Apart from constituting punitive action over Croatian aggression in Bosnia and the enclave of Krajina, it is also hoped the threat could be used to force the Croats to co-operate in the creation of a 'viable Muslim state' in any carve- up of Bosnia.
As EC foreign ministers meeting in Copenhagen listened to the pleas of the Bosnian President, Alija Izetbegovic, a senior diplomat described as 'very likely' the possibility of sanctions being imposed on Zagreb. 'We are not threatening to impose them tomorrow,' he said.
'But at the same time, we all know that threats in the Balkans are worth nothing unless you are prepared to have your bluff called.'
Since Croatia was perceived as the underdog after losing to the Serbs two years ago, the West has been reluctant to punish Zagreb. Much hope has also been pinned, in vain, on a Muslim-Croat alliance.
Yet over the past two years, there has been a persistent ambition by Zagreb to join Belgrade in carving up Bosnia, as well as unspeakable atrocities committed by Bosnian Croats against Muslims. Despite an arms embargo imposed on all of the former Yugoslavia, the Croats have remained well armed.
Apart from the notorious problems in enforcing any sanctions regime, the West would face another dilemma: many humanitarian and UN personnel are based in Croatia, supplies for Bosnia require transit through the republic, and ships such as the Ark Royal rely on facilities in the Croatian port of Split. 'We have to work on the assumption that were sanctions to be imposed, there is a very real possiblity the Croats would tell them all to naff off,' said a British official.
In Copenhagen, EC leaders came under pressure to lift the arms embargo over Bosnia. In a letter addressed to Helmut Kohl, the German Chancellor, President Bill Clinton said the US still favoured a 'selective' lifting of the embargo 'to put the Bosnian government in a position to defend itself'.
Diplomats said Mr Kohl had pushed for the EC to agree to the idea at a tense dinner during the summit last night but had failed to win the agreement of his reluctant partners. EC leaders instead called on Mr Izetbegovic to return to the negotiating table and try to fashion a territorial settlement from the wreckage of the Vance-Owen plan.
Knives out for Izetbegovic, page 10
Leading article, page 19