Notes

COREU FROM: Lord Owen, 2 March 1994

Muslim/Croat Negotiations, Washington

1. I assume the text of the paper signed in Washington late yesterday afternoon and the two attachments thereto (the Framework Agreement for the Federation and the Outline of a Confederation Agreement with its two annexes), have been passed on by EU Ambassadors in Washington. Paul Szasz who has been the legal adviser to ICFY from the inception was present in Washington and I thought it might help for you to have his perception of the way ahead. I also enclose a press release put out late last night by Mr Stoltenberg and myself.

2. Although substantial agreement appears to have been reached as to the delimitation of the "cantons" (incidentally, that name may be changed), it is evidently not possible to complete this matter until the precise delimitations with the Bosnian Serb areas is established.

3. The negotiations were at times quite difficult (particular on the arrangements concerning the Federation President and Government), but the attitude of the parties appears to have been generally constructive. Before the signature, both Presidents Izetbegovic and Tudjman were consulted by telephone and gave their approval - the latter only after achieving some strengthening of the Federation President's powers in respect of the composition of the Government.

4. Outline of the Proposed Arrangements

The complete arrangements that are foreseen are as follows:

(a) A Federation between the Muslim (Bosniac) and the Croat parts of B-H, along the lines in the Framework Agreement - ie a somewhat decentralised federal-type state;

(b) A Union between the Federation and the Bosnian Serb entity, roughly along the lines of the Constitutional Agreement in the Invincible Package - ie a very loose arrangement, which, however, would be the international entity that would be the successor of the present Republic of B-H;

(c) A Confederation between the Federation and the Republic of Croatia, along the lines of the Outline Agreement, ie an initially very loose arrangement but with potential to be strengthened and deepened.

5. For the above to come about, it is evidently necessary to:

(a) Complete and conclude the Federation and Confederation Agreements - this is the objective of the Vienna negotiations scheduled for 4-15 March;

(b) Reach agreement with the Bosnian Serbs as to territorial delimitation and as to the establishment of the Union. Ambassador Redman indicated that it is hoped to accomplish this too within the next two weeks, but specified no forum or venue for these negotiations. Basically it would appear that there would in the first instance be US/Russian consultations with the Serbs, but evidently at some stage the Muslims and Croats would have to be involved.

6. Only little consideration appears to have been given to the consequences of not reaching full agreement with the Serbs:

(a) If no territorial delimitation can be agreed with the Serbs, it would in theory be possible to establish the Federation on the 30% B-H territory now held by the Muslims and Croats - but it is not clear whether this is being comtemplated.

(b) If a territorial delimitation is agreed with the Serbs, but no agreement to establish a Union, then there would be no obstacle to establishing the Federation and the Confederation. The international legal personality of the present Republic of B-H would be transferred to the Federation, and the Bosnian Serbs would either establish a state of their own (which could not hope to attain early international recognition), or it might choose and perhaps be permitted by the international community to join Serbia.

7. The Transitional Committee foreseen by the paper signed in Washington is to start its work in Vienna on Friday 4 March. Paul Szasz will be present in Vienna and will stop over in Geneva on the way to Vienna to consult with me and Thorvald Stoltenberg tomorrow. I will be briefing EU Ambassadors in Geneva at 3pm today and will deal with the history of the Croat-Muslim Confederation/Federation proposal within the ICFY. Wisely handled such a relationship is fully compatible with the development of the EU Action Plan. Nevertheless there are obvious dangers of it becoming an anti Serb Alliance something which the involvement of the EU, the UN and the Russian Federation should be able to prevent.

