Macedonians want to foster a sense of national identity

The two countries are not disputing tangible issues such as borders or populations.

It is more a conflict over competing claims to the past - of who owns the cultural heritage of Macedonia, stretching back to ancient times.

Ten years ago, Greece feared the new republic had territorial ambitions against its northern province.

Athens refused to recognise independent Macedonia and imposed an economic blockade until the two sides reached a compromise.

That saddled the new country internationally with the unwieldy name of the Former Yugoslav Republic of Macedonia, and despite seven years of talks brokered by the United Nations, the two sides have failed to reach a full settlement.

Compromise

However, the latest proposals have been cautiously welcomed by officials in both Athens and Skopje.

Under them, Macedonia would be recognised internationally under its own name "Republika Makedonija" by all countries except Greece - which could use a different term.

In return, Macedonia would agree to respect and honour the legacy of Greek culture within its borders.

Companies in both countries would be able to use the name Macedonia to refer to goods and services produced within either territory.

The authors of the proposal argue it would shore up Macedonia's fragile sense of national identity and thereby provide vital support to its own internal peace process.

For most of 2001, the country teetered on the brink of civil war between its ethnic Macedonian and ethnic Albanian communities, and tensions still remain.

Resolving the dispute with Greece could help restore a sense of security and contribute to normalisation in the southern Balkans.