For nearly two decades, President Vladimir Putin has been on a mission to make Russia great again – to borrow a phrase from his American counterpart – and to right what he sees as the greatest “wrong” in the country’s recent history: the collapse of the USSR and the loss of its superpower status.

In this grand geopolitical quest, tiny Kosovo has also played a special role. Putin sees NATO’s military intervention in 1999 and the 2008 unilateral declaration of independence as a direct affront to Russian power in its traditional sphere of influence in the Balkans. This view is also broadly held in Serbia, which considers Kosovo to be historically Serbian territory.

In recent years, as the United States and the European Union increasingly appear to have failed to bring a lasting solution to the Serbia-Kosovo dispute, Russia has moved from being an outright supporter of Belgrade to trying to assume the role of a mediator.

It is in this context that Putin met Kosovo President Hashim Thaci during the Paris Peace Forum earlier this month and presumably spoke to him in German, a language both men are fluent in. 

In a tweet posted after the meeting, Thaci pointed out that Russia is supportive of a political deal between Kosovo and Serbia to resolve the long-standing sovereignty dispute.

The Russian president appears to have joined the Trump administration and top EU officials like the High Commissioner for Foreign and Security Policy, Federica Mogherini, in backing a land-swap proposal Thaci and Serbian President Aleksandar Vucic floated in early August.

The idea is to partition Kosovo – or “adjust borders”, as Thaci says – with Serbia taking areas in the north in exchange for recognising its independence and potentially giving up a few Albanian-majority municipalities.

The deal would clear the border dispute, the most serious hurdle along Serbia’s path to EU accession some time in the 2020s. By backing this proposed plan, Putin appears to have become an unlikely champion of the EU enlargement.

Yet, even with his support, the deal might not actually happen, as the two sides have failed to reach an agreement over the past few months. In early September,  Thaci and Vucic called off a meeting in Brussels in which they were supposed to discuss “border adjustments”.

Then in early November, talks broke up after the Kosovo government slapped a 10 percent tariff on imports from Serbia and Bosnia and Herzegovina, which hasn’t recognised Kosovan statehood under the influence of Republika Srpska, its Serb-majority entity. 

Pristina hiked up customs duties because of complaints that Belgrade is intensifying efforts to persuade countries across the world to withdraw their recognition of Kosovan independence.

The looming trade war is only the latest point of contention in the increasingly strained ties between Kosovo and Serbia. In late September, Vucic paid a controversial visit to a predominantly Serb region in northern Kosovo to which Pristina responded by sending its special forces there.

Then in mid-October, having relied on foreign forces for security for the past two decades, Kosovo decided to establish a national army, defying protests by its Serbian minority.

The Kosovan government also delayed implementing a key provision of the EU-brokered Brussels Agreement which is meant to pave the way for establishing an Association of Serbian Municipalities on its territory. This entity is supposed to represent the interests of the Serbian minority in the country.

Thaci has also faced growing criticism at home from Prime Minister Ramush Haradinaj and the opposition Vetvendosje, who have rejected the partition or even territorial swaps plans he had put forward. Feeling under political pressure, the Kosovan president has had to put on display his patriotic credentials and disengage with the Serbian government.

As Serbia and Kosovo outbid one another, the chances for them to produce a grand bargain are becoming slimmer by the day. So where does that turn of events leave the big players? 

The EU is certainly the biggest loser from the current stalemate. The normalisation talks, under way since 2013, are in a deadlock. Mogherini, eager to finish off her term as high representative in the coming year with a diplomatic breakthrough, is hardly happy with Vucic and Thaci’s intransigence.

The Serbia-Kosovo trade war is a blow to Brussels’ long-standing efforts to promote economic cooperation in former Yugoslavia. The EU clearly finds it difficult to make the two sides dial down tensions and implement commitments they have already made.

The allure of EU membership, which is supposed to be the union’s chief power asset, is clearly not as effective as it was in the past in pulling Belgrade and Pristina to the negotiating table. Kosovo is lagging far behind the rest of the region in the negotiation process and its citizens are still required to apply for visas in order to travel to the EU.

The US, on the other hand, is involved only halfway. Despite the endorsement of the putative partition deal and the lobbying by top European politicians like German Chancellor Angela Merkel, the Trump administration is not pushing hard enough.

Visiting the region in October, Matthew Palmer, Deputy Assistant Secretary of State in charge of the Balkans file, underscored it was up to the two parties to work out a solution. But the assumption that Serbia and Kosovo are willing and able to provide a blueprint for normalisation has failed a major test in the past few months.

Amid this confusion and deadlock, Russia is, yet again, the winner because it does not really have skin in the game. Putin sees Kosovo a problem for the West and goes by the principle “you break it, you own it”.

As the EU and the US appear to have squandered an opportunity to resolve the Serbia-Kosovo dispute by capturing the early momentum, Russia is trying to assume the role of a constructive player open to dialogue with all parties.

It seems set on regaining ground lost in 2010 when following decision of the International Court of Justice (ICJ) in favour of Kosovo’s independence, Serbia decided to move the issue from the remit of the UN Security Council (where Russia is a permanent member) to the EU.

Today, Russian diplomats are sniping at the EU for its failure to move the normalisation process forward; the hope is that the UNSC will once again become the appropriate venue to discuss Kosovo. And it seems that Thaci, who is insisting that Moscow is neither a friend nor a foe, seems open to engaging.  

Thus, without deploying troops in the Balkans or spending billions like the EU, Putin has become a mover and shaker on a key issue in European security.

The big question is whether the EU can regain the initiative. It is never too late for a bargain on Kosovo.  Serbia can recognise its neighbour’s sovereignty and obtain in return wide-ranging autonomy for Kosovo Serbs through the Association of Serbian Municipalities. 

That will be a bitter pill to swallow for the Kosovars which see the entity as a potential Trojan horse for both Serbia and Russia, not unlike Bosnia’s Republika Srpska. To make it work, the EU and the US should do the heavy lifting.

The first step in that direction should be to make sure Thaci and Vucic do not get carried away playing their patriotic games.

The views expressed in this article are the author’s own and do not necessarily reflect Al Jazeera’s editorial stance.