By John Chalmers BRUSSELS, Belgium (Reuters) - Talks on Kosovo's final status could start in mid-2005 if the breakaway Serbian province under U.N. administration meets rule-of-law, democracy and other standards by then, a senior U.S. official said Tuesday.

"The proposition is that if Kosovars can meet these standards there will be a review of where they stand in mid-2005," U.S. Deputy Undersecretary for Political Affairs Marc Grossman told reporters at NATO headquarters in Brussels.

"If they can meet these standards we will all then be prepared to begin the process of discussing final status for Kosovo."

Speaking ahead of a visit to the Western Balkans, Grossman said if the standards were not met then, the six-nation Contact Group supervising Balkan diplomacy would set a new date.

Kosovo was put under U.N. rule in 1999 after NATO bombing to end Serbian repression of the province's majority ethnic Albanians under then Yugoslav President Slobodan Milosevic.

Serbian and Kosovo Albanian officials had talked recently of a likely date sometime in 2005 for final status talks, but Grossman's statement was the first indication that Western powers saw a similar timetable.

It was also the first time Washington had spoken of a review, which will be seen as a major incentive for the Kosovo Albanians to embrace democratic values, implement minority rights for Serbs and embark on economic reform.

In Belgrade, Serbia's top negotiator on Kosovo, Deputy Prime Minister Nebojsa Covic, said Grossman's statement "represents a sharpening of focus on Kosovo and introduces a timeframe."

"It is important that we have clearly defined standards which have to be measurable: otherwise how will we be able to say they have been met?" Covic told reporters.

SPECTER OF INDEPENDENCE

Belgrade and Pristina held their first direct talks since the Kosovo war last month in Vienna under pressure from the international community to reconcile by tackling practical problems like power supply and missing persons. The two sides remain bitterly divided, with Serbia insisting Kosovo remains part of its territory and Albanians demanding independence from Belgrade. Diplomats say the Vienna meeting was a flop. Not only was the encounter frosty, but it was boycotted by Kosovo's ethnic Albanian prime minister. Expert groups which were supposed to continue the reconciliation talks have not met.

Covic raised a specter haunting big powers: a domino effect if Balkan borders are changed by the creation of an independent Kosovo, drawing a map of enlarged, mono-ethnic states.

"If the international community allows democratic Albanians to separate from democratic Serbia, then it also has to allow democratic Serbs to separate from democratic Bosnia," he said, referring to the Republika Srpska part of the Bosnia federation.

"I am not for the policy of changing borders, but the secession of Kosovo would be a change of borders," Covic said.

The breakup of Bosnia would leave a barely viable rump state and could tempt Bosnia's Croats to also seek secession and union with a Greater Croatia. Kosovo, the domino theory runs, would join Albania, perhaps taking a third of Macedonia with it. (Additional reporting by Julijana Mojsilovic in Belgrade).