It said that the security situation in sensitive areas did not improve for displaced people returning home. And it said "police responsiveness to incidents targeting minority returnees did not improve."
Turning to Serbia and Montenegro, the report said civilian authorities generally maintain effective control of security forces.
But it noted that "there were a few instances in which elements of the security forces acted independently of government authority." The report said this included "arbitrary arrest and selective enforcement of the law for political purposes."
Regarding the province of Kosova, the report said that there were apparent ethnically-motivated killings of Serbs there during the year.
For an overview of the State Department report, click here.
Spotlight On Kosovo
THE WORLD'S NEWEST NATION? The region of Kosovo has a population of more than 2 million, some 90 percent of whom are ethnic Albanians. It was one of the poorest regions in the former Yugoslavia, but has considerable mineral wealth and an enterprising population, many of whom work abroad but keep close contact with Kosovo. All ethnic Albanian political parties seek independence on the principles of self-determination and majority rule. They feel that Serbia lost its historically based claim to what was its autonomous province under the 1974 constitution by revoking that autonomy in the late 1980s and then conducting a crackdown in 1999 that forced some 850,000 people to flee their homes.
Since NATO's intervention that year to stop the expulsions, Kosovo has been under a UN administration (UNMIK). The UN has begun to gradually transfer functions to elected Kosovar institutions. The primary Serbian concerns are physical safety for the local Serbian minority, a secure return for the tens of thousands of Serbian displaced persons, and protection for historic Serbian religious buildings. The main problems affecting all Kosovars, however, are economic. Until Kosovo's final status is clarified and new legislation passed and enforced, it will not be able to attract the investment it needs to provide jobs for its population, which is one of the youngest and fastest growing in Europe. Prosperity is widely seen as the key to political stability and interethnic coexistence in Kosovo, as is the case in much of Southeastern Europe.
For an archive of RFE/RL's coverage of developments in the disputed region of KOSOVO, click here.