BELGRADE, Jan 23: United Nations-run Kosovo faces fresh conflict if the international community fails to answer the Albanian majority's independence demands by the end of 2005, an influential think-tank warns in a new report.

"Either 2005 will see the start of a final status solution that consolidates peace and development or Kosovo may return to conflict and generate regional instability," the International Crisis Group says in a 40-page report to be published on Monday.

By mid-2006, "Kosovo's de jure sovereignty should be recognised by the international community", it writes, reflecting a growing body of international opinion that Serbia's southern province should have some form of independence.

The Brussels-based organisation describes a society still plagued by ethnic hatred and economic despair after almost six years under UN stewardship. It describes a 90-per cent Albanian majority clamouring for independence and ready to act unilaterally in the absence of major progress from the international community this year.

"The potential for renewed violence is very real," says the report, and raises the prospect of Serb forces returning to the Serb-dominated north, a UN evacuation and the de facto partition of Kosovo.

Western powers intervened in Kosovo in 1999 to expel Serb forces they accused of atrocities against Albanian civilians in fighting separatist guerrillas. -Reuters