NATO Vows New Air Strikes as Serbs Refuse to Comply : Bosnia: Alliance says attacks will resume ‘at any moment’ if rebels don’t begin to lift Sarajevo siege. Latest clash threatens to undermine earlier moves toward peace.

NATO early today vowed to renew aerial bombings “at any moment” after the Bosnian Serb army commander defied demands to lift the siege of Sarajevo, jeopardizing a fragile peace process that was just beginning to make progress.

Gen. Ratko Mladic’s refusal to withdraw heavy weapons from around the Bosnian capital came hours after a grenade attack outside the city wounded six residents.

“The NATO military commanders are authorized to resume air strikes at any moment,” NATO Secretary General Willy Claes said following a nine-hour meeting of the Western alliance’s ambassadors in Brussels to debate whether to renew bombing of Bosnian Serb positions. The meeting had been scheduled to last 90 minutes, and its extreme length reflected a growing and divisive debate among the allies over how long to continue the air war against the Bosnian Serbs.

“NATO military commanders are pursuing for a brief period--I’m saying a brief period--the suspension of air strikes in order to determine if the conditions of the United Nations have begun to be implemented by the Bosnian Serbs,” Claes said.

Reiterating U.N. demands, the 16 North Atlantic Treaty Organization ambassadors ordered the Bosnian Serbs to halt attacks on Sarajevo and other “safe areas”; withdraw all heavy weapons from within 12 1/2 miles of the capital; give freedom of movement to U.N. personnel, and reopen the Sarajevo airport, which the Serbs closed in April in an effort to block food and humanitarian aid.

NATO indicated its aircraft will continue to patrol the skies over Bosnia-Herzegovina and drop bombs if hostile Serbian activity is detected.

“NATO aircraft will react immediately to any act or display of hostile behavior by the Bosnian Serbs,” Claes said.

Asked how much time the Bosnian Serbs have to comply, U.S. Ambassador to NATO Robert Hunter said: “Let me put it this way: If I were Mladic and company, I wouldn’t be sleeping well tonight, thinking I had a lot of time to play with.”

On Saturday, Bosnian Serb official Bozidar Zucurevic said he would not release five European Union monitors until NATO stops its “criminal attacks,” Serbian television reported in Belgrade, Yugoslavia. If the report is true, the men, who were originally reported to have been killed, have become the first hostages in the current crisis.

In a stormy, 14-hour meeting with the region’s senior U.N. military commander earlier Saturday, Mladic refused to accept U.N. demands to remove his big guns from around Sarajevo and instead set his own conditions.

Mladic told French Gen. Bernard Janvier that he would retire his weapons only if the Bosnian government army did the same.

Peace negotiator and U.S. Assistant Secretary of State Richard Holbrooke, briefing NATO ambassadors at the Brussels meeting, branded Mladic’s response as insulting. Holbrooke argued for continued air strikes, a NATO official said.

Janvier and Adm. Leighton Smith, commander of NATO forces in Southern Europe, met for two hours Saturday at the airport in Zagreb, the Croatian capital, where Smith had traveled to confer with Janvier and analyze the Mladic response.

The U.N. and NATO military commanders seemed prepared to back down from the resolve shown during the last week. Despite the defiance from Mladic, and to the surprise of observers here, Janvier and Smith recommended that the air strikes cease, according to sources.

Janvier and Smith told the NATO ambassadors that Mladic’s “clear commitment to ease attacks against safe areas is sufficient to justify a cessation of air operations,” according to a diplomatic source.

Several Western officials were alarmed that Janvier and Smith were giving Mladic too much wiggle room.

“It’s a considerable climb-down,” said a diplomatic source in Zagreb. “Any middle ground [with Mladic] would be losing ground.”

But NATO’s political masters appeared to be overruling the commanders on the ground and sought to make clear that the Bosnian Serbs were not being let off the hook.

“This can’t be seen as NATO getting cold feet,” said a NATO official in Brussels. “It has to be seen as giving the Bosnian Serbs time to achieve compliance. If there is no clear evidence of compliance, the bombing will resume. The operation is not over.”

