Europe begins to draw up `Marshall plan' for Serbia

War in the Balkans: Regeneration

THE EUROPEAN Union took the first steps last night towards launching a "Balkan stability pact" to regenerate the region after the Kosovo war and draw all of south-east Europe - including one day a reformed Serbia - closer to the EU and the West.

The plan is still at an embryonic stage, more a matter of good intentions than the commitment of what could be large sums of money. But, as explained by Robin Cook, the Foreign Secretary, it would set in place an open trade area with close links to the EU, built around country-by-country agreements across south-east Europe, aimed at nations with a solid commitment to democracy, even a post-Milosevic Serbia.

"All of that is available to the people of Serbia, if they renounce the fascism of 50 years ago which is being pursued by their present regime," Mr Cook said. Serbians were well aware that their country was becoming the region's laggard, and that feeling "will increase the pressure on President Milosevic as he is isolated and fingered as the obstacle to their progress".

Hours earlier, the EU foreign ministers heard a stark warning from Milo Djukanovic, President of Serbia's junior partner in the Yugoslav federation, of the threat his country faced from the 45,000 Yugoslav army troops stationed in his beleaguered republic.

It was vital to keep the pressure on Mr Milosevic, the Montenegrin president warned. A political settlement after the war should be based on the abortive Rambouillet agreement, providing for "meaningful autonomy", but not total independence which would only reinforce Albanian nationalism. But, Mr Djukanovic insisted, this political settlement could not be achieved with Mr Milosevic: "the final deal must be signed by someone else."

As a first installment of aid, the EU plans to disburse 100m euros (pounds 66m) of direct aid to Macedonia, Albania and Montenegro to help cope with the refugees - including 13m euros to Montenegro itself. Officials were giving no details of how the money would be channelled to Podgorica, to prevent it falling into the hands of the Yugoslav authorities who still control Montenegro's trade and customs systems.

The Balkan Stabilisation Pact will be further fleshed out at a meeting on 27 May of top officials from the EU, the United States, Russia and Balkan countries, and representatives of the IMF, the World Bank, the European Investment Bank and other international financial bodies. Three weeks later, the issue will be discussed by the Cologne summit of the G-8 leading powers and Russia.

Despite the political turmoil in Moscow and lingering anger at the mistaken bombing of the Chinese Embassy in Belgrade earlier this month, Mr Cook claimed after an hour-long separate meeting here with Igor Ivanov, his Russian opposite number, that Russia was still co-operating on working out a United Nations resolution to act as a basis for a settlement of the 56-day-old war.

But for all its backing for a Balkan renaissance from the ashes of war, Britain is clearly more inclined than most of its partners to the continuing use of force - even ground force under certain circumstances - to force Mr Milosevic to back down. "This conflict should be a turning point for the Balkans," Mr Cook said yesterday, "but only if we prevail."

Obviously there would have to be a bombing pause at some point in the peace process: "Clearly we won't bomb retreating troops," the Foreign Secretary added. But he gave a chilly reaction to a reported Italian plan linking a halt in the air strikes to agreement by Russia and China to a UN resolution for an end to the war.

"A bombing pause up front would ease pressure on Milosevic. If we ease up militarily, we could lose momentum on the diplomatic track," he warned.