New Union Proposed by Serbia : Yugoslavia: Rebuilt federation would include Bosnia-Herzegovina, Montenegro and seized Croatian territory.

After seizing broad swaths of Croatian territory and then agreeing to a cease-fire, Serbia has appealed to other Yugoslav republics for a complete redrawing of the Balkans map along ethnic lines.

But the controversial proposal that would create at least four states out of what is now considered Yugoslavia met with immediate skepticism Friday among Muslim leaders in this capital of Bosnia-Herzegovina who fear the plan is a thinly disguised plot to form a “Greater Serbia.”

Serbs would constitute a majority of about 70% in the new, smaller Yugoslavia being proposed, and the Serbian leader in multiethnic Bosnia-Herzegovina confirmed that the rebuilt federation envisages the inclusion of Croatian territory where about 500,000 people live.

Serbian President Slobodan Milosevic has called on the leaders of Montenegro and Bosnia-Herzegovina to meet him in Belgrade on Monday to discuss his idea for creating a new Yugoslavia in the event other republics secede, the official news agency Tanjug reported.

Slovenia and Croatia declared independence on June 25, and the southern republic of Macedonia has set a Sept. 8 referendum to gauge support for secession.

Montenegro, the smallest of Yugoslavia’s six republics, quickly agreed to join its Communist ally Serbia for talks on the future of the disintegrating Balkans federation. But Bosnia-Herzegovina’s Muslim president, Alija Izetbegovic, sent word to Belgrade that he is opposed to the plan that many here believe would lead to the subjugation or dismemberment of Bosnia.

“It would give the wrong impression” if Izetbegovic were to negotiate with the Serbian leadership on changing the internal borders of Yugoslavia, said Ejup Ganic, a Bosnian vice president speaking on behalf of the republic’s vacationing leader.

Milosevic’s public appeal for a new Yugoslavia of three republics and his dream of forming an expanded Serbia from the federation’s remnants are “completely the same,” stated Osman Brka, a leader of the Party for Democratic Action, a Muslim political alliance that represents the largest faction within the Bosnian Parliament.

“I ask Mr. Milosevic, what about the rights of Muslims and Croats in this Greater Serbia if it is difficult for these two peoples to have their rights now?” Brka said, claiming Serbs have long held disproportionate power and privilege in the republic.

Bosnia-Herzegovina poses a special dilemma as Yugoslavia unravels because it unites the federation’s three largest ethnic groups--Muslims, Serbs and Croats--in one republic, with no single nationality constituting an outright majority. A sizable segment of the population of 4.5 million is of mixed nationality as the result of intermarriage, and few areas are ethnically homogenous, making division of the republic along ethnic lines virtually impossible.

Officials here campaigned against secession by Slovenia and Croatia, with all three nationalities supporting preservation of Yugoslavia’s geographic integrity.

However, since Slovenia and Croatia declared themselves sovereign states, Bosnia’s Muslims and Croats have been pressing for an independence referendum of their own, while the Serbs have threatened armed resistance if such a vote is even scheduled.

Muslims account for about 44% of Bosnia’s population, with Serbs representing 31% and Croats about 18%.

Milosevic and Croatian President Franjo Tudjman have privately discussed the possibility of carving up Bosnia between them as an alternative to continuation of the bloody ethnic violence.

The armed clashes occurred as Serbian militants opposed to Croatian independence moved into Serbian-inhabited towns and villages, seizing control of about 15% of Croatian territory.

Most of the Serbian-occupied area borders Bosnia, which would allow the communities to annex to a new Yugoslav state, explained Radovan Karadjic, head of the Serbian Democratic Party of Bosnia.

“Almost the whole Balkan world must be recomposed in order to settle down these tensions,” Karadjic said in an interview.

Croatia can have its independence, but only if predominantly Serbian regions of the republic are likewise granted the right to self-determination, Karadjic said. That means holding votes in each community where Serbs form a majority to decide whether that region should stay part of Croatia, declare itself autonomous or unite with the new Yugoslavia.

The voting would affect areas of Croatia where 500,000 people live, Karadjic estimated.

Those Serbs living in areas of Croatia where they are an ethnic minority would have to be given the opportunity to migrate to the new federation, the Serbian leader said.

Less than a third of Croatia’s 600,000 Serbs live in the Krajina region bordering Bosnia that is occupied by Serbian guerrillas.

Milosevic has previously said that all of the nearly 10 million Serbs in Yugoslavia must be kept together in a single state.

Karadjic’s interpretation of the latest Belgrade proposal suggests that Serbia may now be willing to drop its insistance on ethnic unity in return for the Croatian territory it now controls.

There was no official Croatian reaction to the Serbian proposal for talks on a new Yugoslavia, but neither was the Zagreb leadership invited to the discussions.

Croatian leaders have vowed to retake the areas now controlled by Serbian rebels. But the Croatian armed forces have so far shown themselves to be a poor match for the Serbs and federal army troops whose presence in ethnically mixed areas of Croatia has served to support the Serbian incursions.

Serbian guerrillas agreed to abide by a cease-fire called Wednesday by the federal presidency--a move many saw as buying time to negotiate permanent control over the Croatian territory taken in battle.

Whether the Milosevic proposal for a reduced Yugoslav federation succeeds will likely depend on whether Croatia is prepared to suffer further casualties to win back the Serbian-populated regions, or if it would trade the lost territory for its independence.