic and Thaci towards a deal on the powers that Serbs in the north will be allowed to wield within the framework of the Kosovo state.
Dacic wants broad autonomy, but Thaci is wary this will only deepen the divide. Ashton wants a deal by mid-April, when she will issue a progress report that will decide whether the European Union opens accession negotiations with Serbia in June.
Serbs in the north fear they are about to be abandoned by Belgrade. But even in divided Mitrovica, a shadow of the mining hub it once was in the former Yugoslavia, the slow march of Kosovo independence appears unstoppable.
On the banks of the Ibar, Serbs queue at Hodzic's office for Kosovo identification documents, vehicle licence plates and to register companies under Kosovo law. Some seek grants from the Kosovo government to fix roofs or peeling facades.
Hodzic, who as a Serbian-speaking Muslim crosses the divide more easily between mainly Muslim Albanians and Orthodox Serbs, estimates almost a quarter of the Serbs on the north side of Mitrovica have come to her office for some kind of assistance.
Serbs deny this implies recognition of Kosovo as a state, but say it is increasingly difficult to travel or work within Kosovo without such documents.
"People need to work, to earn money, to feed families," Hodzic said. "We live next to each other, but we need to start living together, finding common challenges and solutions. Life is short."
(Editing by Pravin Char)