Ruling Party Leads Serbia Vote, but May Lack Majority : Balkans: President Milosevic’s Socialists declare victory. He heads for peace talks in Geneva.

Serbian President Slobodan Milosevic’s ruling Socialists emerged Monday as front-runners in parliamentary elections, but their apparent failure to win an absolute majority may add a governing crisis to Serbia’s economic chaos.

The Socialists nevertheless declared victory, and Milosevic set off for another round of peace talks in Geneva amid reports that nationalist allies in Bosnia-Herzegovina will give up captured territory in pursuit of a peace plan.

Milosevic, long considered the instigator of Balkan wars that have killed as many as 250,000 people, has lately sought the role of peacemaker in a quest to get U.N. sanctions lifted from his isolated and economically staggering country.

Milosevic aides have been hinting for days that a division of Bosnia is close at hand. A senior Bosnian Serb leader, Momcilo Krajisnik, said in a radio interview over the weekend that his faction had worked out a deal with Bosnian Croats to cede a few areas of conquered territory to the Muslim-led government in hopes of meeting Western demands for a Bosnian carve-up.

But Krajisnik, head of the self-styled Bosnian Serb parliament, suggested a settlement might be scuttled by the Sarajevo leadership.

“Muslim advisers are encouraging them to obstruct a deal in order to gain time and then achieve their goals militarily,” he contended.

His claim may have been an attempt to pressure the government into accepting the impending offer, which would divide Bosnia into three ethnic enclaves and put to rest any remaining hope of restoring Bosnia’s 1,000-year-old history as a multicultural society.

Western governments at first denounced the Belgrade-backed Serbian rebellion that turned heavy artillery fire against Bosnian civilians in April, 1992. But their choice of diplomacy over military intervention to resolve the conflict has failed to stop the killing, and both politicians and mediators have grown weary of their repeated failures to broker an accord.

Bosnian Serbs, who have conquered 70% of the republic, and Croats, who hold most of the rest, have agreed on the terms of an ethnic carve-up. But the government rejected the plan in September on the grounds that it denied the rump state access to the Adriatic Sea and sufficient space for the Muslim Slavs expelled from vanquished areas.

U.N. special envoy Thorvald Stoltenberg and fellow mediator Lord Owen of the European Community have been shuttling among the Balkan combatants for the past two weeks, “doing their utmost to get a settlement before Christmas,” according to Geneva conference spokesman John Mills.

Mills said a revised agreement has been worked out that is acceptable to all three Bosnian factions. But he conceded Monday that several key issues are still to be resolved.

Milosevic has been identified by Western governments as the instigator of Serbian rebellions in Bosnia and Croatia, where insurgents have seized territory for a Greater Serbia that would unite the scattered Serbs of the Balkans in a single state.

But after years of spending as much as 80% of the national budget to fuel the war machine, coupled with the destructive effects of U.N. sanctions imposed 19 months ago, Milosevic now faces an increasingly volatile and confused electorate.

The Socialists polled poorly in Belgrade and other cities, although voters in rural areas continued to stand by Milosevic.

Ballot-counting was slow, but unofficial returns from about 50% of the vote for 250 seats in the Serbian Parliament showed the Socialists winning at least 116 seats and as many as 128.

The former figure would fall short of a 126-seat majority and force the ruling party to seek a coalition partner to form a new government. Full returns are expected Wednesday.

The opposition coalition, DEPOS, was projected to win nearly 50 seats, and the Democratic Party appeared to control 30.

The ultranationalist Serbian Radical Party was projected to hold on to only about 40 of its previous 73 seats, having been denied access to all-important television after its leader, Vojislav Seselj, turned against Milosevic.

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It was Seselj’s challenging of the Serbian president that prompted Milosevic to disband the last Parliament and call early elections in hopes of winning an outright majority to replace the failed Socialist-Radical coalition.

Another ultranationalist, Serbian Unity Party leader Zeljko (Arkan) Raznjatovic, may have been shut out from the Parliament entirely, despite spending millions on his campaign. Like Seselj, Arkan heads a paramilitary unit and has been accused of committing war crimes.

Arkan’s failure to provide his ally Milosevic with a majority coalition raised the prospect of a hung Parliament and further political insecurity in a country already in turmoil because of the gutted economy and worthless currency.

Opposition parties celebrated a moral victory as the early returns showed that they would collectively be able to challenge the Socialists for control of the government. But because they have a long history of infighting, it remained doubtful the opposition would be able to agree on a division of power to unseat the Socialists even if it wins more than half the seats.