Notes

COREU FROM LORD OWEN, 3 March 1994

BOSNIA: FOLLOW UP TO WASHINGTON AGREEMENT

1. Following the Muslim/Croat agreement in Washington on 1 March, our task is to see how this bilateral agreement can be capitalised on in the search for an overall solution between the three parties. Throughout the work of the ICFY we have always attempted to foster good relations between the Croats and Muslims, as we recognised that the two constituent peoples' economic interests are more closely linked to each other's than to the Serbs'. The Washington agreement need not lead to the unravelling of all that has been achieved in the context of the EU Action Plan - indeed its main elements have been fully discussed within the ICFY over the last few months. What we must be very wary of is presenting the Serbs with a package that is non-negotiable. If we are to get an overall settlement we need to seriously address with the Americans the question of whether now is the time to let the Serbs go their own way - to join eventually, or if there is a comprehensive settlement now, with Serbia and Montenegro. The alternative is to try to persuade the Serbs to join a very loose Union of their republic with the Croat/Muslim Federation. What we must avoid is a situation where Croats and Muslims come together in an anti-Serb alliance which can only serve to prolong and widen the war. Today's Washington Post has US officials saying that the Serbs "may join the Muslim/Croat Union, but it would not be required for a final peace", which is fair enough, but then goes on to talk rather like Silajdzic when he talks about "occupied territory", saying "any conquered territory not surrendered by the Serbs would be considered in a kind of international limbo, still officially regarded as part of Bosnia. The objective of American and Bosnian negotiators is to preclude Serbia's annexation of Serb-held parts of Bosnia, in the hope that someday the Bosnian Serbs will join the Muslims and Croats under the Bosnian flag."

2. A lot of time was spent during the negotiations on the VOPP on finding ways of strengthening the Muslim/Croat axis. It was only after many hours of talks that agreement was finally reached between the Muslims and Croats on the delimitation of the boundaries of Travnik and Mostar provinces, in exchange for which Tudjman and Boban agreed to renounce their aim of establishing a Croat republic of Herceg Bosna. There were also extensive discussions on how these provinces, with ethnically very mixed populations could be administered in a way which served the interests of all citizens. The aim was to avoid any delimitation on purely ethnic grounds, and Travnik province in particular was not "given" to the Croats as many detractors of the plan claimed. It was a marginal province in terms of the likely outcome in a democratic UN supervised vote after 2 years had elapsed to allow for mainly Muslim refugees to return. We in fact made a serious attempt in January 1992 to physically link the outlying majority Muslim province of Bihac to the core Croat and Muslim territories, with a territorial link stretching from Bihac to Livno (further details in para 10), but were unable to get agreement. There were constant meetings brokered by the ICFY between the Muslims and Croats in the spring of 1993 to reduce fighting, including meetings between Tudjman and Izetbegovic on 24 April and 18 May. On 6 May the Serb assembly voted against the VOPP and on 9 May the Croats started to round up Muslims in Mostar. The two events were not disconnected. The intense Muslim/Croat fighting started after the VOPP was pronounced dead in Washington on 21 May. Efforts to improve the Croat/Muslim relationship both in the short term, in order to end the fighting, and in the search for a stable and viable long term solution continued.

3. The idea of a two republic (Muslim/Croat) solution is not a new one and began to arise during the course of the ICFY negotiations once President Izetbegovic had opened up the possibility of Bosnia and Herzegovina not remaining a Union of three republics for all time. He did this when offering to let the Republika Srpska become independent, in the 16 September Serb/Muslim joint declaration which said that "after reaching a mutually acceptable resolution to the territorial delimitation of the three republics within the Union, and during the initial two year period of the Union's existence, there shall be a provision for a referendum to be held on a mutually agreed date within the republics of the Union on the question of whether the citizens of any particular republic agree to remain in the Union or to leave the Union". Izetbegovic in agreeing this was almost certainly hoping that the Serbs would give up significant amounts of territory in exchange for the chance to secede. This proved not to be the case, at that stage, but it did allow us to explore these possibilities at subsequent meetings and it could now be the catalyst for further territorial adjustments by the Serbs.

4. I raised the idea of a two republic solution with the EU in the paper I circulated on 26 October in Luxembourg on the search for a global solution. At that time I said that such a solution was "worth pursuing, having a number of advantages, including making a more viable state." However, our analysis at the time was that although Izetbegovic would favour it, Tudjman was still hoping to incorporate Herceg Bosna into a greater Croatia. This was evident in Tudjman's continued insistence incorporated in the HMS Invincible package that if the Serbs did vote to leave, this would mean the dissolution of the Union, and the Croats must be allowed to go their own way too. We did, however, from June 1993 insist that as a disincentive to Croatian secession from the Union they would have to give the opstina of Neum to the Muslims as the price for a greater Croatia.

