* Exchange of first envoys since 1998-99 war
* Serbia insists they are not ambassadors
* EU near decision on accession talks with Serbia
By Valerie Hopkins and Fatos Bytyci
BELGRADE/PRISTINA, June 17 (Reuters) - Serbia and its former province of Kosovo exchanged envoys on Monday for the first time since a 1998-99 war, a step loaded with symbolism for the Balkan neighbours as the European Union considers whether to set Belgrade on the path to membership.
Dubbed liaison officers, the officials will help with the implementation of a landmark accord brokered by the EU to improve ties between the two countries, five years after Kosovo declared independence from Serbia with the backing of the West.
Serbia does not recognise Kosovo and they have no diplomatic relations, but the EU says they must "normalise ties" if they are to eventually follow in the footsteps of ex-Yugoslav Croatia, which becomes the bloc's 28th member on July 1.
The officials both took up their posts, based in the offices of the EU in Belgrade and Pristina, at midday, with little pomp or fanfare.
"I am not an ambassador," Serbia's Dejan Pavicevic told reporters in the Kosovo capital. "We're not talking about the full normalisation between two countries but maybe between two nations."
Kosovo envoy Lulzim Peci, a former Kosovo ambassador to Sweden, said he expected "open and positive cooperation" with Serbia.
"This mission in Belgrade is like any diplomatic mission of the Republic of Kosovo and as the chief of this mission I represent the government of Kosovo and also all the communities that live in Kosovo," he told Reuters Television on Sunday.
Neither will have diplomatic immunity but they will have police protection.
The exchange of envoys is hugely symbolic for Serbia as the largest country carved from federal Yugoslavia chases the economic boost of EU accession talks.
The bloc will decide at the end of June whether to set a date for talks to begin, possibly later in the year or early 2014, or to postpone amid concern over apparent foot-dragging in the implementation of the Kosovo accord brokered in April.
Under the agreement, Serbia is to cede its de facto control over a northern slice of Kosovo where some 50,000 minority Serbs reject the former province's 2008 declaration of independence.
Kosovo is a locus of myth and legend for many Serbs, considered by many as the cradle of their nation and the Serbian Orthodox faith.
But 90 percent of its 1.7 million people are Albanians. Kosovo broke away in 1999, when NATO bombed for 11 weeks to halt the killing and expulsion of Albanians by Serbian forces under late strongman Slobodan Milosevic.
Around 100 countries have recognised the country as independent, including the United States and 22 of the EU's 27 members. It is still patrolled by some 6,000 NATO peacekeepers.
(Editing by Matt Robinson and Alison Williams)