BELGRADE, Yugoslavia?Serbia and Montenegro signed a historic accord Thursday to radically restructure their federation, dropping the name Yugoslavia and granting greater autonomy to prevent the country’s final breakup.

The agreement, reached by the European Union, was signed by Yugoslav President Vojislav Kostunica, Montenegrin President Milo Djukanovic, EU foreign policy chief Javier Solana and other Serbian and Montenegrin officials.

The new country, consisting of two semi-independent states, will be renamed Serbia and Montenegro, Kostunica said after the signing ceremony. Both republics will share a defense and foreign policy, but will maintain separate economies, currencies and customs services for the time being.

Kostunica said the step signifies a break with the previous regime of former Yugoslav President Slobodan Milosevic.