Kohl, Mitterrand Press Political Solution in Bosnia : Diplomacy: German, French leaders suggest they may accept a Serbian confederation. They view Bihac assault as ‘shrill warning.’

German Chancellor Helmut Kohl and President Francois Mitterrand of France, meeting Wednesday for a final bilateral summit before the French leader’s retirement, put aside differences on Bosnia-Herzegovina and urged a negotiated settlement to the conflict there.

Europe’s elder statesmen called for a diplomatic solution based on “just and balanced rights” for all groups in the former Yugoslavia.

In a printed statement, Kohl and Mitterrand said if the Bosnian Serbs accept the peace proposal drafted by the Contact Group of five nations, the two leaders will consider making “adjustments” in the plan.

They apparently were referring to the idea raised by some U.S. and U.N. officials in recent days that would allow the Bosnian Serbs to form a confederation with Serbia, much as the Bosnian Croats and Muslims confederated with Croatia.

Until recently, the United States and its European allies had refused to accept a Serbian confederation.

“It is one minute to 12 and we must all . . . do everything to pursue the peace plan,” Kohl said at a joint news conference.

He said the French-German position will be set forth at a meeting of the Contact Group--the United States, Russia, France, Germany and Britain--in Brussels on Friday.

The continuing Serbian assault on the U.N. safe area of Bihac “is the final and most shrill warning signal for us,” Kohl said.

On Monday, Kohl’s Christian Democratic Union called for a lifting of the U.N. arms embargo to the Muslim-backed Bosnian government, a position opposed by France and Britain, which have thousands of peacekeeping troops on the ground.

Kohl reiterated that he believed in lifting the embargo in principle, but backed off the stand in favor of presenting a unified European position.

“Since we have no troops there, we restrain ourselves,” Kohl said. “The German position is to go along with the alliance.”

The 78-year-old Mitterrand added that “Europe’s duty is to maintain the impression that there is clearly no solution other than a political, negotiated one.”

The Contact Group’s peace plan, which would give 51% of Bosnia to a Muslim-Croat federation and 49% to the Serbs, has been accepted by the Bosnian government but rejected by the Serbs, who would have to give up territory they have won militarily. It does not allow for a Serbian confederation.

The United States, which views the Bosnian Serbs as the aggressors in the war, until now has been urging greater use of NATO air power to pressure the Serbs to accept the plan.

The Kohl-Mitterrand summit was their last before Mitterrand, who is dying of prostate cancer, steps down in May.

Although Kohl is a conservative and Mitterrand a Socialist, they have been allies on European unity over the last 12 years that both have been in power.

But they have had their differences too, and in what seemed to be a quid pro quo, Kohl announced that he had invited the leaders of six Eastern European countries--Poland, Hungary, Slovakia, the Czech Republic, Romania and Bulgaria--to make an appearance at a European Union summit in Essen next week.

Germany has been far more eager than France to integrate the former Communist countries into the EU.

Germany believes that integration will help protect its borders, while France fears diminished influence within the union as its center moves east.