The arrival in Belgrade last night of Mr Viktor Chernomyrdin, the Russian special envoy, and Finnish President Martti Ahtisaari, representing the European Union, is clearly a turning point in the Balkans war.
The stakes are high for both parties: a success in the negotiations could clinch the necessary peace deal, but a failure will virtually dictate a NATO ground offensive in Kosovo.
In theory, the alliance can claim that it is increasingly winning the war. No NATO government has been tempted by President Milosevic's unilateral "peace offers" and the political unanimity within the alliance has been maintained.
The air campaign, now 70 days old, is creating havoc with the Yugoslav economy and military structure. The alliance has even managed to brush aside its frequent bombing mistakes; NATO spokesmen in Brussels no longer bother to offer their hitherto routine apologies after the occasional hospital or refugee convoy is hit from the air.
More importantly, NATO leaders believe that Mr Milosevic is slowly being forced to accept their own peace terms. Only two weeks ago the Yugoslav leader refused to countenance the presence of foreign peacekeeping forces in Kosovo at the end of the war. Now, almost all the key NATO demands, from the withdrawal of Yugoslav troops to the return of ethnic Albanian refugees, have been accepted by Belgrade.
The snag is that this apparent capitulation by the Yugoslav leader represents merely the continuation of the war through other means; the real battle for Kosovo's survival will continue even if a peace deal is concluded today.
Officially, NATO's war aims are clear and not negotiable: President Milosevic is being presented with a peace plan which he is expected either to sign or reject. In practice, however, most of the conditions imposed on Yugoslavia are open to various interpretations, as well as last-minute compromises with the Russian government, which is still acting as Yugoslavia's ultimate protector.
The first diplomatic tussle is over the cessation of the air offensive. The Russians have given up on their demand that NATO's air strikes should stop the moment a deal is signed. But both Moscow and Belgrade are still demanding that the alliance should cease bombing as Yugoslav troops withdraw.
NATO has already offered a concession, in the form of a guarantee that the withdrawing columns of Yugoslav troops will not be targeted, provided they are heading away from Kosovo. Nevertheless, the alliance is not prepared to suspend the air offensive altogether, mainly because it knows that, once stopped, the political consensus for the resumption of the air campaign will never be re-created.
A compromise seems to have been offered by the Americans yesterday, according to which the bombardment will cease once the Yugoslav withdrawal from Kosovo is deemed "irreversible", presumably after the bulk of Belgrade's troops and their equipment have already left the province. Belgrade may accept this offer, especially if it gets an informal understanding that, as the withdrawal takes place, NATO will progressively scale down its bombing.
The second difficulty was over the composition of the peacekeeping force in Kosovo.
Yet again, Mr Milosevic and his Russian supporters have officially given ground on all essential points. Yugoslavia now accepts that an international force will be introduced into the province to allow for the return of refugees and the administration of the territory pending a final political settlement.
Yugoslavia originally hoped that this force would not be composed of NATO troops, or at least not commanded by the alliance. But even these points have been conceded, at least by the Russians who now accept that NATO will both provide the bulk of the troops on the ground, and decide on which alliance countries will take part in the operation; a force dominated by British, French and American forces - in this numerical order - is now an inevitability.
But the diplomatic games are just beginning.
Russia has agreed to take part in the peacekeeping operation with its own troops. This much is welcomed by Western leaders eager to reassure Moscow that the war was not about creating new spheres of influence in the Balkans. The snag is that the Russians are not interested in merely taking part in a NATO-led operation; they are determined to participate as equal partners, and on their own terms.
Mr Chernomyrdin has privately suggested a geographic distribution of troops: NATO forces in the south of Kosovo, and the Russians in the northern part of the province. This has been rejected by every Western government as an ill-disguised partition of Kosovo. So Moscow has now shifted its position, by suggesting a peacekeeping operation similar to the one undertaken in 1995 in Bosnia, where NATO and Russian troops operate side by side in different sectors but not alone: each has a "lead nation", but includes troops from various countries as well.
The Bosnian example may be enticing, but it is largely irrelevant for Kosovo. Bosnia was recognised by the international community and already divided by the time the Russians and NATO arrived on the ground. Kosovo's international status remains indeterminate, and the bulk of its population has been driven out.
In short, while the division of Bosnia could not be reversed by the time peacekeepers arrived, in the case of Kosovo a territorial division is rather simple to achieve at this stage.
It is clear that Western governments will not accept such a division for, coming on top of Mr Milosevic's survival as Yugoslav leader, it will signify NATO's utter humiliation. But what cannot be put formally in a peace deal can still exist in practice on the ground. For appearances' sake, a Russian sector in Kosovo will contain units from other countries as well.
Formally, therefore, the peacekeeping force will operate throughout the province. But refugees are unlikely to want to return to an area in which Russian troops predominate.
Since many of the villages in Kosovo have been destroyed, some refugees will have to be rehoused elsewhere. A situation could therefore be created where the bulk of the population is in just one part of Kosovo.
This, coupled with the fact that the status of the province is still up for negotiations, and that therefore the Russians could still deal with the Yugoslavs as the legal authority in Kosovo, could mean a de facto partition which will gradually become permanent.
Also, the Russians are demanding the disarmament of the KLA, the Albanians' guerrilla movement. NATO may be prepared to search returning refugees in order to prevent the introduction of weapons. Yet even if such searches are efficient, NATO is unlikely to be successful in disarming KLA fighters already in Kosovo. The KLA will always find a more fertile ground in Western-controlled territory, rather than in areas where Russian troops may be stationed.
So again a division will slowly emerge, by necessity if not by design.
Ultimately, much will depend on who enters Kosovo first. If NATO marches in immediately after a deal is signed, it may be able to establish the necessary control in order to avoid a partition. If, however, Russian units enter the province at the same time as NATO and from different directions, a partition of sorts will be achieved, regardless of what a peace treaty actually says.
All in all, therefore, the real battle for Kosovo's existence has just begun. One of the key promises which NATO made when it launched its air offensive was that it would never accept a territorial compromise with Mr Milosevic. Yet this is exactly the question now facing the alliance, and it is precisely here that most of the diplomatic fudges will be made.
Mr Milosevic has returned to the negotiating table not in order to capitulate, but in order to snatch a political victory out of his military defeat.
Jonathan Eyal is director of studies at the Royal United Services Institute in London