The US National Security Council reviewed the situation following broad hints that the Clinton administration was prepared to bomb Serbian airfields.
But in London the Foreign Secretary, Douglas Hurd, told the Foreign Affairs Select Committee that he did not believe a settlement could be imposed on the Serbs by force and, in any event, British ground troops would not be used in combat missions.
Further adding to the confusion, Mr Hurd said he was in close touch with his US counterpart, Warren Christopher. But he held out the prospect of a major Nato peacekeeping effort in Bosnia if the EC-UN peace plan is accepted by the warring Muslims, Croats and Serbs.
A Nato-led operation would require a large US contribution of ground troops, because Britain and its allies are fully committed, he suggested. Mr Hurd stressed, however, that he saw 'no likelihood of American ground troops being involved in an international military effort to impose a solution on any part of Yugoslavia'.
A spokesman for the EC-UN peace conference in Geneva said that it might become necessary to ask the Security Council to impose a settlement in Bosnia if the factions fail to reach one themselves.
Mr Hurd used his appearance before the Commons committee to send a carefully calibrated signal to Belgrade that the EC would not tolerate rampant sanctions- busting and was taking steps at the UN for action to seal Serbia's water and land borders.
The EC and the Security Council were deeply embarrassed by this week's passage of at least five tug-drawn cargoes of oil up the Danube to Serbia, without the bordering countries of Romania and Bulgaria lifting a finger to halt them.
The threat of tighter sanctions on one of the world's most porous borders was dismissed as 'a feel- good type of action' by a senior US official. Russia is making its support for Serbia more obvious and would probably veto such a move, especially if the US vetoes sanctions against Israel.
The UN is under pressure to pull out of Yugoslavia if the fighting widens as it is preparing to do in Angola. Brazil, president of the council, is grumbling about double standards and too much effort being devoted to the Balkans.
As Western leaders floundered over forging a common strategy, fighting worsened in southern Croatia. Croatia continued to ignore demands from the Security Council to end its offensive, and opened a second front near a hydroelectric dam at the southern end of the Krajina region.
The Croatian army said it had captured the dam, but that retreating Serbs had set off demolition charges. About 20,000 people living downstream have been evacuated.
WASHINGTON - US intelligence says that Ukraine is loading oil on to 100 more barges headed for Serbia, AFP reports. 'Compliance with the embargo on the Danube is a complete joke,' the US official said.
Dam threatened, page 11