Serbian leader Slobodan Milosevic again rejected foreign mediation to end escalating violence in the southern Kosovo province, snubbing Western powers on Friday even as they attempted to stiffen punishments for the rump Yugoslavia's repression of ethnic Albanians.
A spokesman for Milosevic dashed last-minute reports that suggested the Yugoslav government, in a bid to avert additional economic sanctions, would reverse itself and accept international referees in negotiations with Albanian separatists in Kosovo.
"Solutions to the Kosovo situation can only be found in Serbia," Dragomir Vucicevic, a senior Foreign Ministry official, was quoted as saying. "It is not acceptable for foreign representatives to come and deal with the internal affairs of our country."
The Kosovo province, where a 90% Albanian majority is ruled by a heavy-handed Serbian police force, is the scene of daily attacks that have killed more than 130 ethnic Albanians and Serbs since late February.
Armed ethnic Albanians are demanding independence from Serbian rule, while the Serbian-dominated Belgrade government refuses to surrender control of a region it considers sacred to its national identity.
Friday's refusal to accept international help to defuse the Kosovo crisis was the latest indication of how positions on both sides have hardened, making a peaceful solution appear remote. It came as the six-nation Contact Group, formed to monitor the Balkans, planned to freeze foreign investment in Yugoslavia.
Members of the Contact Group were expected to meet today in London to decide on the investment ban and consider other moves.
Thomas R. Pickering, the U.S. undersecretary of State for political affairs, said Kosovo was an agenda item for foreign ministers from the seven leading industrial nations and Russia, who have also gathered in London for a meeting.
Speaking before Milosevic announced his rejection of international mediation, Pickering stressed U.S. support of a peace mission led by former Spanish Prime Minister Felipe Gonzalez.
The mission is backed by both the Contact Group and the 54-nation Organization for Security and Cooperation in Europe.
Western powers have imposed a weapons-import ban and 10 days ago froze Yugoslav assets abroad.
While those sanctions had little impact, the investment ban was seen as the first measure with real bite.
Yugoslavia, now made up of the republics of Serbia and Montenegro, had calculated raising an estimated $1.5 billion through foreign investment and privatization this year. The country desperately needs to avoid hyper-inflation and revive a stagnant economy already devastated by sanctions in place since 1992 to punish Serb-led warmongering.
"A stop on foreign investment would be a catastrophe and may be a final blow for our highly insolvent and exhausted economy," Deputy Prime Minister Vojin Djukanovic said earlier this week.
In Washington, U.S. officials Friday predicted that the investment freeze will take effect in coming days and have what a State Department spokesman described as "a very crippling effect on the Serb economy."
Still, its harshness will be blunted by Russia's refusal to go along.
Russia, a longtime ally of the Slavic Serbs, supplies Yugoslavia with much of its fuel and is an important trading partner.
Senior Russian officials traveled to Belgrade this week in an effort to persuade Milosevic to accept international mediation. Expectations were raised when Igor Ivanov, a deputy foreign minister sent from Moscow, said Milosevic was "seriously considering" this possibility.
But any opening for a breakthrough closed again Friday. Gonzalez said Belgrade formally rejected a mediating mission.
As diplomacy continued to founder, more deaths were reported Friday in Kosovo.
An Albanian tending his cattle and a second man were reported killed, while at least four police officers were wounded in gun battles with armed separatists.
Also Friday, the U.N. international war crimes tribunal dropped charges against 14 Bosnian Serbs accused of beating, raping and killing prisoners so it can concentrate on prosecuting more senior suspects, Chief Prosecutor Louise Arbour said from The Hague. She said she wants to speed up prosecutions and free the tribunal's limited resources to focus on major perpetrators of war crimes during the Balkan war.
Times staff writer Tyler Marshall in London contributed to this report.