Serbia Cuts Off Bosnian Rebels : Balkans: Belgrade, under international pressure, says it is denying supplies of fuel and arms to forces it has supported. Washington cautiously welcomes move.

ANCONA, Italy —  Serbian President Slobodan Milosevic, mastermind of the conflict that has racked the Balkans for three years, announced Thursday that he was cutting support for his proxy warriors in Bosnia-Herzegovina for their refusal to relinquish the dream he inspired of a Greater Serbia.

Serbia and Montenegro, the last two republics in the rump Yugoslavia, also proclaimed their territory off-limits to Bosnian Serb leaders. The Bosnian Serbs have refused to bow to pressure, even from their patrons in Belgrade, to cede some conquered land to the Muslim-led Bosnian government as the price for peace.

In statements released in Belgrade, the Serbian and Yugoslav capital, Milosevic urged Bosnian Serbs to overthrow the leaders whom he branded “war profiteers.”

He specifically targeted Radovan Karadzic, a Belgrade protege who has presided over the 28-month-old rebellion and seized 70% of Bosnian territory with a view to annexing it to Milosevic’s state.

But the international community last week stepped up the pressure on Milosevic with threats of tighter sanctions against Serbia, compelling him to cut vital fuel and weapons supplies that have nurtured the deadly rebellion.

The Belgrade-based Tanjug news agency said the rump Yugoslavia was breaking all economic and political ties with Bosnian Serb rebels because they had rejected a proposed territorial division worked out by senior diplomats from the United States, Russia, Britain, France and Germany--the so-called Contact Group.

Russia froze its contacts with the Karadzic forces a day earlier and appealed to Milosevic to continue pressuring his proxies to compromise and make peace.

Washington welcomed the Yugoslav move to rein in the Bosnian Serbs, but White House Press Secretary Dee Dee Myers noted it would bear watching to see “if that border actually seals up.”

“We welcome any steps to continue to put pressure on the Bosnian Serbs to accept the Contact Group’s proposal,” she said, adding: “With reference specifically to Serbia, we’ve heard these kinds of statements before. . . . I think what we want to see is action, not just words. But certainly if they mean what they say, that would be a positive step.”

U.S. officials also warned that pressure was mounting in Congress for lifting an arms embargo that has prevented Bosnian government forces from defending their country.

Leon E. Panetta, the White House chief of staff, said the United States might decide to defy a U.N. embargo and arm the Bosnian government if the Bosnian Serbs persist in refusing to accept the peace settlement.

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This seemed to signal a change in policy; the Clinton Administration has insisted many times before that the United States would respect the embargo so long as its European allies refused to join in lifting it.

But Panetta told Cable News Network that if the Bosnian Serbs continue “to fight this issue . . . ultimately we will seek a multilateral lifting of the embargo, and if necessary, a unilateral lifting of the embargo.” He maintained that the United States would act unilaterally only as a last resort. “First we want to put maximum pressure on them to come around,” he said.

Milosevic last year vowed to shut his country’s border with Bosnia to punish the rebels for spurning an earlier Western peace plan. But that announcement proved to be posturing as Karadzic and his fellow warlords continued to enjoy support, advice and refuge in Belgrade, where they have spent much of their time since fleeing homes in Sarajevo so they could lay siege to the Bosnian capital.

The current threats appeared more serious, at least for the moment, as Yugoslav authorities turned back a senior official of the rogue leadership when she attempted to cross into their territory. Yugoslav border guards barred self-styled Vice President Biljana Plavsic from returning to her Belgrade apartment after a Wednesday night leadership session meted out a final rejection of the peace plan, the Associated Press reported.

The Bosnian Serbs are entirely dependent on Serbian-led Yugoslavia for the money and munitions needed to wage war.

In denouncing the five-nation peace plan, Karadzic warned his armed followers that they risked deprivation and isolation but that to capitulate to the peace plan would be tantamount to national suicide. Bosnian Serb nationalists would have to withdraw from about one-third of the land they have conquered in Bosnia, under terms of the peace plan.

Even more objectionable, in the rebels’ view, is that acceptance would mean endorsement of the internationally recognized borders of Bosnia--forever signing away their chances of unifying captured lands there and in Croatia into an expanded Serbian state.

The rebel leadership has called for a referendum on the peace plan Aug. 27-28 and suggested approval could be engineered if the international mediators would give in to their sovereignty demands.

That has already been rejected by the American and European mediators, who presented their peace plan--at least the fourth proposed formula for dividing Bosnia--as a take-it-or-leave-it offer.

Milosevic may be heeding the advice of Russian authorities to push the Bosnian Serbs for compliance in hopes of getting sanctions lifted whether the rebels sign the peace plan or not.

Russian Deputy Foreign Minister Vitaly S. Churkin commented earlier this week that it would be “paradoxical” to continue punishing Serbia and Montenegro with economic sanctions if they were doing all they could to persuade the Bosnian Serbs to settle. After his visit to Belgrade on Monday, Russian Foreign Minister Andrei V. Kozyrev expressed broad support for Milosevic in what he suggested was a genuine effort to get the rebels to accept the peace plan.

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But Milosevic has proved a master at forging and breaking alliances as circumstances suit him. He arranged the political ouster of Croatian Serb leader Milan Babic after that proxy warlord refused in late 1991 to endorse a plan for deploying U.N. peacekeepers to divided Croatia. The Serbian strongman has also repeatedly threatened to cut the supply lifeline to conquered areas of Croatia whenever international pressure has been brought to bear on him to settle disputes there.

Yet Babic has made a political comeback as foreign minister of the rogue Republic of Serbian Krajina--the internationally ostracized but increasingly independent territory seized from Croatia--and the flow of food, fuel and weaponry continues there.

Times staff writers David Lauter and Stanley Meisler in Washington contributed to this report.

Sealing the Border

Yugoslavia, which consists of Serbia and Montenegro, severed political and economic ties with Serbs in Bosnia-Herzegovina after the rebels once again rejected an international peace plan.