PRISTINA -- Serbian and Kosovar officials have signed a deal to restore a railway link between Belgrade and Pristina and to connect the two capitals with a highway in a step toward normalizing bilateral relations.

The signing ceremony occurred on the sidelines of the Munich Security Conference on February 14 in the presence of the Serbian and Kosovar presidents, Aleksandar Vucic and Hashim Thaci, as well as U.S. special envoy for Serbia and Kosovo Richard Grenell, who also serves as U.S. ambassador to Germany.

The move comes after the two sides last month signed an agreement on the resumption of commercial flights between Serbia and Kosovo that were halted two decades ago, when the 1998-99 Kosovo conflict escalated.

"Another milestone!" Thaci tweeted after the Munich signing ceremony, calling the agreement a "great step" toward reaching a final deal on normalizing relations between Belgrade and Pristina.

The Kosovar leader also told RFE/RL he believed that Belgrade and Pristina could reach such a deal this year.

Relations between Pristina and Belgrade have remained strained since the Kosovo war, which claimed more than 10,000 lives and left over 1 million people homeless.

Serbia continues to consider its former province part of its territory, although its independence, declared in 2008, has been recognized by about 100 countries, including the United States.

Talks on normalizing diplomatic relations were derailed in November 2018 by Pristina's imposition of 100 percent tariffs on Serbian goods and services in response to Belgrade's continued lobbying for countries to reverse their recognition of Kosovo.

After the signing ceremony in Munich, Thaci and Vucic thanked U.S. President Donald Trump for his leadership.

"We feel that this will bring us a better future and that we will ensure peace for decades to come," the Serbian leader wrote on Twitter.

Grenell hailed Thaci and Vucic for their goodwill, saying, "What I talked to the presidents about is trying as much as possible to concentrate on economic development, jobs for the future."

"I have to say that from the very beginning both presidents have agreed that that is the focus -- how do we move forward on economic development," he added.

In his interview with RFE/RL, Thaci said economic development and job creation was what the peoples of Kosovo, Serbia, and the entire Western Balkans "need."

Currently, there is train link between a small city in central Serbia to a northern Kosovo town. Most people travel by car and bus on poorly maintained roads across the border.

With reporting by Rikard Jozwiak in Munich