IVICA Dačić (pictured on the left), Serbia’s prime minister was in jocular mood. Abandoning a prepared speech to the Friends of Europe annual Balkan conference in Brussels on December 5th, he spoke on a variety of topics and told an anecdote from his dinner, the night before, with Hashim Thaci (pictured on the right), prime minister of Kosovo, and Catherine Ashton, the EU’s foreign policy chief. “I said: ‘Why don’t we build a highway to [the southern Serbian city of ] Niš?’ Thaci said, ‘Why don’t we ask the EU for money for that?’. Lady Ashton said: “Now you two are against me.’ So, I said: ‘You asked us for normalisation of relations, well give us the money!’” The anecdote is telling. Recently Mr Dačić said that if he had met Mr Thaci during the Kosovo war of 1998-99 he would have killed him. Now he says that it is imperative for both men to find a solution to the lingering issue of relations between Kosovo and Serbia, which is preventing both countries from moving forward. In Serbia Mr Thaci has been reviled as a man alleged to have been involved in murder of Serbs for their organs. In Kosovo Mr Dačić is remembered as the right hand of Slobodan Milošević, the Serbian leader who repressed Kosovo and finally fought Mr Thaci’s Kosovo Liberation Army (KLA) and then NATO.

After three meetings, it became clear that the personal chemistry between the two men is surprisingly good. When last summer Tomislav Nikolić , Serbia’s president, said that he wanted to raise the European Union’s Serbia-Kosovo dialogue from a technical to a political level, the idea seemed premature. In the wake of the meetings presided over by Lady Ashton, it is clear they are bearing fruit.

On December 4th the two leaders made progress on a number of issues especially on how to regulate border crossings. Kosovo declared independence from Serbia in 2008 and Serbia does not recognise the new country, but increasingly it is coming to terms with the fact. One of the items agreed upon at the dinner was that Serbia and Kosovo would now place “liaison officers” in Belgrade and Pristina respectively. When a history of the diplomatic relations between the two is written it may well be that the story of the liaison officers are the first chapter.

Mr Dačić, says he is “ready and prepared for a permanent and final solution” between Kosovo and Serbia. “It needs to be just, to respect the legitimate interests of Serbs and Albanians. We need to reach a solution acceptable to both sides.”

What the solution is, Mr Dačić won’t or can’t say. “We don’t dispute the right of Albanians because they don’t want to live together with Serbs. But for us, what is crucial, is the question of the status of the Serbs who don’t want to live in an independent Kosovo.” Some 130,000 Serbs live in Kosovo. Perhaps 40,000 live in the north, which abuts Serbia and is not under the control of the government of Kosovo. They are now protesting about the border agreement.

Both sides want something from being seen to cooperate in the EU talks. Kosovo wants to make progress on getting visa-free travel to Europe’s Schengen zone. Serbia would like to get a date to start EU accession talks. Stefan Füle, the EU’s enlargement commissioner told the Friends of Europe meeting that Serbia’s government was being courageous and this should be recognised.

On November 29th the UN’s war crimes tribunal in The Hague acquitted Ramush Haradinaj, a former KLA commander of war crimes. Mr Haradinaj, a former prime minister, would like his old job back but, says Mr Dačić, Mr Thaci told him he was not about to get it. “Serbs think it is better to negotiate with Thaci than with Haradinaj,” said Mr Dačić to Mr Thaci.

The talks in Brussels took place against the backdrop of a tragic but very strange Balkan story. Just before the dinner between the two leaders Branislav Milinković, Serbia’s much-respected ambassador to NATO, was collecting a group of Serbian officials from Brussels airport. When they got to the garage Mr Milinković, who a friend said had been depressed lately, walked to a parapet, climbed over and then jumped to his death.