RUMP Yugoslavia and its former republic of Macedonia normalised relations yesterday, signing a treaty that could help to reduce political and ethnic tensions in the southern Balkans.
The respective foreign ministers, Mr Milan Milutinovic of Yugoslavia and Mr Ljubomir Frckovski of Macedonia, toasted each other with champagne after signing the treaty in Belgrade.
The treaty may enable Yugoslavia, which comprises Serbia and of the on it for the Serb role in the 1991-95 wars in Croatia and Bosnia.
The European Union said in January that it would not extend full recognition to Yugoslavia unless the Serb-led state normalised relations with Macedonia.
Macedonians voted for independence in a referendum in September 1991, less than three months after the outbreak of war between Serb forces and the breakaway republics of Slovenia and Croatia. Since then, the young Macedonian state has led a precarious existence, a fact under lined by last year's attempted assassination of President Kiro Gligorov.
The state is known formally at the United Nations as the Former Yugoslavia Republic of Macedonia, a formulation which reflects Greece's objection that the term Macedonia on its own implies a territorial claim on the northern Greek province of the same name. Greece imposed a trade embargo on Macedonia in 1994 and only lifted it last year.
Yugoslavia's refusal until yesterday to normalise relations suggested some Serbs were reluctant to acknowledge that Macedonia, which was known in pre 1939 Yugoslavia as "southern Serbia", had turned into a sovereign state.
Meanwhile, Bulgaria recognised Macedonia's independence but not the existence of a distinct Slav Macedonian nationality or language, which is similar to Bulgarian. Although the post Communist democratic Bulgarian state has not pressed territorial claims against Macedonia, Bulgaria has briefly occupied parts of Macedonia three times this century.
Another potential threat to Macedonia's stability comes front its large ethnic Albanian population, concentrated in western regions and representing more than 20 per cent of the state's two million people. Albanians allege the Slav Macedonian majority discriminates against them and want their separate national status enshrined in the constitution.
Yugoslavia has its own Albanian problem in the southern Serbian province of Kosovo where tensions run high between the Serb authorities and the Albanian majority population. The Albanian question is one issue on which Serbs and Slav Macedonians tend to see eye to eye.
Although Yugoslavia has won back some international respectability since helping to negotiate the Bosnian peace accord at Dayton, difficulties still plague its relations with several Yugoslav successor states. Yugoslavia is angry at Slovenia's efforts to reach a separate deal with the London Club of international commercial banks over its share of the foreign debt incurred by Communist Yugoslavia.
Yugoslavia fears that, unless it is recognised as the sole successor to the Communist state, it could lose much of the gold and hard currency assets that are frozen a round the world. For its part, Slovenia wants to sever all links with its Yugoslav past, establish itself on world capital markets and prepare for entry into the EU.
Yugoslavia's relations with Croatia remain in difficulty because of the continuing occupation by Serb rebels of Croatia's province of eastern Slavonia. The area is due to return to Croat control within two years but Serbs in the region including thousands of refugees from other parts of Croatia ar hoping to block the agreement.