ATHENS (Reuters) - A United Nations mediator said on Monday there was “positive momentum” towards settling a 27-year dispute between Athens and Skopje over the ex-Yugoslav republic’s name.

FILE PHOTO: UN envoy Matthew Nimetz speaks to the media after a meeting with Macedonia officials in Skopje February 20, 2012. REUTERS/Ognen Teofilovski

The row over the name of the former Yugoslav Republic of Macedonia (FYROM), as it is formally known, has held up its prospects of joining both the European Union and NATO.

Macedonia took that name when it became independent in 1991 following the break-up of Yugoslavia. Greece has challenged it since, saying it implies territorial claims to the Greek region of the same name and of the ancient Greek kingdom ruled by Alexander the Great.

In an interview with Greek state television ahead of talks in New York on Wednesday with diplomats from both countries, U.N. mediator Matthew Nimetz said: “In both countries there is a positive momentum.

“I think the people in both countries are maybe ready to hear some solutions that are consistent with national interests but also have some element of compromise that would resolve the problem.”

Nimetz said the new government in Skopje was “very interested” in resolving the issue.

Athens has only agreed that the country be referred to internationally as “FYROM” until the row is resolved. That is the name under which it was admitted to the U.N in 1993 and the name which the EU and other bodies use for it.

Greek government officials have suggested that Athens would try to focus on brokering an agreement that calls for a compound name with a geographical qualifier. Suggestions floated have included upper or northern.

Asked if he would present a new name in the latest round of talks, Nimetz said “there’s always a new way of looking at things ... of course there’s nothing totally new, there’s no new magic, we know what the problems are.”

Greeks are highly sensitive about the name issue. Nearly 70 percent said they did not want the term “Macedonia” used in any solution, a poll showed on Sunday, and rallies have been planned in Athens and in northern Greece in the coming weeks.

(This story has been refiled to add dropped word in lede)