The Council welcomed that Croatia and the Federal Republic of Yugoslavia (Serbia and Montenegro) had made progress in adopting practical suggestions proposed by the United Nations military observers in May 1996 in order to reduce tension and improve safety and security in the area in addition to resolving the Prevlaka dispute. There was concern at long-standing violations of the demilitarisation regime, but noted that these had occurred less often. The presence of United Nations military observers remained essential for the negotiations.