diff --git a/lib/constants.py b/lib/constants.py
index eeba79b550e10e8b335b05c9e7c6de7d2a43f0e3..35cf2adacf9f6a4bc60ca65b326fc4bf7096c0ba 100644
--- a/lib/constants.py
+++ b/lib/constants.py
@@ -165,6 +165,8 @@ XEN_INITRD = _autoconf.XEN_INITRD
 
 KVM_PATH = _autoconf.KVM_PATH
 SOCAT_PATH = _autoconf.SOCAT_PATH
+SOCAT_ESCAPE = _autoconf.SOCAT_ESCAPE
+SOCAT_ESCAPE_CODE = "0x1d"
 KVM_MIGRATION_PORT = _autoconf.KVM_MIGRATION_PORT
 
 VALUE_DEFAULT = "default"
diff --git a/lib/hypervisor/hv_kvm.py b/lib/hypervisor/hv_kvm.py
index aada45bc797770572e77ca94bd874f3e7a368d86..4b09edd124aa41ee0d10f4aa11a9fe7df017f7b8 100644
--- a/lib/hypervisor/hv_kvm.py
+++ b/lib/hypervisor/hv_kvm.py
@@ -114,6 +114,18 @@ class KVMHypervisor(hv_base.BaseHypervisor):
     """
     return '%s/%s.serial' % (cls._CTRL_DIR, instance_name)
 
+  @staticmethod
+  def _SocatUnixConsoleParams():
+    """Returns the correct parameters for socat
+
+    If we have a new-enough socat we can use raw mode with an escape character.
+
+    """
+    if constants.SOCAT_ESCAPE:
+      return "raw,echo=0,escape=%s" % constants.SOCAT_ESCAPE_CODE
+    else:
+      return "echo=0,icanon=0"
+
   @classmethod
   def _InstanceKVMRuntime(cls, instance_name):
     """Returns the instance KVM runtime filename
@@ -678,15 +690,8 @@ class KVMHypervisor(hv_base.BaseHypervisor):
 
     """
     if hvparams[constants.HV_SERIAL_CONSOLE]:
-      # FIXME: The socat shell is not perfect. In particular the way we start
-      # it ctrl+c will close it, rather than being passed to the other end.
-      # On the other hand if we pass the option 'raw' (or ignbrk=1) there
-      # will be no way of exiting socat (except killing it from another shell)
-      # and ctrl+c doesn't work anyway, printing ^C rather than being
-      # interpreted by kvm. For now we'll leave it this way, which at least
-      # allows a minimal interaction and changes on the machine.
-      shell_command = ("%s STDIO,echo=0,icanon=0 UNIX-CONNECT:%s" %
-                       (constants.SOCAT_PATH,
+      shell_command = ("%s STDIO,%s UNIX-CONNECT:%s" %
+                       (constants.SOCAT_PATH, cls._SocatUnixConsoleParams(),
                         utils.ShellQuote(cls._InstanceSerial(instance.name))))
     else:
       shell_command = "echo 'No serial shell for instance %s'" % instance.name