5. Despite our, and particularly the FRG's, efforts to persuade Tudjman to the contrary, there was no significant change in his position on any of this until the meetings between Izetbegovic and Tudjman at Petersberg in Bonn, which I reported fully in my COREU of 10 January. By then Tudjman was ready to consider a confederation either between an enlarged Republic of Croatia and an independent Muslim majority republic, or between the Republic of Croatia and the Croat and Muslim majority republics, and was prepared to discuss this in detail. He was not ready, however, to let the Serbian republic secede without the Croat majority republic going as well. The sticking point at that stage was that the Croats insisted on delimiting a boundary between the Muslim and Croat majority entities, whatever form they might take, while the Muslims bitterly opposed this. This remained their position at the 18-19 January and 10-12 February rounds of negotiations in Geneva. As I commented in my COREU of 19 January reporting those talks, we felt that the chances of holding together a Union were virtually gone, and though we managed to get Karadzic reluctantly back on board in February, his parting shot when the talks ended was to reject it again.

6. Following the end of the talks in February, it was clear that Ambassador Redman, and the Germans, who had done so much to move Tudjman's position at the Petersberg meeting, still felt that it might be possible to bring the Muslims and Croats together, and I encouraged Redman to make the attempt. We now have the results of that effort and must examine ways of taking things forward in practical terms, while maintaining as much as possible of what has been achieved through the EU Action Plan. As ever, one of if not the key issue will be the map. The Bosnian Muslims are attracted by the idea of adding together the Croat demand for 17.5% and theirs of 33.33% and placing the Serbs under an obligation to come up with a global offer of 50.83%. Some may also see a Muslim/Croat solution as a way of preempting any Serb/Croat territorial deal, but the wiser Muslim leaders may see they stand to gain from a comprehensive Serb/Croat settlement.

7. As I pointed out in my COREU of 13 February, one of the potential drawbacks of the Washington agreement is that it could limit the possibilities for wider Serb/Croat territorial adjustments, involving the UNPAs, Prevlaka and even a corridor above Brcko in Croatia, with Posavina and land above Dubrovnik in Bosnia and Herzegovina, which could lead to a resolution of the overall Serbo-Croat problems.

8. Finding a solution to the Posavina question will not be easy, and it will be recalled that the VOPP foundered on this point. It is inextricably linked to the issue of the Serbs' "northern corridor" linking Banja Luka to Bijeljina, and to the Muslims' demand for access to the Sava at Brcko, with the Invincible solution, rejected by the Serbs, as their bottom line. Neither the Serbs nor Muslims show any flexibility in their positions. Currently, as the Croats admit, the bulk of the Croatian population of Posavina has left the area, and been replaced by Serbs, mainly from western Slavonia. What the Serbs want, as a quid pro quo for giving up the Western UNPA, is to limit the Posavina to a very small area and widen their corridor. It may be possible that the Croats might accept less than the 2% territory in this area they are asking for if the western UNPA was to return to full Croatian control and if Posavina was to become part of the Republic of Croatia, which, if it was isolated from the rest of BiH territory by the Northern Corridor, it would de facto be in any case. The Croats might also be persuaded to consider the idea we have often put to Tudjman of Croatia ceding a slice of land north of Brcko to the Bosnian Serbs, thus providing them with east-west contiguity, and the Muslim majority republic unhampered territorial access to Brcko.

9. A two republic solution should also involve the resolution of Serb access to the sea at Prevlaka, along the lines already discussed by the two parties, in exchange for the Croats getting a strip of land above Dubrovnik to protect its hinterland. The attitude of Tudjman on such an exchange should be watched closely. If he is concerned about future Muslim intentions, he will almost certainly want to have this strip of land absorbed into Croatia proper rather than left as part of the Croat majority republic. Allowing its incorporation into Croatia may also encourage Tudjman to be more flexible in his offer to the Serbs.

