Croats and Serbs agree on Muslim land demand: Offer at talks hailed as breakthrough is rejected by Bosnian President

CROATS and Serbs said yesterday that they had agreed to meet Muslim demands for a full third of the territory of Bosnia-Herzegovina in a carve-up of the country, but the offer was immediately rejected by the Bosnian President, Alija Izetbegovic. The latest offer had been seen as a breakthrough by negotiators earlier in the day and raised hopes for an end to 20 months of bitter war.

'After long and rather tiring discussions between the Croatian and Serbian delegations, we have reached agreement as to how we shall have 33.3 per cent for the Muslims,' President Franjo Tudjman of Croatia had earlier told reporters in Geneva.

With international mediators and the European Union pressing for a pre-Christmas peace accord, all three of Bosnia's warring parties returned to Geneva yesterday to attend a new round of talks. The day, however, was dominated by negotiations between Mr Tudjman and Serbia's President Slobodan Milosevic and their respective client warlords.

At first glance the latest Croatian-Serbian offer, which would give Croats 17.5 per cent of the country and the Bosnian Serbs just under half, appears to be an improvement on an earlier three-way division that offered just under 31 per cent of Bosnia to the Muslims. That deal was rejected by the Bosnian parliament in September. Mr Izetbegovic insisted on at least 3 per cent more territory, including villages and towns in northern and eastern Bosnia, such as Zvornik and Prijedor, which were overrun and 'ethnically cleansed' by Bosnian Serb forces.

Mr Tudjman said the Croatian and Serbian delegations made their latest offer to the peace mediators Lord Owen and Thorvald Stoltenberg, who were to communicate it to Mr Izetbegovic. However, details of the new offer were not immediately clear. Croatian officials said despite yesterday's negotiations, differences still remained on the details of a new Bosnian map - the traditional obstacle which has tripped up past 'breakthroughs'.

Earlier in the day Lord Owen said he was 'fairly confident' of securing land concessions from Serbs and Croats to meet Muslim demands. But Bosnia's Prime Minister, Haris Silajdzic, said he could see no sign that the demands would be met. 'The purpose of this meeting is to reach an agreement. Unfortunately, we do not yet see any sign of this agreement,' he said, calling on the EU to end the deadlock.

Lord Owen has been under particular pressure to produce results in the latest round of peace talks. There have been rumblings of discontent over the way the Geneva peace conference has drifted in recent months, with the Belgian, Dutch and German governments making clear their concern that Lord Owen has allowed the talks to focus on the partition of Sarajevo rather than forcing Serbia to withdraw from some of the 70 per cent of Bosnia it conquered and cleansed of Muslims.

The Bosnian government, for its part, has accused Lord Owen of allowing the Serbs to dictate the agenda of the negotiations.

At this month's EU summit, leaders agreed to a demand that the Serbian government make territorial concessions in Bosnia or risk a tightening of sanctions - a move Mr Milosevic is keen to avoid.