Bosnians, Croats Will Halt Assault on Serbs, U.S. Says : Balkans: Combined offensive nears rebel stronghold. But it is jeopardizing Washington-brokered peace plan.

Under U.S. and British pressure, Bosnia and Croatia on Tuesday promised to put a brake on a week-old offensive in northern Bosnia, U.S. officials said, even as their troops were reported within striking distance of the rebel stronghold of Banja Luka.

The offensive has won for the Bosnian government and its Croatian allies control of approximately half of Bosnia-Herzegovina, but it has jeopardized a U.S. initiative that produced arguably the best chance for peace in the Balkans in more than four years of war.

The pledge to hold back the offensive came only after Croatia on Monday escalated matters by sending several thousand troops over the border into Bosnia to fight Bosnian Serbs near Banja Luka. The Serbs responded by shelling the Croatian border town of Dvor, killing two Danish U.N. peacekeepers.

After a week in which the Muslim-led government army and its Croatian allies appeared to roll over vast expanses of Serb-held territory with ease, the Serbs on Tuesday mounted a defense around Banja Luka, U.N. officials said, in what could be the prelude to a major battle.

Alarmed that a delicately negotiated peace process was about to collapse, U.S. envoy Richard Holbrooke met Tuesday with Croatian President Franjo Tudjman and Bosnian President Alija Izetbegovic in the Croatian capital, Zagreb.

Then Holbrooke dashed off to Belgrade, the Serbian and Yugoslav capital, for another round of talks with Serbian President Slobodan Milosevic, long considered the regional powerbroker--at least where the Serbs are concerned.

U.S. State Department spokesman Nicholas Burns in Washington said that Tudjman and Izetbegovic assured Holbrooke that their allied forces will not attempt to overrun Banja Luka, the Bosnian Serbs’ largest city and military headquarters.

Burns said the promise covered only Banja Luka but that the Bosnian-Croatian offensive seemed to be winding down throughout the country.

Even as assurances were being conveyed, the United Nations reported that Bosnian government troops advanced against Serbian rebels on Mt. Ozren in north-central Bosnia, aiming for Doboj, a key transportation and communication hub held by the Serbs.

There were also unconfirmed reports that Croatian forces had taken the town of Prijedor, site of notorious Serb-run concentration camps during the first year of the war and only 30 miles from Banja Luka. The Serbs denied the reports.

Croatian and Bosnian government troops claim to have seized about 2,400 square miles in the last week and a half, reducing Serbian holdings in Bosnia from 70% just a few weeks ago to about 50% now. U.N. spokesman Alexander Ivanko said in Zagreb that the Serbs have confronted enemy artillery within nine miles of Banja Luka.

Muslim-Croat forces are faced with striking a delicate balance between regaining the amount of territory granted them in international peace plans and going too far, diplomats said.

“The problem is when to stop, and who’s deciding when to stop,” said a European diplomat.

The offensive poses several threats to the peace process: If the Muslim-Croat push goes too far, diplomats say, it risks provoking Milosevic and dragging Serbia into the war. Overrunning Banja Luka would also send hundreds of thousands of Serbian refugees into flight.

A second danger comes from the precarious alliance between the Muslim-led Bosnian government and the Croatian forces, which include Bosnian Croats as well as regular Croatian army units.

Bosnia has always been the weak partner in the alliance, and most of the military gains have been the work of the Croats, whose ability to sidestep an arms embargo in the last several years has rewarded them with a well-stocked, sophisticated arsenal.

Diplomats say they are concerned that the Croats will want to keep more of the recovered territory than rightfully belongs to them under any eventual peace deal map carving up Bosnia.

Although Burns said the Bosnian government and its Croatian allies may have strengthened their hand for coming peace negotiations, he said the United States believes that additional fighting will damage the hopes of peace and, possibly, backfire on the Bosnians and Croats.

“Certainly the Bosnian Serbs are not a defeated military force,” Burns said. “They retain a very significant capability to strike back. . . . We think it is an illusion to believe that the tide of the war can be turned completely in favor of one side or another, and all that will result in the process is that more people will be killed. . . .

“We think that the worst possible turn of events would be an escalation of the fighting just at a time when the stranglehold on Sarajevo may be broken, when humanitarian goods are now flowing into Sarajevo, when we have a chance to deliver the people of Sarajevo from the heavy weapons of the Bosnian Serbs.”

The State Department’s positive assessments that the Bosnian-Croatian offensive had halted were not echoed on the ground in the Balkans. Holbrooke, who will travel to Washington later this week, told reporters in Belgrade: “I think we are making some small measurable progress on a step-by-step basis.”

Holbrooke said the foreign ministers of Yugoslavia, Bosnia and Croatia agreed to meet next week in New York, where they will be attending the United Nations.

Clinton Administration officials said Holbrooke’s trip to Belgrade was hastily arranged to urge Milosevic to keep his powerful army out of the fighting in Bosnia.

Secretary of State Warren Christopher said Holbrooke was instructed to tell Milosevic that “widening the war is in no one’s interest.”

At the same time, Christopher said the United States “must press in the hardest way” for the Bosnian government and its Croatian allies to end their current offensive.

A senior U.S. official said that Milosevic has behaved responsibly in resisting nationalist pressure to enter the fighting on the side of beleaguered Serbian militias.

For all the talk of restraint, there were signs of belligerence.

Gen. Atif Dudakovic, commander of the Bosnian government army’s crack 5th Corps, told the Associated Press in northwestern Bosnia that the anti-Serb alliance could spread its attacks to new battlefronts within days.

“Our aim is to liberate as much of Bosnia as we can,” said Dudakovic.

Wilkinson reported from Sarajevo and Kempster from Washington.