10. Providing 50.83% of territory for the Muslims and Croats will be difficult for the Serbs, though the incentive of immediate independence may persuade them to introduce more flexibility into their position. One possibility for gaining extra territory, which would also enhance the viability of a two republic state, would be to link Bihac to Livno, giving around 2.1%. This idea first came up in early January 1993 during the negotiations on the VOPP and was linked to the "Northern Corridor" problem. We proposed that the Muslims/Croats should get a corridor from Bihac to Livno in return for them allowing the Serbs a corridor from Banja Luka to Bijeljina. I explained the idea to President Mitterand on 14 January and asked him to raise it with Tudjman, whom he was about to meet. We then discussed it with Tudjman and Izetbegovic in Zagreb on 15 January. Tudjman said he could accept a 15-20km wide corridor for the Serbs in Posavina in return for a similar corridor to Livno. Izetbegovic, while accepting that linking Bihac with Livno would be very useful, was at that time adamant, in the context of him still not at that stage accepting the VOPP, that he would not allow the Serbs the "Northern Corridor". A significant attraction for the Croats is that a territorial link up to Bihac would isolate the Knin area, which will obviously be a disincentive for the Serbs. We may have to convince the Russians that the Serbs cannot expect to have both access through the "Northern Corridor" and to the Knin. This link up proposal was put to Milosevic at one stage and he was non-committal - the area involved, while predominantly Serb is very sparsely populated.

11. It may also be possible to persuade the Serbs to give up more territory in the area of Sanski Most, particularly if this involved an exchange for territory around Zepa and Srebrenica. Until any such exchange took place, it may be that we have to accept these areas coming under UN administration. Also the Serbs might be induced in some way to renounce their claims on Sarajevo, this would make for a much more viable state and avoid UN administration.

12. All this points to attempting to revive the idea of a global settlement, as set out in my 26 October paper to which I have already referred, particularly since Milosevic is moving on the Vojvodina and there are signs that he could be ready to move on Kosovo. The case for a global settlement is made all the stronger by the American position over sanctions which appears to have moved away from the concepts put forward in the EU Action Plan relating to the suspension of sanctions, and particularly the linkage with a modus vivendi in the Krajina. This is a potentially worrying development. Following the Washington agreement, the Croats are saying that there will be no suspension of key financial sanctions until a comprehensive solution is reached in the UNPAs. Yet without the incentive of suspension of sanctions the Serbs are unlikely to sign up to any agreement requiring significant concessions on their part and the Russian Federation will become more difficult in the Security Council, particularly since these sanctions were imposed because of the conflict in Bosnia and Herzegovina.

13. All in all I see no reason to change my judgement, expressed in my COREU of 13 February, that this is a time for the US, EU and Russian Federation governments to act in the fora of the FAC, NATO and the Security Council and for the ICFY to act as facilitators. I would be reluctant to call all three parties together in Geneva until there has been more progress over territorial adjustments on a map and more definition of what should be the status of any Bosnian Serb republic.

Notes

COREU FROM LORD OWEN, PERSONAL FOR MINISTERS 14 march 1994

BOSNIA: DEVELOPMENTS FOLLOWING THE NATIO COMMUNIQUE.

I am writing to inform you how the situation is developing following the issue of the NATO communique. As you know, now that Thorvald Stoltenberg is no longer UN Special Representative, the prime responsibility in the field is held by Mr Akashi but Stoltenberg is still very much involved in advising the Secretary General and he keeps me in close touch and is happy for you to have some of the basic information since we are both very concerned by the manner in which these very complex issues are being discussed in the newspapers and on television. My advice as to the way forward can obviously only be related to the negotiating process.

Srebrenica

The Bosnian-Serb military some weeks ago discussed the situation over Srebrenica with General Briquemont who also wrote to Dr Karadzic informing him of the decision of BH Command to replace the Canadian companies with a Dutch contingent. Dr Karadzic responded favourably with the caveat that details should be arranged with General Mladic. Dr Karadzic repeated this position when Mr Akashi met him in Pale on 10 January. The important thing is that General Mladic should not delay the process again as happened some three weeks ago when the Bosnian Serbs prevented a Dutch mission from reconnoitering Srebrenica. Apart from meeting General Mladic to discuss the details of the deployment, the only way of testing the sincerity of the Bosnian Serb commitment would be to attempt another reconnaissance mission. According to Dr Karadzic, General Mladic is currently travelling abroad and, therefore, cannot be met immediately to seek a confirmation of Dr Karadzic's assurances. In the light of this, I discussed the situation with Mr Apostilides in London on Tuesday evening and following this meeting wrote to the President of the Council, Mr Papoulias suggesting that the Presidency intervene with the Serbs directly over Srebrenica and Tuzla.

