The decision by the people of Montenegro to separate from their union with Serbia, imposed by the European Union, has brought the world one step closer to ending the long, painful and violent process that has attended the break-up of the former Yugoslavia. The political dissolution of Yugoslavia is now virtually complete. However, it need not be a defeat for Serbia. The excision of festering, historic political issues should make way for the reconstruction of a dynamic, regional economic partnership.

Much could depend on how we handle the next step-a decision on the final status of Kosovo-expected to come before the end of the year. The combined efforts of the United Nations, the United States and Russia, and the European Union may at last have brought the international community to the brink of creating a structure in the Balkans that promises to give its people a future more compelling than the ethnic bloodlettings and political violence of their collective past.

The UN special negotiator, former Finnish President Martti Ahtisaari has launched formal negotiations with Kosovar and Serb representatives to resolve the final status of Kosovo. There is unanimity among objective observers that the only viable result must be independence for the former Yugoslav province, with essential guarantees for minority rights, and security for historic religious sites.   Any partition of Kosovo's territory is ruled out.

Russian officials, while expressing sympathy for Belgrade, agree that Kosovo will become independent. Serb political leaders also privately acknowledge that Kosovo's independence is inevitable, although they publicly insist Serbia must retain sovereignty.

At the same time, initiatives to build regional economic integration leading to ultimate eu association are picking up momentum. A regional free trade agreement-including Serbia, Montenegro and Kosovo as well as other Central European countries-is possible by the end of the year. Agreements with Europe in critical areas of infrastructure, such as energy and civil aviation, are knitting the region together in new patterns that distribute benefits more evenly and ultimately lead to markets in Europe.

Thus, there is now increasing confidence that Serb reluctance can be overcome by the benefits of economic integration, internationally guaranteed Kosovar commitments to protect minorities and preserve historic religious sites, and ultimately, a path toward European integration. Final resolution by year-end seems more and more realistic.

We are, in fact, looking at an opportunity to thwart what might be a serious threat to Europe's security. As long as Yugoslavia's prior "republics" and autonomous regions stand apart from economic cooperation and Europe, historic religious, ethnic and tribal hostilities will breed violence and poverty.

NATO intervention in Kosovo with un blessing was a classic example of how U.S. power with NATO support and international approval can advance U.S. and Western strategic interests. The Balkans are both an integral part of Europe and a historic tinderbox. As a result of NATO intervention, today we have an opportunity to create an economically integrated Balkan region, which can contribute to the collective security and prosperity of the Balkans.

There is genuine urgency in settling this issue this year. Today, Kosovo, which can be a positive force for Balkan development, is seen as a dangerous source of drug trafficking, money laundering, and other crimes. A seventy percent unemployment rate among young Kosovars, a stagnating economy (due in part to the inability of international financial institutions to lend to a non-sovereign entity) and the cloud of an uncertain political future create an inflammable mixture. Independence can lead to membership in a regional economic union and end this serious security threat.

The small but effective NATO force (KFOR) remains well accepted by Kosovars. The pressures on our defense commitments around the world have led some to propose that the 1,800-man U.S. presence within KFOR can be withdrawn after a "settlement." I fully appreciate advocacy on the part of the Department of Defense in refining and adjusting U.S. troop commitments abroad to avoid strain and overstretch. However, in this case, it is apparent that a significant U.S. presence within the NATO force is psychologically critical to Kosovars-many observers point to the U.S. presence as the factor responsible for Kosovar restraint. I would support retaining a small but prominent U.S. military element in Kosovo until it is firmly ensconced in Europe.

If the costly U.S./NATO air war against Milosevic to stop the ethnic cleansing of Kosovo is to be deemed a success, it must have led to Kosovo's independence within an economically unified Balkan region on the road to eu integration. The moment is now.

Frank Carlucci is a member of  Advisory Board of the Alliance for a New Kosovo. A retired career diplomat, he was President Reagan's Secretary of Defense and National Security Advisor.