U.N. envoy Kai Eide faulted Kosovo's provisional government on Friday for falling short in fostering ethnic tolerance and a strong justice system, but said the Serb province had made significant progress in setting up governmental and economic structures, Reuters reported. Eide, in a report to U.N. Secretary-General Kofi Annan, recommended the launch of international negotiations in any case on whether Kosovo should now win independence, as sought by its ethnic Albanian majority, or remain a part of Serbia, as demanded by Belgrade. Annan endorsed Eide's recommendation. Here is Eide's scorecard on how Kosovo's local authorities have performed in meeting key international standards set by the U.N. administration that has governed it since 1999. -- Governmental institutions: Legislative, executive and judicial institutions have been set up and systems are in place across Kosovo for providing public services. But minority Serbs have chosen to remain outside the political system and establish their own health and education services. -- The economy: "Significant progress has been made" in creating economic structures. But the current economic situation nevertheless "remains bleak," with high unemployment and widespread poverty. Privatization of state-run firms is well under way and future prospects are positive, however, so long as job discrimination along ethnic lines is avoided. --more 2239 Local Time 1939 GMT