If a Dutch reconnaissance party is still being blocked after Stoltenberg and I raise the issue again with Karadzic and Milosevic in Geneva on Tuesday, I believe that if the UN military are ready to force their way in under NATO air cover, then such action is totally defensible in terms of UN impartiality. I do not believe that it would in itself upset the negotiating process, and it would send a message to General Mladic that there are limits to his obstructiveness and that as with close air support when UN forces are being attacked or obstructed on their humanitarian mission, the UN has teeth and will bare them.

Tuzla Airport

UNHCR does not attach as much importance to opening Tuzla as to maintaining the Sarajevo airlift, and they are concerned at action over Tuzla could jeopardize Sarajevo. Over the last two months the Tuzla region has received about one quarter of its assessed needs, and UNHCR believes that the situation while bad is better than they might have expected and part of the explanation for this may be significant cross-line trading. UNHCR is reluctant to open Banja Luka simultaneously as a sweetner for the Serbs, but I believe this should be offered as a face saver, and that given the prestige that has been invested in trying to open Tuzla airport, a few humanitarian flights a week into Banja Luka is not too high a price.

Both UNHCR and UNPROFOR have been considering the opening of Tuzla airport since spring 1992. A preliminary acceptance was obtained at the local level from both the Bosnian Government and the Bosnian Serbs, but the issue then became complicated by the more aggressive military approach of the Bosnian Government forces not only against the HVO in Central Bosnia, but recently against the Bosnian Serbs as well. Moreover, it is an open secret that the BiH Armija, for the past few months, has been receiving substantial financial assistance which enabled it to acquire a substantial amount of arms. The main Bosnian Serb suspicion is that Tuzla airport would be used for further arms shipments.

The UN are finding that following the December meeting at Ministerial level with the parties in Brussels, when there was a lot of publicity over Tuzla and now after the NATO meeting has attached such a high priority to the opening of the airport Bosnian Serb suspicions are high. Moreover, the fact that NATO is urging UNPROFOR to examine the matter in the context of air strikes reinforces Serb suspicions and the UN worries that this will further undermine UNPROFOR's impartiality from the Bosnian Serb perspective. It is easy to retort "so what" but much of the UN's present problems over its diminished authority stem from the fact that the Serbs no longer believe the UN to be impartial not helped by the findings of the enquiry into corruption that arms have come through Sarajevo Airport and on UN convoys.

It is important to know that Tuzla has in fact three airfields. The one considered for reopening is at the southeastern outskirts of Tuzla. A second one is a stretch of highway 6 km. west of the main airport. This segment has been designed as a war time airfields and could be made usable by minor repairs. The third is a 2,000 m runway approximately 3.5 km south of the first airport. As opposed to the others, this runway cannot be observed from the hills 12 km northeast of Tuzla, the location of the Bosnian Serb artillery positions. The suspicion must be that with some aircraft coming in to the UN/UNPROFOR controlled airfield the Muslims will hope to be able to fly clandestinely into this airfield. This makes it essential for UNPROFOR to establish control over all three airfields. Even if the second and third airfields were destroyed, (an option to which the Bosnian Government is likely to object) the area would have to be patrolled continuously by UNPROFOR to prevent attempts to render them usable again. Moreover, in the present political climate, assurances by UNPROFOR as to the exclusively humanitarian use of the airport are not credible from the Bosnian Serb perspective.

The town of Tuzla and the airport are within reach of Bosnian Serb artillery. Operating the airport against their will would require continuous air cover for the humanitarian aircraft as well as air to ground suppression of the Bosnian Serb artillery. The UN assume that any further study of the military elements in such an operation alone would show that ensuring the safety of the humanitarian aircraft and the town and airport of Tuzla would require a heavy commitment of NATO air assets.

So far, Tuzla is being supplied by road convoys from UNHCR's warehouse in Zenica and from UNHCR Belgrade via Zvornik. Obstructions on the route from Zenica basically have been the result of BiH - HVO fighting. Any use or threat of air strikes would inevitably prevent access from Zvornik, as that route is under FRY and Bosnian Serb control. Opening the airport by force would, the UN believe, jeopardize UNHCR's ability to deliver assistance by road which is the crucial element in ensuring bulk supply.

