By Patrick Worsnip

UNITED NATIONS, Dec 31 (Reuters) - Prolonged deadlock over the future of Serbia's Kosovo province could create instability in the region, put U.N. achievements at risk and threaten U.N. staff, Secretary-General Ban Ki-moon said in a new report.

The report, made available on Monday, follows the failure of U.N.-sponsored talks earlier this month to reach a breakthrough between Serbia and Kosovo's majority Albanians and of the Security Council to breach differences over how to proceed.

Kosovo's 2 million Albanians are expected to declare independence in the first months of 2008, but Belgrade is telling Serbs in Kosovo to ignore such a move, raising the prospect of an ethnic partition of the breakaway province.

In his report, Ban said expectations were continuing to rise among the Albanians of Kosovo, which has been under U.N. administration since NATO bombing drove out Serb forces in 1999, that the province would soon be independent.

"The status quo is not likely to be sustainable," the U.N. chief said. "Should the impasse continue, events on the ground could take on a momentum of their own, putting at serious risk the achievements and legacy of the United Nations in Kosovo.

"Moving forward with a process to determine Kosovo's future status should remain a high priority for the Security Council and for the international community."

The Security Council has been hamstrung by a division between Western and Muslim states, which are ready to see Kosovo go independent, and Russia, which backs Serbia. Belgrade has been willing to offer only autonomy for the province.

The 15-nation council will have to return to the issue in January when it debates Ban's report, but there has so far been little sign of differences narrowing.

"Uncertainty and a loss of forward dynamic in the future status process could create a risk of instability, both in Kosovo and in the wider region, as well as a potential risk to the safety of U.N. staff," Ban said.

He urged both Albanians and Serbs to stand by promises to refrain from violence.

Western states say there is no more the Security Council can do and expect the European Union to take over U.N. police and justice functions, with NATO troops continuing to maintain order as Kosovo declares independence. But Ban's report suggested unease at the prospect of the council sitting by.

Ban said participation of Serbs in Kosovo elections on Nov. 17 had been "disappointingly very low" and referred to reports of intimidation of Serb candidates and voters, following calls by authorities in Belgrade for a boycott of the vote.

He noted that some Serb parties would take part in the assembly that was elected but said this did not indicate "a fundamental shift in the general opinion" among Kosovo Serbs in favor of integration.

(Editing by Cynthia Osterman)

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