German Chancellor Angela Merkel sees "good prospects" for Serbia's attempts to join the European Union despite disagreements over the status of Kosovo. Merkel was speaking at a joint press conference with Serbian President Boris Tadic, who was received in Berlin Monday to meet with the chancellor as well as German Foreign Minister Guido Westerwelle and business leaders.

"Germany sees Serbia's EU prospects very clearly, and we will be working together on that. Of course there is a whole row of obstacles still to be overcome, but I want to express my respect for the policies of the Serbian president," Merkel said.

"He has made many courageous steps with regard to internal reform and the role of Serbia in the Western Balkans," the chancellor added.

Tadic is widely seen as a pro-Western leader who has led Serbia away from the isolation caused by the Balkan wars of the 1990s and towards full European integration.

"It is of great importance that we have Germany's support on our European path," Tadic said.

"However there is a point where Serbia and Germany don't agree. Serbia cannot and will never recognize the independence of Kosovo."

Kosovo unilaterally declared independence from Serbia in February 2008, which both the EU and the US have recognized. Serbia has asked the International Court of Justice for an "advisory opinion" on the legality of Kosovo's declaration.

"It is however important to underline that this position will be defended exclusively with diplomatic and legal means," Tadic said.

Serbia's path toward EU membership largely depends on the success of an interim agreement on trade, which in turn hangs on whether or not the European Council judges Serbia to be cooperating with a war- crimes tribunal in The Hague.

Two Serbian war-crimes suspects, Ratko Mladic and Goran Hadzic, are still on the run and wanted by the International Criminal Tribunal for the former Yugoslavia (ICTY).

"Serbia will do everything to find Mladic and Hadzic, and deliver them to The Hague," Tadic said.

Tadic added that he hoped that a report by Serge Brammertz, the ICTY's prosecutor, on Serbia's cooperation would be positive, and that in turn would open the way for a full EU entry application.

Whilst in Berlin Tadic attended the signing of a Memorandum of Understanding between German energy giant RWE and Serbia's state electricity supplier EPS, over future cooperation in the sector.

"The energy partnership signed today between Germany and Serbia will create economic stimulus through the realization of joint projects," said Economics Minister Rainer Bruederle.

Chancellor Merkel also expressed her sympathy with Serbians mourning the death of Patriarch Pavle, head of the Serbian Orthodox Church, who passed away on Sunday, aged 95.