Serbs, Croatia Agree to Set of Peace ‘Principles’ : Balkans: Zagreb and rebels approve 11 tenets for re-integrating Eastern Slavonia with rest of nation.

One of the most difficult pieces in the Balkan peace puzzle began slipping into place Tuesday when leaders from Croatia and the breakaway Serb-controlled region of Eastern Slavonia agreed for the first time to a set of “guiding principles” for a settlement.

The 11 tenets, if ultimately implemented by both sides, would re-integrate the region into Croatia and defuse a tense standoff between rebel Serb soldiers and the Croatian army, which has threatened to overrun Eastern Slavonia if the territory’s status is not resolved by the end of next month.

Such a battle, Western diplomats say, could draw the powerful army of neighboring Serbia into direct combat with the Croatian army, setting off a broad escalation of the war in the Balkans and toppling the current U.S.-led peace effort.

“It is a dramatic first step,” said U.S. Assistant Secretary of State Richard Holbrooke, who leads the U.S. peace mission. “Eastern Slavonia threatens the possibility of peace in Bosnia. . . . This is the first time we have been able to announce progress, limited though it is, on this issue.”

The narrow region of rich farmland and oil fields is the only Croatian territory still occupied by Serbian insurgents. The so-called Krajina Serbs were routed from Western Slavonia in May and from the Krajina region in August. Croatian President Franjo Tudjman, emboldened by those battlefield successes, has said he will not be satisfied until all Croatia is under government control.

Peter Galbraith, the U.S. ambassador to Croatia, who helped broker Tuesday’s session in this Serb-held border town, said the accord represents the most far-reaching acknowledgment by Croatia’s Serbs that their dream of an independent state, or one incorporated into neighboring Serbia, will not be realized.

Although no timetable has been agreed upon, the principles would allow the Croatian government to re-establish Croatian institutions in the region, including post offices and passport offices, and would require local elections. They also call for the demilitarization of the region during an unspecified transition period, except for the presence of an international force to ensure compliance.

Hrvoje Sarinic, Tudjman’s chief of staff, led the Croatian delegation, the first time a top-level Croatian official has traveled to the disputed territory to meet with local Serbs.

Sarinic predicted the talks would succeed where numerous efforts over the past three years have failed because of provisions assuring the region’s inclusion in Croatia. Talks are scheduled to resume Monday at the U.S. Embassy in Zagreb, the Croatian capital.

“The sovereignty of the Republic of Croatia on this territory is not in question,” Sarinic said. “Croatia, assisted by the international community, on the other hand, has to make sure that the Serb minority and all people who live in that area have all their human rights. We are, of course, completely ready for it.”

But Milan Milanovic, the chief negotiator for the Serbs, spoke far more cautiously of the achievement Tuesday. Guarantees that local Serbs would not be mistreated by returning Croatian authorities come against a stream of reports of atrocities against Serbs in other parts of Croatia. On Tuesday, the United Nations confirmed another incident of elderly Serbs being murdered near Knin, once the capital of the Krajina Serbs.

Milanovic also said Serbs have not given up on local autonomy, even though such a provision was not included among the 11 principles. And the transition period proposed Tuesday is disputed: The Croatians insist that it last no longer than one year, while Serbs want five years.

“It is a complicated situation, but we do desire peace,” Milanovic said. “All the playing cards are on the table. We are going to be ready with our objections to the text on Monday. This is only the beginning.”

If the people of Erdut, a tiny village best known before the war for its fine wines, are any indication, Milanovic will find broad support for his peace efforts but little backing for integration into Croatia. The town was wrecked in fighting in 1991 and 1992, and the ethnic Serbs here are weary and without money. Scores of them rely on handouts for their only solid meal each day. Soldiers lining the roads speak nostalgically of civilian life.

“We all are suffering, and we all are afraid,” said an elderly woman shuffling down the street in slippers. “We’ve paid a heavy price.”

But a 29-year-old man, taking his toddler son for a walk, said no one in the village would trade his misery to rejoin Croatian society.

“The Croats are always cheating us; we can’t trust anything they say,” said the man, who fled Zagreb at the start of the war. “Everyone is tired of fighting, but if there is no other solution, we are ready to fight.”