A DEAL, PART II?

By KARSTEN PRAGER

In an interview published in TIME last week, Serbian President Slobodan Milosevic offered his services as a Balkan peace broker, promising to bring the Bosnian Serbs closer to a deal, provided U.N.-imposed sanctions against Yugoslavia are lifted. The proposal made no waves in Washington, since it recycled ideas that had been rejected by the U.S. Then hard on the heels of the capture of Srebrenica by the Bosnian Serb army, Time has learned, Carl Bildt, the peace negotiator for the European Union, presented Milosevic with a number of ideas that might make a deal more palatable all around, including a way to finesse a potential Russian veto of enforcement measures. Milosevic was described as being "receptive."

The specifics discussed by the two men in several meetings last week build on Serbia's acceptance, given last July, of the peace plan put forth by the so-called Contact Group, composed of the U.S., Britain, France, Germany and Russia; that proposal envisages the future Bosnia as a union of the Bosnian Serbs' Republika Srpska and the Bosnian-Croat federation, on the basis of a 49%-51% allocation of territory. Milosevic would not only recognize the union but also make certain that the peace plan is accepted by the so far intransigent Bosnian Serb leader Radovan Karadzic. Serbia would in addition promise to seal more effectively its frontier with Bosnian Serb-held territory (an 11-month-old closure the U.N. has so far certified as essentially effective) and agree to the deployment of more U.N. monitors along the border.

Beyond that, Milosevic is reportedly willing to accept a step-by-step suspension of the sanctions against Yugoslavia, with progress dependent on compliance -- a suspend-comply-lift scenario keyed to the gradual implementation of the Bosnia peace plan. In the first phase, strategic materials would stay on the sanctions list, with the exception of an annual quota of allowed oil imports. The time frame for review remains under discussion, with Milosevic insisting on at least a year between compliance assessments. Whatever the interval, the Bildt concepts are said to insist that sanctions will be reimposed should Belgrade evade its commitments; a critical problem here is who decides whether and how Belgrade is in violation. Milosevic initially suggested that reimposition required a unanimous decision of the U.N. Security Council -- which would mean that Russia, the only major power on the Security Council friendly to the Serbs, could block an embargo resumption. One Bildt idea under discussion is that sanctions renewal could be imposed by three of the five permanent members of the U.N. Security Council rather than by unanimous decision; whether such a change in voting procedure is legal remains in question, but as a senior U.S. Administration official puts it, "It does reflect an effort to get around the problem of the veto."

Milosevic insists that the U.S., along with Serbia, oversee the Balkan peace process, a reflection of his conviction that the Europeans either lack the leadership clout or have too many conflicting interests in the former Yugoslavia to impose a settlement, and that the U.N. is too weak to do so. Can he deliver on his part of any bargain? Possibly, but he will need time to bring the Bosnian Serbs into line and convince Serbs in general that he is not selling out their cause. "Like it or not, there's nothing else out there," says an insider in Belgrade. "Nothing will happen unless the U.S. and Serbia are involved-nothing. And if nothing happens, there will be a disaster." Against the backdrop of Srebrenica, of course, that is already true.

--With reporting by J.F.O. McAllister/Washington and Marguerite Michaels/New York

With reporting by J.F.O. MCALLISTER/WASHINGTON AND MARGUERITE MICHAELS/NEW YORK