War in the Balkans: Diplomacy - Alliance prepares its final offer

DIPLOMATIC EFFORTS to reach a Kosovo settlement entered a crucial phase yesterday, as top representatives of Russia, the European Union and the United States gathered to finalise what amounts to a take-it-or- leave it deal to present to President Slobodan Milosevic.

"We are facing probably decisive days," the German Foreign Minister, Joschka Fischer, said on the eve of the departure of Viktor Chernomyrdin, the former Russian Prime Minister, to Belgrade. Hours earlier, Yugoslavia had forwarded to Germany its formal "acceptance" of a vaguely worded peace plan hammered out by the Group of Eight leading Western powers and Russia last month.

Yesterday, Mr Chernomyrdin, the Finnish President, Martti Ahtisaari, and Strobe Talbott, the US deputy secretary of state, held talks in Bonn to try to reach an agreed position. But though the prospects for a diplomatic breakthrough look better than at any time since the G8 foreign ministers met there on 6 May, success is anything but guaranteed.

Britain greeted the apparent peace signals from Belgrade with caution verging on scepticism, while Mr Fischer himself said that the moment was finely balanced between a possible breakthrough and a worsening of the conflict.

Even the optimistic Mr Chernomyrdin mixed hope with a warning. All sides had an "enormous desire" to find a political solution, he said. But, he added, much work remained to be done on the details of a deal. "The foundation for a political settlement has been set. Now we have to agree on the most difficult issue - the implementation mechanism."

The two main sticking points, referred to once again yesterday in otherwise relatively conciliatory remarks by General Nebojsa Pavkovic, commander of Yugoslavia's Third army, involve the number of troops Belgrade will be allowed to keep in a postwar Kosovo and the make-up of the "effective" international peacekeeping force stipulated by the G8 last month.

Though Yugoslavia wants to retain the 11,000-plus men in the province permitted by last October's abortive ceasefire agreement, Nato is adamant that all Serb military and paramilitary forces must pull out. It says only a few will be allowed back, to guard Serb holy sites and maintain a token presence on the border, symbol of how an autonomous Kosovo will remain juridically part of Yugoslavia.

President Milosevic says the peace-keeping force must be UN-controlled, and contain no soldiers from countries that took part in the bombing campaign. The alliance insists the force must have a Nato "core". Unless heavily armed British, French and US units are involved, the allies say, "K-For" simply will not be a credible enough guarantee to persuade the 800,000 ethnic Albanian refugees to return home.

"That is where the crucial diplomatic battle is being fought," said General Pavkovic. If that is the case, then Belgrade has yet to shift its position significantly.

Mr Talbott and Mr Ahtisaari did not add many specifics. The US envoy gave no indication of extra flexibility, while the Finnish President, the West's designated representative in discussions with Mr Milosevic, said he would accompany Mr Chernomyrdin only if there was a real chance of progress.