The wider ramifications for UNPROFOR's and UNHCR's security have been discussed in depth in the context of the no-fly zone enforcement regime and when the issue of air strike came up in August last year. Opening the airport by force, the UN fears, will have serious consequences for UNPROFOR and UNHCR's ability to deliver humanitarian assistance elsewhere in Bosnia and Herzegovina. However at the request of the UN Secretary General they are reconsidering and re-examining all of these issues but I very much doubt whether they will reach a different conclusion.

Viewing the situation as a negotiator, I would like to see every possible pressure and inducement on the Serbs to open Tuzla airport, but if this fails, I see using force as definitely damaging the impartiality of the UN and putting the negotiating process at risk. I do not believe that the negotiating process would automatically end, as would undoubtedly be the case if we were adopting punitive air strikes, but I see a marked deterioration in Serb/UN and Serb/EU relations. Aircraft would have to fly in against radar lock-ons and random explosions in the air, and I wonder how much humanitarian aid would actually be air-lifted in. I also think that UNHCR's concern about the knock-on affect on Sarajevo is a real one. I believe the highest priority in Tuzla is that aid convoys get through, but I also think we have to face the reality that if Izetbegovic's position has hardened (see attached Reuters report which has been confirmed by Bosnian Government authorities in Sarajevo), and the Serbs and Croats become convinced, with a breakdown in Geneva, that the Muslims have taken the military option, they will seek to isolate Tuzla as they have done over Bihac, and that the airfield will be in the centre of the fighting and controversy.

Bosnian President Talks Tough on Peace Terms SARAJEVO, Jan 12 (Reuter) - President Alia Izetbegovic said on Wednesday Bosnia's war would last until ethnic Serbs had given up all land which was predominantly Moslem before the conflict began 21 months ago. "Now we have 200,000 soldiers in Bosnia-Herzegovina. It is all very different," Izetbegovic told a meeting of his ruling Moslem Democratic Action party in the Bosnian capital. Izetbegovic, buoyed by recent gains against ethnic Croats in central Bosnia, has said that the 33.3 percent of territory offered by the Serbs, who currently hold 70 percent of Bosnia, was unacceptable. "The end of the war could be when all enclaves are liberated. Zvornik, Prijedor, Vesegrad, we cannot allow them to be under occupation. When we take back these parts of Bosnia we can talk about it," he said. The three towns he mentioned are not included in the territory the Serbs are ready to roll back from. The purge of criminals and smugglers from its ranks late last year has considerably boosted the morale of the Bosnian Moslem army, enabling it to launch a successful offensive against Croats in the strategic Lasva valley in central Bosnia. But Western diplomats said it would need much more than that, including new weapons, to take on the Serbs now holding the three towns Izetbegovic mentioned. The president, back in Sarajevo from peace talks in Bonn with Croatian President Franjo Tudjman, indicated that Tudjman's latest proposal was too little, too late. Their talks were a prelude to full-scale negotiations including the Serbs next Monday in Geneva. "If they (the Croats) had offered the documents a year ago I would have kissed them," Izetbegovic said. "It would have been a fine gesture." Tudjman accused Izetbegovic on Tuesday of retracting support he said the Bosnian leader had given the plan behind closed doors in Germany. The Croatian proposals ranged from ceasefire terms through territorial divisions to a formal alliance between Croatia and Bosnia. Tudjman said his Bosnian counterpart had promised to answer with his own proposals by January 15, three days before the planned three-sided negotiations in Geneva.

