By Matthew Price BBC, Belgrade

In Kosovo you measure progress in small steps. Like driving your son to school.

So one grey morning in Pristina, Vesna Bojicic, her son Dino and I all squeezed into her tiny Yugo car and headed out of the city.

Dino now attends an exclusively Serb school

Once Serbs needed an Nato escort to do this safely.

Dino's school is in the Serb enclave of Gracanica. It is here that the progress ends.

Gracanica is where many of the Serbs still in Kosovo live. It is like Serbia itself.

Signs are in cyrillic script. You can buy kajmak, Serbian cheese. And in the centre a tatty Serbian flag hangs stubbornly on the flag pole.

Success stories

Most of the rest of Kosovo is very different. Signs are in Albanian. The language of the majority here.

Kosovo's central problem remains - Albanians do not trust Serbs, and Serbs are deeply suspicious of the Albanians

Dino used to attend an Albanian school. He speaks the language as well as Serbian. But the school we drop him off at is exclusively Serb.

It is hardly the multi-ethnic Kosovo the international community and his mother Vesna believe in.

"He was accepted by the children and the teacher at the old school, but the parents of the children made some comment about us. That we are the Serbs, that we should go to Serbia. It was a really big pressure for us."

A majority on both sides feel security is improving

But there are success stories. The multi-ethnic Kosovo Police Service for one. Albanians and Serbs now serve together.

About 16% of the force is non-Albanian. Most of those are Serbs.

Sergeant Visare Berisha - an Albanian I meet on patrol - was not convinced it could work.

"It seems to be," she told me cautiously. "I am surprised. But it seems to be working."

Mistrust

They certainly need the police here. Organised crime is huge. Ethnic crime though, despite a recent increase, is in the long term falling.

Some surveys show a majority here on both sides feel security is improving.

The economy is shot to pieces - in Kosovo unemployment is a crippling 60%

But Kosovo's central problem remains. Albanians do not trust Serbs, and Serbs are deeply suspicious of the Albanians.

The legacy of the conflict between Kosovo's majority ethnic Albanians and Belgrade in the late 1990s has politicised everything.

Serb forces, accused by Nato of committing atrocities against the Albanian population, were withdrawn after a three-month bombing campaign.

Since then Kosovo has been run by the United Nations. Under a UN resolution it still officially remains part of Serbia and Montenegro. But in reality Belgrade has no power here.

Practical issues

For four long years Belgrade and the mostly ethnic Albanian political leaders in Pristina have all but ignored one another.

Now though the UN has decided it is time for the first talks between the two sides.

They will focus on practical issues:

• Energy
• Transport
• Missing persons
• The return of more than 100,000 displaced people.

But Kosovo's final political status will not be discussed, for now.

With feelings so deep on both sides, it's understandable that final status will be left for another day.

But this limbo situation that Kosovo finds itself in does not help one bit.

The economy is shot to pieces. In Kosovo unemployment is a crippling 60%.

Factories lie dormant with little hope of investment. The UN says it must tackle standards before it can tackle Kosovo's final status. But without status, no-one knows what they are investing their money in.

Attracting investment

The UN knows it has a huge task on its hands. Even after spending an estimated $10bn on and in Kosovo since the war.

In his office in Pristina, Harri Holkeri, the head of the UN mission in Kosovo tells me how he hopes to kick start the economy.

"By improving the security in general the investments are more ready to come. The faster society develops towards democratic institutions the easier the investors will come. And no doubt when the final status of Kosovo can be fixed, it helps a lot."

But there seems no sign that this is remotely possible in the next decade, I put it to him.

He hesitates, then says: "I do not want to speculate on how much time is needed but everybody knows that this issue must be tackled."

The international community is already working on new crises, diverting its money elsewhere.