By Ellie Tzortzi

BELGRADE, Sept 20 (Reuters) - Serbia would need European Union help to implement a plan for the self-government of Kosovo if the ethnic Albanian majority of the province accepts it, but it would be a wise investment, says Serbia's top negotiator.

After the 1998-99 war, mass expulsions, NATO intervention and eight years of U.N. stewardship, a solution that turns Kosovo Albanians into "loyal citizens of Serbia" is unlikely, Minister for Kosovo Slobodan Samardzic told Reuters.

"We try to be realistic as much as possible," he said. "They are looking for independence. They cannot get it as far as Serbia is concerned. So we must find a middle ground."

"The European experience is to resolve these issues through compromise solutions which are all different, like South Tyrol and the Basque country," he told Reuters.

Serbia proposes "the highest level of autonomy on offer anywhere in Europe, maybe even in the world," Samardzic said. It was not seeking "absolute victory" over Kosovo Albanians, who form 90 percent of Kosovo's population.

The two sides have been deadlocked since talks began in late 2005. With Russia's help, Serbia scored a diplomatic victory this summer by blocking a Western-backed U.N. plan that would have given Kosovo independence this year.

Now it hopes to persuade the 27-member EU its plan is best.

A new round of talks began last month at the insistence of Belgrade and Moscow, and the two sides will meet face to face in New York on Sept. 28. A progress report to the U.N. is due on Dec. 10 but the Albanians insist independence is non-negotiable.

"PARALLEL LIVES"

Samardzic's office is near downtown buildings bombed by NATO in 1999, at the height of the Kosovo crisis. He spoke after visiting London to set out his proposal for the Kosovo 'troika' of Russian, United States and European Union mediators. It offers Kosovo "loose integration" for 10-20 years, under the label "substantial autonomy", with Serbs and Albanians living "parallel lives", he said. The Albanians would not participate in Serbia's government unless they wanted to.

Kosovo would be a "self-governing territory" in terms of its political and economic life. Serbia would manage foreign policy and border control and would reserve its rights on military issues, but not necessarily exercise them.

Samardzic, who has visited Kosovo twice under U.N. escort, acknowledged the Albanians would likely remain a "hostile population" for some time, so the question of who would actually man border posts would have to be answered pragmatically.

He said it was primarily up to the international community to guarantee the settlement, "in the form of a civilian and military mission for some period, to keep the peace".

"The EU is ready to pay," Samardzic said. "....maybe it's cheaper than 30 years of clashes."

NATO bombed Serbia for 11 weeks in 1999 to halt the killing of Albanian civilians by Serb forces fighting a separatist revolt. Serb troops were forced to pull out and the U.N. took over. Over 100,000 Serbs fled, fearing Albanian revenge attacks.

"Independence is just a magic word," Samardzic said. "They get empty symbolism, and they will be a black hole in Europe."

"We are looking for a historical compromise that will satisfy both legitimate interests," he stressed. "If one side imposes a solution on the other, we are only postponing our conflict, and it will last decades.

"I think our solution is conciliatory, it's not about absolute victory."

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