Serbia's aspirations to join the European Union have run into another complication.

German Chancellor Angela Merkel on Tuesday warned Serbia it must make progress in talks with Kosovo before it can become an EU candidate, possibly later this year. Ms. Merkel spoke after talks in Belgrade with Serbian President Boris Tadic. She said Serbia's candidacy for the EU is entering a crucial phase.

Serbia had hoped it would be able to move forward with its EU membership drive after delivering Serb wartime political leader Radovan Karadzic, his military commander, Ratko Mladic, and Croatian Serb rebel leader Goran Hadzic – its top three remaining war crimes fugitives – to the international war crimes tribunal in the Netherlands. But the German leader said the Kosovo issue cannot be allowed to linger.

Kosovo declared independence from Serbia in 2008, but Serbia and ethnic Serbs in northern Kosovo have refused to recognize it as an independent state.

During the news conference with the German chancellor, Serbian President Tadic asked Germany to show understanding of what he described as a complex issue. He said Serbia would like to see a creative solution.

Tensions between Serbia and Kosovo flared last month when Kosovo's ethnic-Albanian government sent special police units to take control of northern border crossings, part of an effort to enforce a ban on imports from Serbia.

One policeman was killed and several other people were wounded in an exchange of gunfire between the two sides.

The ban was in retaliation for Serbia's blocking of Kosovo's exports.