U.N. Renews Threat of Air Strikes as Serbs Advance : Balkans: Rebels capture strategic ground overlooking Gorazde. Cease-fire talks break down amid rejection of mediators’ demands.

The United Nations renewed threats Saturday to launch air strikes against Bosnian Serbs after the nationalist rebels conquered the most strategic high ground around the besieged eastern town of Gorazde.

Tensions also heightened after talks aimed at wresting a cease-fire out of the warring factions broke down when Serbs rejected Western mediators’ demands that they pull back from Gorazde.

The Bosnian Serb assault and capture of the commanding Gradina heights overlooking the trapped Muslim community of 65,000 was waged under cover of a 24-hour truce designed to improve the atmosphere at negotiations. It clearly angered British Lt. Gen. Michael Rose, the U.N. commander for Bosnia, who arranged the cease-fire.

In Geneva, U.N. Secretary General Boutros Boutros-Ghali demanded that Serbian forces withdraw to positions they held before the Gorazde offensive that began nearly two weeks ago and said “all available means” could be used by U.N. troops to push them back.

“We don’t exclude any measures, and air strikes are included,” said Therese Gastaut, Boutros-Ghali’s spokeswoman in Geneva.

NATO commanders meeting in Naples, Italy, confirmed that they are prepared to intervene with air power should the U.N. peacekeeping force in the Balkans, UNPROFOR, request it.

It was the threat of North Atlantic Treaty Organization air strikes against Serbian rebel artillery encircling Sarajevo that halted the deadly bombardment of this battered capital two months ago.

The United States and other Western powers had appeared reluctant to issue similar warnings to protect Gorazde, a U.N.-designated “safe area” that has never been accorded a protective deployment of troops. Only 13 U.N. military personnel are stationed in the region; all but four arrived in the last two days.

The intensified Serbian incursion into Gorazde on Friday seemed to have spurred the tougher U.N. position.

Serbian forces used tanks and artillery to seize the Gradina promontory, said U.N. spokesman Maj. Rob Annink, describing the assault as “a major advance.”

“The Bosnian Serb army has the initiative and military dominance, but we do not think Gorazde is under imminent threat of being taken because it is strongly defended and because we do not believe the Serbs actually want to take the town,” Annink said.

But U.N. officials had earlier said that the Serbs were unprepared to take the Gradina heights.

One of the few foreign aid agencies in Gorazde, the Paris-based Doctors Without Borders, contradicted the U.N. assessment, saying in a statement that it feared the pocket was at risk of being overrun.

Even the U.N. military observers recently dispatched to Gorazde have suggested in confidential communiques that the seriousness of the Serbian assault is being understated by U.N. officials.

At least 85 people, mostly Muslim civilians, have been killed during the offensive and more than 400 have been wounded, said U.N. refugee agency spokesman Kris Janowski.

In Sarajevo, cease-fire talks between the rival military commanders with Rose and U.S. special envoy Charles Redman became deadlocked and broke off.

Bosnian army commander Gen. Rasim Delic blamed the breakdown on the Bosnian Serb military leader, Gen. Ratko Mladic, who refused to withdraw from land seized around Gorazde and sought to freeze the territorial status quo as the basis for U.N. troop deployments. Serbs now control 70% of Bosnian territory.

“In principle, nothing has been agreed. Gorazde is still under attack,” Delic said. “Now it is up to UNPROFOR and Mr. Redman to find a solution.”

Mladic, in turn, accused the Bosnian government of scuttling a truce.

“We wanted in our agreement the permanent and complete cessation of hostilities, which is far more than what was offered by the opposite party,” Mladic said.

The mediators cast the deadlock as an opportunity for “reflection” on a proposed plan to call a two-week halt to the fighting while diplomats work out the terms of an overall settlement.

“Some political assurances still have to be made, and both sides have gone back to consult with their political authorities,” Rose said as he emerged from nearly five hours of fruitless discussions, his arms clenched anxiously across his chest.

Redman said the Bosnian factions are drawing closer than ever to a common view of how this war-ravaged country should be pacified but noted that the government and the Serbs remain in disagreement over the timing, duration and scope of any cease-fire.

The breakdown underscored the growing complexity of the Bosnian conflict, in which strengthening government forces are unwilling to give up the military option to recover land lost to the Serbs.

The government is also wary of Western promises that a fair deal will be concluded if they leave the ethnic partitioning to be worked out through negotiations instead of on the battlefield.

Throughout the 2-year-old war that has killed more than 200,000 people, the United States and its allies have denounced Bosnian Serb aggression in U.N. Security Council statements but done little to deter it.