BRUSSELS - Serbia and its former province of Kosovo struck an historic deal on Friday to settle their fraught relations, opening the door to European Union membership talks for Belgrade in a milestone for the region's recovery from the collapse of Yugoslavia.EU foreign policy chief Catherine Ashton said the prime ministers of both sides had initialed an agreement during talks in Brussels, capping six months of delicate negotiations after over a decade of deep animosity since Kosovo broke away in war.Deal may be tough to enforcePrime Minister Hashim Thaci, who led a guerrilla army in an insurgency against Serb forces in 1998-99, told reporters: "This agreement represents a new era ... This agreement will help us heal wounds of the past, if we have the wisdom and knowledge to implement it in practice."Under the agreement, the north of Kosovo will be absorbed into the legal framework of the country but retain limited autonomy in areas of health, education, policing and courts.Implementation will not be easy, in a region bristling with weapons and sectarian animosity.In a sign of possible resistance to come, Serb municipal lawmakers in northern Kosovo demanded a referendum on whether Kosovo should be part of Serbia or Belgrade should accept the conditions set down by the EU to clinch accession talks.The agreement marks a seminal moment in the region's recovery from Yugoslavia's bloody collapse, when some 150,000 people were killed in wars in Bosnia, Croatia and Kosovo in the last decade of the 20th century.Serbia was an international pariah until strongman Slobodan Milosevic was ousted in 2000.After neighboring Croatia joins the EU on July 1, anchoring Serbia in accession talks would belatedly help to drive reform and cement stability."Likely to be taken as a positive by the market, as this will further anchor reforms in Serbia, albeit accession negotiations are likely to be very long," said Tim Ash, head of emerging markets research at Standard Bank.Though Serbia says it will never recognize Kosovo as a sovereign state, the deal reflects a sea change in official policy given that Belgrade wants to come to terms with the loss of its southern province in exchange for the economic boost of closer ties with the EU.Steeped in history and myth for Serbs, Kosovo broke away from Serbia in 1999, when NATO carried out 11 weeks of air strikes to halt the killing and expulsion of ethnic Albanians by Serbian military forces under Milosevic waging a brutal counter-insurgency campaign.Kosovo became a ward of the United Nations, but Belgrade retained de facto control over the northern Serb pocket. The partition has frequently flared into violence and frustrated NATO's hopes of cutting back a costly peace force that still numbers 6,000 soldiers."It's very important that now what we are seeing is a step away from the past and for both of them a step closer to Europe," Ashton told reporters.Kosovo's EU's integration minister, Vlora Citaku, tweeted: "And the white smoke is out! Habemus pactum! Happy:)))"Serbian officials said the deal remained subject to approval by "state bodies" back in Belgrade. "We will inform the EU by letter on Monday whether we accept the deal or not," Serbian Prime Minister Ivica Dacic told reporters. EU diplomats said there was very little chance of Serbia reversing course.The pact tackles the ethnic partition of Kosovo between its Albanian majority and a small Belgrade-backed pocket of some 50,000 Serbs in the north, a schism that has dogged regional stability since Kosovo seceded from Serbia in 2008.It will also likely open the door to greater international integration of the young state, the last to emerge from the ashes of federal Yugoslavia but which Belgrade considers the cradle of the Serb nation.Serbia hopes it will be enough to win the green light on Monday from the EU's 27 members for the start of talks on Serbian accession to the bloc.That process could unlock Serbia's potential as the largest market in the former Yugoslavia and lure much-needed foreign investment to its struggling economy.A source in the European Commission, the EU's executive arm, said the Commission would likely recommend the start of accession negotiations with Serbia, and set Kosovo on the road to a pre-accession association agreement.An excerpt of the deal seen by Reuters said that Serbia and Kosovo had agreed not to block each other's EU accession. "It is agreed that neither side will block or encourage others to block the other side's progress in their respective EU paths," point 14 of the accord states."The agreement reached today between #Kosovo and #Serbia is recognition of Kosovo independence by Serbia," tweeted Kosovo Foreign Minister Enver Hoxhaj.