Serb Nationalists Warning of a Military Victory : Balkans: But negotiators claim that a peace settlement is closer than ever. Muslims gain access to sea.

Serbian nationalists eager for international acceptance of the new state they have built in rebellion warned Tuesday that they see no choice but to defeat the Muslim-led Sarajevo government militarily if it continues to refuse to surrender.

While Western mediators claimed that a negotiated settlement was closer than ever and Muslims compromised with Croats over access to the Adriatic Sea, the Serbian fighters, farmers and refugees crowding this rebel staging ground above Sarajevo condemned the Bosnian government for spurning the partition plan.

Mediators Thorvald Stoltenberg of the United Nations and Lord Owen of the European Community had planned a truce-signing ceremony Tuesday but had to call it off when last-minute talks aboard a British aircraft carrier failed to resolve remaining territorial disputes.

Here, in the heart of the Bosnian Serb revolt, the failure was blamed on the republic’s Muslims.

“The only solution is to defeat them militarily and to take away their status as a nation, so that they are Serbs and Croats as they were before,” said Biljana Rajic, a miffed 40-year-old hairdresser, dismissing a religious heritage that dates back 600 years.

Rather than pondering concessions to win the endorsement of Bosnian President Alija Izetbegovic for a proposed ethnic carve-up, Serbs cast the 2 million defenders of united Bosnia as ingrates and said they risk ending up with nothing at all.

“Serbs have already given up too much. Force is going to be the only way” to compel the government to accept peace, insisted Bozo Kostovic, 30, a soldier guarding the former ski lodge that serves as rebel headquarters. “They now hold 10% of the territory. The plan gives them 30%, and still they won’t agree to it. They are going to have to lose this 10%, and then we will talk again.”

Bosnian Serb leader Radovan Karadzic, who spends more time abroad than in this mountain hamlet he considers his wartime capital, was quoted in Serbian newspapers as saying he will not withdraw from more territory than currently stated in the U.N.-brokered plan.

His chief of staff, Slavisa Rakovic, said Pale authorities believe it is just a matter of a weeks before Izetbegovic is forced to concede to the settlement Karadzic drafted in May with Bosnian Croat warlord Mate Boban.

“Izetbegovic is the loser,” Rakovic stated flatly. “He now sees that the Lisbon paper (an ethnic partition plan pushed by the Serbs 18 months ago) would have been ideal” in comparison with the truncated Muslim state now on offer.

The people of Pale--about 6,000 natives and twice that number of Serbian refugees--are virtually unanimous in their judgment that only Muslim intransigence stands in the way of peace.

In an isolated region where the nationalist government controls all movement and information, the war has been presented as a valiant defense against Islamic fundamentalism. Almost no one here believes that the armed forces of their proclaimed Serbian Republic have fired a shot in anger at secular Sarajevo or any other demolished city.

Because they see as an unwarranted slander the U.N. orders that their sieges be stopped, Serbs reject suggestions by Western leaders that the rump of Bosnia left after partitioning be provided with the means of survival.

The carve-up now envisions awarding 52% of Bosnia to Karadzic’s forces, 17% to Boban’s Croats and about 28% to the Muslims and others who oppose ethnic segregation. Sarajevo and Mostar would be placed under respective U.N. and European Community administration.

Izetbegovic left no doubt upon his return to Sarajevo after the shipboard talks that he remains dissatisfied with the proposed division. It has earned the endorsement of mediators who represent an international community unwilling to enforce U.N. resolutions aimed at a more equitable settlement.

“I personally am not inclined toward that proposal,” Izetbegovic told a news conference. He said he is satisfied with a compromise brokered by Owen and Stoltenberg that would ensure government access to the sea. But he restated his request for another 4% of Bosnian territory that was predominantly Muslim before Karadzic’s loyalists rounded up non-Serbs and drove them out.

More than 2 million Bosnians, most of them Muslim civilians, have been displaced by warfare and “ethnic cleansing.”

Despite the apparent deep differences remaining between Serbs and Muslims, those mediating the peace talks claimed progress has been made.

“I believe we can say that we are closer to a solution than any time before in the history of these negotiations,” Stoltenberg said in Zagreb, Croatia.

He said the Bosnian Muslim state is being promised access to the Adriatic via the Neretva River fishing villages of Visici and Celjevo.

Times special correspondent Danica Kirka in Zagreb contributed to this report.