Yugoslavia Appears Ready for Attempt to Restore Peace despite Rocky Start, Latest Cease-Fire Effort by the European Community Raises Hopes

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IF nothing else, two months of fighting in Yugoslavia has provided a useful lesson for the Soviet Union on how not to deal with explosive ethnic tensions.

"Yugoslavia is a nightmare the Soviet Union is trying to avoid," says George Zarycky, an East European specialist at Freedom House in New York. "The Soviets are definitely looking at Yugoslavia and saying, 'We don't want this.

Scenes of bloody conflict between Serbs and Croats in Yugoslavia undoubtedly influenced a decision by 10 Soviet republics, announced Sept. 2, to reshape the Soviet Union into a loose confederation. A move to forestall political collapse, the plan has momentarily defused the threat of conflict over disputed borders and the status of ethnic minorities.

Even as the Soviet republics sidestep divisive issues, Yugoslavia itself is taking a tentative step back from the brink of full-scale civil war. Leaders of the Yugoslav republics of Serbia and Croatia agreed on Sept. 2 to accept a European Community-sponsored cease-fire that could open the door to an international peace conference and eventually to binding arbitration.

If the agreement holds, it could end a costly civil conflict that was triggered when the northern republics of Croatia and Slovenia declared their independence from the six-nation Yugoslav federation on June 25. According to news reports from Croatia Sept. 2, fighting has already shattered the day-old truce, leaving many diplomatic observers pessimistic about the chances for a long-term solution.

In a patchwork federation that includes numerous acrimonious ethnic minorities, relations between Serbs and Croats have been among the most bitter, culminating in the slaughter of thousands on each side during World War II. Beyond historical memories, peace efforts will be taxed by the irreconcilable objectives of leaders of the two republics, who face far stronger pressures from local nationalists than from would-be international peacemakers. Croatia is seeking recognition as an independent state and insists that its 600,000-strong Serbian minority be part of it. Serbia says it would be willing to accept disunion but only if Serbs from Croatia and the other Yugoslav republics are incorporated into a "greater Serbia."

The economic costs of the conflict between Serbia and Croatia have been enormous. Fighting has brought business, trade, and tourism to a standstill and sent unemployment soaring. War has also generated a huge refugee population as 75,000 Croatian Serbs have streamed into Serbia and Hungary to escape the fighting. …