Notes

Personal for Foreign Ministers, 30 march 1994

From: Lord Owen

FORMER YUGOSLAVIA: MY MEETING WITH MILOSEVIC

1. In many hours of discussions with Milosevic at a meeting I had with him and his wife outside of Belgrade on 27 March almost every aspect of the former Yugoslavia was touched upon. I have held off from meeting Milosevic for some time to avoid interfering with the efforts of the US and Ambassador Redman. Following the signature of the Washington agreement and the EU Foreign Ministers' Informal meeting in Ioannina, I thought it was an opportune moment to go ahead with the visit, and informed both Redman and Churkin of my plans. I have today talked to Redman who hopes to see the Bosnian Serbs on Wednesday evening/Thurdsay morning in Pale and also to Churkin both of them being in Zagreb. I will consult with them again before agreeing to see Krajisnik privately in Paris, as he has requested though both feel that provided we all sing the same tune the more pressure that is brought to bear the better. I stressed to both of them the need to keep the momentum of the negotiations going.

EUROPEAN UNION ACTION PLAN

2. The main message is that Milosevic is still committed to the European Union Action Plan and sees no contradiction in the Muslims and Croats forming a Federation within a loose Union of Bosnia-Herzegovina which would have as its other element Republika Srpska. He personally doubts the Muslim/Croat alliance will hold but I do not think he will devote much time or effort to destabilising it, unless it developed into a military threat. For this and other reasons he believes that maintaining the momentum is crucial and we should aim to settle in a month. He believes that EU administration of Mostar will be harder than the UN administration of Sarajevo to which he remains committed, but Milosevic will try and influence the Bosnian Serbs to negotiate over Sarajevo though not at the expense of delaying a settlement. He accepts the Federation having between 50-51% of the territory of Bosnia-Herzegovina and wants Ambassador Redman to involve himself in the detail of the map, where he thinks we should strive for a commonsense pattern of compactness rather than an octopus-like configuration. Hence he is more flexible over Sarajevo but I think only to the extent of having a smaller and compact Serb part of Sarajevo around the airport. He is confident Martic can establish a modus vivendi within Croatia. He promised Churkin that he would deliver Serbs to meet in the Russian Embassy in Zagreb. He now expects Churkin to deliver the ceasefire. He promised me he would tell Martic to be more flexible on the telephone number question and on road blocks on the autoput from Zagreb to Belgrade. As to the oil pipeline the Serbs are now able to provide Tudjman with electricity to the Dalmatian coast and he believes that the pipeline issue will be resolved. He is convinced, however, that a political settlement in the Knin cannot be pushed too fast and that a six month ceasefire and confidence-building measures are necessary as a prelude to serious negotiations. He is preparing the ground for a political initiative over Kosovo and I urged him to move soon so as to in effect dictate the pattern of autonomy for Serbs in the Knin. His main anxiety is that the EU Action Plan will be changed in relation to sanctions and the Krajina (see below).

THE Y WORD

3. One of the most fascinating parts of the conversation was when Milosevic's wife, Mira Markovic, was present as I had been wanting to meet her for some time. She is an academic and Marxist theorist who helped found the League of Communists-Movement for Yugoslavia (SK-PJ) in 1991. She has been a virulent public critic of Karadzic and Seselj and her private views are even more outspoken. She has also just recently visited Moscow where interestingly she was seen by the Patriach. She has always openly argued for reconstituting Yugoslavia and is proud of being an internationalist and a scathing critic of nationalism. To those who only see Milosevic as a nationalist aggressor it must be surprising that they can be married to each other, but in fact Milosevic is a far more complex figure than he is normally portrayed by the media. For example, if he is the architect of Greater Serbia why is he seemingly content for the Republika Srpska to remain within Bosnia-Herzegovina, and why does he in private continue to devote time and effort to ways of establishing links, economic and transport, to the different parts of the former Yugoslavia. It is hard to escape the conclusion that he rides the tiger of nationalism when it suits to achieve and retain political power but is also ready to get off the tiger when it suits him for reconstituting most of Yugoslavia in an economic rather than a political association. Whether the tiger will let him remains to be seen.

4. When I criticised his appointment of Veljko Knezevic as his "Ambassador" to Zagreb, which was seen as provocative by all of Tudjman's advisers, he defended it on the grounds that Knezevic personally gets on with and likes Croats and that Tudjman showed he was a better politician than his advisers by accepting him. But it is also a fact that Knezevic is associated with SK-PJ. Also Mirko Marjanovic, the new Serbian Prime Minister, is linked to SK-PJ and is interestingly a close friend of the Russian Prime Minister. Bora Mikelic, who has just become the so-called Prime Minister of the RSK, is a business associate of Marjanovic, and also linked to SK-PJ as is Zeljko Simic who is playing an intermediary diplomatic role for Milosevic in Geneva and Zagreb. Milosevic will balance this SK-PJ input with strands of Serbian nationalism and his wife's public utterances will not by any means always reflect his views, but she is an important factor in understanding and predicting Milosevic's behaviour.

