But UN administrator Jessen-Petersen told the Security Council that ethnic Albanian leaders have made broad progress. He expressed concern that minority returns to the province have been low, but said improvements have been made in freedom of movement for minorities. He also praised a strengthening of institutions, and a maturing political environment in Pristina.
Jessen-Petersen said officials in Pristina are demonstrating a commitment to implementation of key reforms.
"We feel that the authorities in Kosovo, and increasingly the citizens, have understood the need to implement standards and have made efforts to reach out to the minorities," he said.
UN Secretary-General Kofi Annan is expected soon to name a special envoy to conduct a comprehensive review of reforms in Kosovo. If positive, that review could lead to negotiations later this year on the province's final status.
Jessen-Petersen said the resolution of the status issue would improve returns, freedom of movement, and economic prospects. He also said it could hasten regional integration.
"There are clearly limits to results on regional integration that can be achieved without having certainty on status," said Jessen-Petersen. "Leaving it pending will delay regional integration and adversely affect the interests of all, including Belgrade, Podgorica, Skopje, and Tirana. In my meeting with regional partners, the interest in seeing status resolution is strong."
The top official from Serbia and Montenegro on Kosovo issues, Nebojsa Covic, told the Security Council that the UN report is a distortion of the realities facing Serbs in Kosovo.
Covic said security conditions for minorities remain poor. He stressed that the best path to a resolution of Kosovo's status is dialogue between Belgrade and Pristina.
He said once Kosovo's Serbs become "free of fear" about their safety, it will become easier for them to participate in local self-government efforts.
But Covic cast doubt on Serb participation in talks that would deal with independence for Kosovo.
"The independent Kosovo is not a sustainable option and is neither a democratic nor a multiethnic option," Covic said. "It will only destabilize the region and bring us back to the previously seen and dangerous times. And I think that no one wants us to go back to what happened 10 or 15 years ago."
Most Security Council members expressed qualified optimism about progress in the province and accepted the recommendation to conduct a comprehensive review.
Russia's UN ambassador, Andrei Denisov, said the review must be "thorough and lengthy" to allow for an objective survey of conditions in Kosovo.
Greece's UN ambassador, Adamantios Vassilakis, said the burden will be on Kosovo Albanian leaders to carry out reforms.
"It is our hope that Kosovo will become one day an equal participant in the region's stability and prosperity, an integral part of the enlarged European family," said Vassilakis. "Therefore, no less than a complete implementation of all the goals in the standards plan is a prerequisite."
Annan is expected to name Norwegian diplomat Kai Eide as his envoy to conduct the comprehensive review this summer.