NATO bombardment of Bosnian Serb positions began Wednesday and was suspended Friday to allow time for negotiations. Bosnian government officials immediately protested the pause and on Saturday said they may refuse to participate in talks this week in Geneva if the Serbs are allowed to use the lull to renew attacks.

The grenade that fell on a Sarajevo suburb Saturday wounded two children and four other people, and Bosnian Serbs fired a mortar shell at a U.N. checkpoint on the Mt. Igman road into Sarajevo. The U.N. rapid-reaction force returned fire with a barrage of 24 artillery shells.

“As soon as NATO stopped, the Serb terrorists continued their bloody business,” Bosnian Prime Minister Haris Silajdzic said.

Bosnian President Alija Izetbegovic wrote letters to President Clinton and French President Jacques Chirac urging that the bombing resume.

“Those people who have been paralyzing any action of the international community, who have been prolonging the war and Bosnian agony and destroying the credibility of international institutions, are at it again,” Izetbegovic said in the letter, which was quoted by the Bosnian state news service.

U.N. officials Saturday conceded that the air raids have not destroyed many of the estimated 300 heavy weapons and artillery pieces that the Bosnian Serbs have around Sarajevo, which has been under siege for 40 months. The Serbs have hidden much of the equipment in the surrounding forests, making it more difficult for NATO fighter pilots to spot their targets.

In the Brussels meeting, Holbrooke was said to have told the ambassadors that the air strikes have not impeded but have helped his shuttle diplomacy as he hawks a peace plan in the capitals of the former Yugoslav federation. He argued that if the Bosnian Serbs “are allowed to step out of this, their arrogance would undermine Milosevic’s position,” a NATO official said.

Serbian President Slobodan Milosevic last week managed to assert his authority over the Bosnian Serbs, who agreed to accept him as negotiator on their behalf. Holbrooke hailed this as a positive step because Milosevic is viewed as a more reasonable negotiating partner.

Mladic’s hard-line stance now seems to be bucking Milosevic’s authority, but independent analysts in Belgrade said they doubt there is a real rift between the warlord and the Serbian president.

Mladic, they said, is caught in a difficult balancing act: He must deliver on promises to his patrons in Belgrade, but he must also keep the lid on hard-line Bosnian Serbs opposed to a peaceful settlement to the war.

“I think he is trying to save face,” said Milos Vasic, an analyst with the independent newsmagazine Vreme. “He may be having problems with the Bosnian Serb government and maybe part of his own army. There are still Bosnian Serbs who feel they are invincible and are willing to start World War III. . . . [Mladic] has to wait for them to understand. The shock of the NATO bombing needs to sink in.”

In his meeting with Mladic, which dragged on from Friday afternoon to 4 a.m. Saturday, Janvier lay down a series of steps the Bosnian Serbs would have to follow unconditionally. These included reopening roads into and out of the city and reopening the Sarajevo airport by Wednesday.

“Bosnian Serb compliance with the terms of this agreement is not dependent on the action, inaction or agreement of any other party,” Janvier stated in a letter to Mladic. “Noncompliance with any of these terms could result in the continuation of air operations against Bosnian Serb military targets.”

Mladic stormed out of the meeting four times during the night and angrily complained that he would not negotiate with a gun to his head, U.N. sources said.

Finally, he responded with a one-page letter, in English, to Janvier. He conditioned the withdrawal of his weaponry from Sarajevo on, among other things, a requirement that the Muslim-led government army do the same.

The contents of both Janvier and Mladic’s letters were made available to The Times.

Claes and NATO dismissed Mladic’s response. “The reply of Gen. Mladic is not sufficient and does not constitute a basis for terminating air strikes,” Claes said. “We expect the Bosnian Serbs to comply.”

Marshall reported from Brussels and Wilkinson from Zagreb, Croatia. Times staff writer Dean E. Murphy in Belgrade, Yugoslavia, and Bonn bureau researcher Reane Oppl contributed to this report.