RUSSIA

5. Another important aspect of Milosevic's strategy is his attitude to Russia. As a banker he well understands that the Russians have never had a market economy and cannot easily follow the decentralised economic path of former Yugoslavia. He does not intend to live within the Russian sphere of influences. He respects the United States of America where he has travelled frequently. Far from being critical about Clinton's concentration on domestic policy, jobs and healthcare, he thinks this is long overdue and appears to genuinely welcome Clinton's presence. He is out of sympathy with Yeltsin and clearly impatient for him to go. He believes Yeltsin's liver failure is well advanced and that he is receiving artificial life support and will not continue much longer. He thinks either the Speaker of the Parliament or the Prime Minister will succeed, and though Rutskoi damaged himself by allowing his people to shoot during Parliament's struggle with Yeltsin, he will become influential again.

SANCTIONS

6. It is clear that Milosevic wants the Duma, having passed a resolution in favour of lifting sanctions, to follow this with legislation to that effect which Yeltsin could not then ignore. He is incidentally dismissive of Zhirinovsky. I have no doubt that the EU and the Americans should not formally attempt to redefine Security Council sanctions policy so that sanctions cannot be lifted without resolving the Krajina dispute. To do that will provoke and allow Milosevic to mobilise both the Russian Federation and China to block the present consensus in the Security Council on the former Yugoslavia, even while Yeltsin remains President. On sanctions, there is a danger of us believing that because Milosevic and Jovanovic publicly put this at the top of their talking points they are being progressively weakened by sanctions. In fact I noted many signs which pointed to the contrary being the case. Flying in a helicopter over the Serbian plains I was struck by how well tilled are all the fields and certainly the agricultural industry has been protected from oil sanctions and once again there are more cars and buses on the roads. Undoubtedly October/November 1992 was the high water mark of oil sanctions. The root of Milosevic's anger about sanctions is that apart from the hardship it hurts Serbian national pride and it is humiliating for them that our policy is seen to be controlled not by their cooperation with the peace process but by the political mood of the Bosnian Government leaders. It is imperative to the whole peace process that sanctions has to be seen to be a lever for peace not a weapon of war. Formally the Serbs are saying they will not negotiate until sanctions are lifted. This, I am convinced, is more for public consumption and that they understand that under the EU Plan sanctions will only be suspended and that only when Bosnian Serb forces withdraw. The bridge between the EU and the US position is the word "suspension" and we well need Russian support to suspend in the Security Council since I assume it will need a new resolution. A tougher criteria for lifting sanctions can become an unstated second stage. Nevertheless the time is fast approaching when the Serbs will have to be offered the prospect that if they withdraw to lines on a map that are judged to be fair by the international community then economic sanctions will be suspended. If we reach the stage where the Serbs do not withdraw to a fair line on a map then the international community will have to accept that war will effectively have broken out between the armed forces of the Federation and the Bosnian Serbs, and we will be facing the question of whether the UN can continue to operate in Bosnia over a third winter. In fairness to the newly formed Federation, then we may have no alternative than to accept UN withdrawal and a selective lifting of the arms embargo for the armed forces of the Federation. Now that we can assume that arms will come to the Muslims without Croat interference lifting the arms embargo has more military significance and will be a pressure point on the Serbs. Such an application of sanctions policy would be so patently fair that it would be hard for either the Russians or the Chinese to oppose it. Of course it will involve difficult questions of judgement about what is a fair map but the Security Council makes judgements on other complex issues of less far reaching consequences and we cannot forget that sanctions are harming millions of innocent citizens, not just in Serbia and Montenegro but in Hungary, Romania, Bulgaria, Macedonia, Albania and Greece. If we make real progress over a peace settlement then the current differences between the EU and US over sanctions will resolve themselves. If we make a big issue of these differences now we will inflame the Serbs and embarrass and aggravate the Russians.