Balkan Foes to Open Liaison Offices : Bosnia: Sarajevo, Belgrade agree to step toward diplomatic recognition. But truce violations continue.

With U.S.-sponsored peace talks approaching, Bosnia and Serb-dominated Yugoslavia agreed Wednesday to open liaison offices in each other’s capitals in a first step toward diplomatic recognition between the two bitter enemies.

But another day’s negotiations in the Balkans produced little else and dramatized the differences that complicate efforts to reach a settlement, diplomats said.

Wednesday’s announcement came as a week-old cease-fire continued to be violated by the Bosnian government and rebel Bosnian Serbs, the United Nations reported, and as tensions rose over territory disputed by Croatia and Croatian Serbs.

Bosnia-Herzegovina, the rump Yugoslavia and Croatia are scheduled on Oct. 31 to participate in high-stakes talks aimed at ending the war.

The so-called “proximity talks,” which could last for weeks, will be held at Wright- Patterson Air Force Base in Ohio, a fenced-in installation that offers maximum security for participants.

Richard Holbrooke, the U.S. envoy who has been shepherding Bosnia’s most promising peace process, shuttled from Belgrade, the Yugoslav capital, to Sarajevo on Wednesday and then emerged from a meeting with Bosnian President Alija Izetbegovic to announce the agreement to open liaison offices.

“This does not amount, of course, to diplomatic recognition between the two countries,” Holbrooke told reporters, speaking on behalf of the five-nation Contact Group of mediators. “However, liaison offices . . . are official offices of the governments and, as such, provide an important method of direct communication, without diplomatic recognition.”

Yugoslavia and Bosnia have had no official ties since Bosnia seceded from the crumbling former Yugoslav federation more than three years ago. Belgrade refused to recognize Bosnia as a country, and war followed. For Yugoslavia to open diplomatic relations with Bosnia would be a major turnaround.

Holbrooke, in a later interview, said he believed that the opening of liaison offices will eventually lead to full recognition. But on many other matters--from how to hold elections to constitutional reforms and the drafting of territorial maps--the sides remain far apart.

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“We’re having a very rough time now,” Holbrooke said. “We’re approaching the [proximity] talks and everyone is stiffening their positions. . . . Before, we were negotiating with results. Now, they are just laying down tough markers on their positions.”

Under the Holbrooke tutelage during the past month, the Bosnian government and the Bosnian Serbs agreed to a cease-fire that began last Thursday and agreed to divide Bosnia into two ministates. The details, however, have to be resolved at the proximity talks.

Elections may be one of the most complicated issues.

The Izetbegovic government does not want people such as Bosnian Serb leader Radovan Karadzic, who has been indicted for alleged war crimes, to be candidates.

Carl Bildt, a mediator representing the European Union, said there is general agreement that the elections be held within a year but that no one has come up yet with the mechanisms for doing it.

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“Elections are critical,” Bildt said after a joint news conference with Holbrooke, “but we don’t want elections that ratify ‘ethnic cleansing.’ ”

Holbrooke left Sarajevo, the Bosnian capital, for Zagreb, capital of Croatia, where he was expected to warn Croatian President Franjo Tudjman against using force to recapture the last piece of Serb-occupied Croatian territory, Eastern Slavonia. Were Tudjman to make such a move, Yugoslavia would probably step in, war would erupt and the peace process would become irrelevant, diplomats say.

Alarm over Eastern Slavonia grew Wednesday because Tudjman canceled a meeting to discuss the matter with the Serbs amid reports that Croatian troops were massing near the border with the disputed territory. The Yugoslav army also began maneuvers, and rebel Serbs accused Croatia of shelling villages in Eastern Slavonia.

Croatia has in recent months used force to take other Serb-held land.

The conquest of Croatia’s Krajina region led to murder and looting by Croatian security forces, according to U.N. and other human rights officials. On Wednesday, under international pressure, Croatia announced the arrest of 25 people implicated in the murders of elderly Serb civilians.

A U.N. relief agency, meanwhile, reported on the alleged murder of 100 Muslim civilians by Serb paramilitary gunmen in the northwest Bosnian town of Bosanski Novi. Citing the testimony of refugees, the agency said the civilians were killed when they refused to be expelled from their homes.

A week into the cease-fire, the guns are silent along 80% of an about 600-mile-long front line, the United Nations reported.

But in the crucial northwest, where the Muslim-led Bosnian government and its Croatian allies have taken considerable territory from the Bosnian Serbs, fighting has continued, with new artillery fire reported Wednesday.

Meanwhile, in Washington, Clinton Administration policy-makers clashed with lawmakers, particularly House Republicans, in their second day of appearances before Congress to outline plans for deploying about 20,000 U.S. troops in Bosnia for peacekeeping duties.

Secretary of State Warren Christopher, Defense Secretary William J. Perry and Gen. John M. Shalikashvili, chairman of the Joint Chiefs of Staff, spoke to the House National Security Committee and House International Relations Committee. As they had in appearances before two Senate committees on Tuesday, they drew a barrage of skepticism.

The exception was remarks by Rep. Lee H. Hamilton (D-Ind.), ranking Democrat on the International Relations panel, who excoriated his colleagues for demanding that Clinton seek advance congressional authorization for the deployment. He predicted that Congress would not insist on voting to approve the deployment.

“Members would rather let the President take full responsibility,” Hamilton said. “If he succeeds, they will praise him. If he fails, they will criticize. Congress only reluctantly shares responsibility.”

* Times staff writer Art Pine in Washington contributed to this report.