FOCUS: WAR IN EUROPE: If Dresden could rise again so can Kosovo

Diplomats, already planning post-war reconstruction, see a Balkan `Marshall Plan' as vital to future peace and prosperity

With no notice or fanfare, top officials from the leading Western powers and Russia met last week to discuss the Kosovo war. They gathered in, of all places, Dresden, virtually obliterated in a single February night in 1945, near the end of another, far greater European war. Many will have wondered at history's parallels - of US and British planes raining bombs; then over a German city swollen with refugees fleeing Russian armies, now over Yugoslavia and its southern province full of refugees fleeing marauding Serbs.

But they will have noted something else too. Dresden was subjected to an apocalypse beyond anything even the Balkans can imagine. At least 35,000 people, maybe double that, were killed during the raid as the city turned into a fireball. Corpses were burned by the hundred in great petrol- doused pyres. But no disaster is for ever. Dresden stands again. Today, even as the bombs fall, diplomats face the task of rebuilding Kosovo, Yugoslavia and the southern Balkans.

When the fighting ends, there will still be a land called Kosovo, still deemed by Serbs to be the cradle of their nation. There will still be desperately fragile, perhaps collapsed states around it, in Montenegro, Albania and Macedonia. There will be a battered, bitter, resentful Serbia, with an even stronger sense of victimhood, whether or not Slobodan Milosevic is in power. Out of this chaos, the diplomats must try to fashion a new Balkan order.

Officially, the basis for a Kosovo settlement is what might be termed "Rambouillet Plus" - the original Contact Group plan for an autonomous, multi-ethnic province within Yugoslavia's existing borders, protected by a Nato peacekeeping force, but now requiring the return of all refugees to their homes, and the total withdrawal of Yugoslav army and paramilitary forces.

In practice Rambouillet is dead. After the events of the last three weeks, even the most nominal control by Serbia - even under a leader other than Mr Milosevic - would be unacceptable to the ethnic Albanians, not to mention Western public opinion. One way or another, a Nato protectorate will surely have to be imposed on all or part of post-war Kosovo.

Once the immediate humanitarian crisis has been overcome, the choices seem to be two. One is partition, in which the north of the province is merged with Serbia and the south becomes a separate entity. The other is a whole and independent Kosovo. In the first case, it is hard to see how a rump Kosovo would not be incorporated, sooner rather than later, into some form of "Greater Albania". Either way international guarantees will be needed - and, almost certainly, Nato or UN peacekeepers.

Dresden took decades to rebuild. In Kosovo itself the reconstruction process ought to be shorter, even though the damage is growing by the day. Replacing the homes and infrastructure already wrecked, and providing a subsistence income to Kosovo's two million inhabitants, many of whom have lost everything, means the bill might run to pounds 10bn, perhaps more.

Kosovo is only one basket case among several. Albania, Macedonia and Montenegro, already among the ranks of Europe's impoverished, will emerge even poorer and less stable. Yugoslavia proper, hit hard by economic sanctions before the bombing started, now faces war damage that will cost billions of dollars to repair.

Europe's map after the Second World War was redrawn by the Yalta and Potsdam conferences, and its economy (in the West at least) revived by the Marshall Plan. Diplomats believe something similar is inevitable once this closing act of the Balkan tragedy of the 1990s is played out. The big powers know they cannot resolve matters simply by throwing a few thousand soldiers and a few billion dollars in the direction of Kosovo, and turning their attention elsewere.

They know that in purely economic terms, a new "Marshall Plan", albeit far smaller than the 1947 original, will be needed to tackle the backwardness which so contributes to Balkan instability. Even at peace the region is a tangle of smouldering historical fuses. But if a magician's wand could transform its states into a set of Switzerlands, their ethnic, religious and linguistic divisions would, hopefully, be submerged by prosperity.

Clearly, the money for reconstruction must come from the Europe in whose backyard the war has been fought: and the politicians at least seem alive to the need. In a week filled by violence and human misery, a rare hopeful piece of news came from Luxemburg, when the EU foreign ministers on Thursday specifically held out the prospect of membership of both Nato and the EU as an incentive for reform in Balkan countries. Plans for debt relief and concessionary loans are also taking shape.

It was a "commitment on behalf of us all", the German foreign minister, Joschka Fischer declared, that "the Europe of wars and ethnic hatreds become a thing of the past."

A political conference too is on the cards - a modern Balkan equivalent of Vienna in 1815, Versailles in 1919, and Yalta/Potsdam 1945. The Balkan countries, Nato and European powers including Russia would all take part. The problems are myriad: first and foremost, would Yugoslavia itself go along with the idea? The agenda too would be horribly complex: the future not only of Kosovo, but of Bosnia, the Serb Republic (to be re-united with Serbia proper?) and of Montenegro. Indeed, should a state called Yugoslavia continue to exist? And - following the principle that "good fences make good neighbours" - might peaceful population transfers be necessary, to match states and ethnic groups more closely?

These are ingredients of unresolved Balkan Questions past. But similar issues were settled in 1945 in an adjacent corner of Europe. Out of a mountain of smoking debris, a new Dresden eventually emerged to regain its place in a new Germany. The politicians' task now is to create a new Kosovo, and in the process drag the Balkans from the 19th century to the 21st.