* Draft report sees improved Serbian cooperation with court

* It urges Belgrade to keep up efforts to arrest fugitives

* Serbia wants trade agreement unfrozen, EU accession

By David Brunnstrom

BRUSSELS, Nov 30 (Reuters) - Serbia's cooperation with the U.N. war crimes tribunal in The Hague has improved but Belgrade must keep up efforts to arrest the remaining fugitives, the court said in a report obtained by Reuters on Monday.

Serbia is hoping the report by the court's chief prosecutor, Serge Brammertz, will help accelerate its long-stalled progress towards European Union membership.

"The Office of the Prosecutor is satisfied with the current level of efforts undertaken by Serbia's authorities in their cooperation," Brammertz wrote in a draft of the report he is due to submit to the U.N. Security Council this week.

"However, the Office of the Prosecutor insists that Serbia maintain these efforts in order to achieve additional positive result."

He did not refer in the draft to the "full" cooperation with efforts to arrest suspected war criminals which has been demanded by the EU as a condition for Serbia to make progress towards membership of the 27-nation bloc.

The report's tone echoed the tribunal's long-standing policy of combining carrot with stick in dealing with Serbia, praising progress but demanding it recognise its role in wars in Croatia, Bosnia and Kosovo in the 1990s after Yugoslavia's collapse.

Serbian authorities, wary of provoking a backlash among nationalists, have only recently and reluctantly hinted at accepting Belgrade's responsibility for atrocities committed against non-Serbs during the wars.

EU WANTS MLADIC ARRESTED

EU ministers agreed on Monday to allow visa-free travel in the bloc for Serbia as well as Macedonia and Montenegro from Dec. 19. But Serbia's EU membership drive has stalled because of its poor record on war criminals.

Serbia also hopes the EU will soon unfreeze an interim trade agreement blocked by the Netherlands, an EU member state.

Belgrade hoped the arrest last year of Bosnian Serb wartime leader Radovan Karadzic would unblock the road to EU membership but the bloc said Bosnian Serb wartime commander Ratko Mladic, now the tribunal's most wanted man, must also be arrested.

Mladic, who hid in Belgrade until 2006, has been indicted for genocide over the killing of 8,000 Muslim men and boys in Srebrenica in Bosnia and over the 43-month siege of Sarajevo, in which 10,000 people were killed by mortar bombs, sniper bullets, hunger and cold.

"Since the last report, Serbian agencies continued to actively conduct search operations aimed at the fugitives and their support network," Brammertz says in the draft report.

"It is hoped that this improved framework and the ongoing operational activities will result in the apprehension of the fugitives in the near future."

EU ministers will meet next week to decide whether to unfreeze the trade agreement with Serbia, which hopes to apply as early as next year for candidate status -- an initial step in the long process to EU accession.

A Dutch official who spoke on condition of anonymity said Serbia's cooperation had improved but additional efforts were still needed.

"It's continued pressure by the international community and specifically the EU that is absolutely necessary to get results," the Dutch official said.

"Whatever the Dutch government decides, it will want to have some kind of control mechanism in the future to ensure this process leads to real results." (Reporting by David Brunnstrom, writing by Ivana Sekularac, editing by Alison Williams) ((ivana.sekularac@thomsonreuters.com; +381 11 30 44 930; Reuters Messaging:ivana.sekularac.reuters.com@reuters.net))

AlertNet news is provided by