NEWS ANALYSIS : Western Leaders Concede Failure to Halt Bosnia Strife, Censure Guilty : Balkans: But some who attended London gathering say patience and diplomacy still hold out the best hope for long-term peace.

Western leaders who took part in this week’s costly and vaunted conference on Yugoslavia concede that they failed to deter the Balkan killing or censure those accused of inciting it. But some claim that patience and diplomacy still hold out the best chance for peace in the distant future.

Although the assembled representatives of influential governments sidestepped appeals for military intervention, they chose not to loosen the noose of sanctions imposed three months ago on the Serb-led Yugoslav federation.

They also denied recognition to the new federation laying claim to the name of disbanded Yugoslavia, making clear that the Serb-dominated state held responsible for fomenting ethnic violence in Bosnia-Herzegovina will remain a political outcast as long as the war drags on.

Time will tell whether further measures are necessary, the mediators said, as the shelling of Bosnia escalated to a bloodier crescendo.

Cyrus R. Vance, the United Nations’ special envoy on the Yugoslav crisis, summed up the mood of the mediators by saying that they all felt “great anguish” over the continuing assaults on Sarajevo and other cities but wanted to avoid creating unrealistic expectations of peace by setting unattainable goals.

“We recognize the urgency. We see the importance of time in this effort,” Vance told journalists Friday after the two-day session that focused more on what was possible than what was necessary.

“It would be folly, it would be wrong for me to give you any day, any deadline” by which a newly constituted network of peace talks intends to have curbed the Bosnian bloodshed, Vance said.

The London conference was envisioned as a forum for drafting a consensus between the U.N. forces responsible for peacekeeping operations and European Community diplomats involved in peacemaking through negotiations.

While the gathering consolidated earlier declarations and positions issued by both groups, it failed to spell out how it would achieve its objectives of “peace with justice,” as British Prime Minister John Major called for in his opening address as host of the conference.

Instead, the diplomats reiterated demands that have long been ignored by the combatants, and they passed responsibility for resolving the crisis on to a new round of negotiations opening Thursday in Geneva.

The conference did approve measures for tightening the leaky trade blockade against Serbia, apparently in the hope that those branded as chief aggressors will eventually be starved or shamed into compliance.

If more effectively applied than has been the case so far, attempts to financially squeeze and isolate Serbs blamed for the dismemberment of Bosnia could stir the social unrest in Serbia that many believe will be the only means of toppling Serbian President Slobodan Milosevic.

Milosevic and Yugoslav President Dobrica Cosic are the architects of a nationalist campaign to unite all Balkan Serbs by conquering predominantly Serbian areas of other republics, annexing them to a Greater Serbia and expelling non-Serbs to ensure their hold on the territory.

One-third of Croatia, where Serbs constituted 12% of the population before last year’s war, is now under Serbian occupation, and more than half of Bosnia-Herzegovina has been overrun by Serbian militants and declared separate from the majority Muslims and Croats.

Most of the Serbs under Belgrade’s rule, however, firmly believe that they are guiltless in the Bosnian slaughter, even though it was the Serb-led federal Yugoslav army that provided troops and arms to the Serbian rebels and provoked now-uncontrolled fighting by laying siege to cities and towns where Muslims lived.

At the conference--which drew two dozen national delegations, all Yugoslav parties, U.N. leaders and humanitarian relief workers--the international community took a somewhat contradictory position toward resolving the conflict. By choosing the long-term approach of negotiation and sanctions rather than the direct application of military force, the Western leaders demonstrated a reluctance to take sides in the conflict while at the same time singling out Serbian militants as the chief aggressors.

The continued reliance on diplomacy was little comfort to Bosnian Muslims, who have suffered the brunt of the civil war’s horrors. At least 8,000 people are known to have been killed in Bosnia since April--the full toll is believed to be many times higher--and 2 million, mostly Muslim civilians, have been evicted from their homes.

Bosnian President Alija Izetbegovic, a Muslim, succumbed to the conference pressure to resume negotiations with the Serbian leaders he has accused of a campaign of terror against his state.

Izetbegovic was visibly saddened by the foreign mediators’ satisfaction with Serbian promises to end the sieges of Sarajevo and other cities where Muslims still live. He noted that similar professions of peaceful intent in the past have done nothing to ease the fighting that has shattered his country.

“Verbal agreements are one thing; deeds are another,” a skeptical Izetbegovic said after the London talks.

As the diplomats debated the need for harsher measures, Sarajevo suffered one of the worst bombardments of the 5-month-old siege. Western journalists in the Bosnian capital reported that mortars rained down on the city from Serbian positions.

Bosnian Foreign Minister Haris Silajdzic called the international hesitancy to defend besieged Muslims “inexcusable.” But he confirmed that the Bosnian government will return to European Community-mediated negotiations with the Serbs who have seized 70% of the republic and Croats who control much of the rest.

“We are willing to talk, until the last of the Bosnians,” Silajdzic said in a fatalistic tone. “The last thing we want to be accused of is being uncooperative.”

Some government delegations, such as those from Germany and the Netherlands, protested what they saw as a sellout of the Bosnian Muslims in hopes of buying peace. They noted a contradiction between the gathering’s collective willingness to identify Belgrade and the Bosnian Serbs as chief perpetrators of the war and its reluctance to take any action to reduce the aggressor’s armed advantage.

The Serbs’ general sense of relief, expressed by both Yugoslav Prime Minister Milan Panic and Bosnian Serb warlord Radovan Karadzic, was seen by the proponents of more forceful action as evidence that the attempt to step up pressure on the Serbs had failed.

Karadzic told the British Broadcasting Corp. that he was pleased that the conference avoided becoming a forum for condemning the Serbs.

“I believe this London conference was a great success,” an ebullient Panic declared to reporters. “For the first time, there is a real breakthrough for peace.”

But while the Southern California businessman-turned-politician agreed at the conference to unconditional recognition of the republic of Bosnia-Herzegovina his fellow Serbs have sought to divide, he qualified that position Friday.

Panic said there would first have to be new elections to replace the current government he considers partial to the republic’s Muslims, who accounted for 44% of the population before the war. Serbs constituted 31% then, but now probably are the majority following five months of attacks against Muslim communities and “ethnic cleansing” of the territory the Serbs have seized.

“That government is taking sides, claiming Serbs to be the aggressors and other funny words in their propaganda scheme,” Panic complained, accusing the Izetbegovic leadership of bringing the republic to war.

Panic said he and Milosevic were in complete agreement with steps spelled out by the conference in a consolidated formula for peace.

However, Panic, a sometimes comically animated figure who last month burst onto the secretive Belgrade political scene, met with ethnic Albanian leaders from the troubled Serbian province of Kosovo during the London conference and promised to restore the autonomy Milosevic stripped from the region two years ago.

Those moves to ease ethnic tensions in Kosovo, although applauded by Western leaders who fear that the Balkan war could soon spread to the restive province, have set Panic on a collision course with the Milosevic forces who brought him to power.

Milosevic and Cosic have manipulated fellow Serbs’ historic grievances over Kosovo to make that region the springboard for their quest to build a Greater Serbia.