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When this phase of late-summer diplomacy began, Western policymakers were wondering whether Milosevic could "deliver the Bosnian Serbs" in any serious negotiation. Last week he produced the two top bosses and their signatures, even though Mladic had stubbornly insisted through two weeks of NATO bombardment that he would not move those guns. With his show of authority, Milosevic--who is striving to win an end to U.N. sanctions against his country--has indicated a readiness to get on with an overall peace settlement. The U.S.-brokered plan for a Bosnia consisting of autonomous Serb and Muslim-Croat republics that once seemed hazy and far off suddenly looks attainable.

The breakthrough in Belgrade came as a great relief for the NATO allies. Though they were dropping the bombs rather than absorbing them, they faced a tough decision about what to do as an encore. Beginning Aug. 30, NATO air forces flew 750 strike missions against 56 target complexes. The raids, the Pentagon claimed, were 95% effective, smashing Bosnian Serb air-defense and communications systems, storage areas and ammunition dumps, roads and bridges. But Pentagon planners were about to run out of targets that met their requirements: avoiding civilian casulaties and not too radically altering the strategic balance between Serb and Muslim-led government forces.

American military strategists were gloomy last week as they surveyed the situation. The shattering of military support targets, important though they were, had not forced Mladic and the Serbs to withdraw their weapons. "They were hunkered down," says a Pentagon official, "and we were being forced to escalate." That was the tough decision and very likely a political impossibility. The next set of potential targets for NATO warplanes, dubbed Option 3, would have entailed a widening and intensification of the air war to include factories, power plants and airports in the civilian areas of Serb-held Bosnia. Washington officials had little confidence that they could persuade the U.N. or NATO's Atlantic Council to escalate the bombing, and on Capitol Hill, members of Congress were also restive.

Moscow was already shouting genocide and threatening a reappraisal of its relations with the West, the U.S. in particular. For a week or so the Clinton Administration thought the Russian government was simply pandering in public to its hard-line critics, but then the private channels heated up as well. Defense Secretary William Perry phoned his Russian counterpart, General Pavel Grachev, and got an earful. The air attacks, Grachev warned, had to stop. Perhaps sending the same message, a masked man fired a rocket-propelled grenade into the U.S.-embassy building in Moscow, smashing into a sixth-floor office and destroying a copying machine but causing no injuries. Russian police increased security around the embassy and sent out a sketch of the attacker, but no arrest has been made.

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