Serbia told proposals 'not good enough'

The European Union yesterday gave the coolest of welcomes to the latest offer of President Slobodan Milosevic to the insurgent ethnic Albanian minority in Kosovo, making clear it would not be enough to reverse the sanctions imposed in London against Yugoslavia by leading international powers, writes Rupert Cornwell.

Mr Milosevic's proposals were "not good enough", Robin Cook, Foreign Secretary said, indicating that Europe entirely sympathised with the Albanian majority in the province who refused to meet a delegation from Belgrade this week, dismissing the exercise as little more than a publicity stunt.

Last night EU foreign ministers at their informal meeting were exploring possible solutions, involving some kind of special status for the province, but within the borders of the existing rump Yugoslavia. As a German official put it, "there must be more autonomy, but we can't have outright separation."

Europe is adamant the isolation of Belgrade will continue failing a genuine move towards a political solution to the crisis by Mr Milosevic, and Mr Cook was confident that the tighter economic squeeze imposed by the six-nation Contact Group on Monday will bite - and bite quickly.

According to the Foreign Secretary, the regime had been "stunned" by the speed of Western reaction, and was especially alarmed by the suspension of financial support for Yugoslavia's privatisation programme. "If they can't sell their (privatisation) bonds, they cannot finance their deficit."

Meanwhile, the foreign ministers delivered an unexpectedly blunt warning to President Suharto that acceptance of the International Monetary Fund's stabilisation plan offered the escape from Indonesia's financial turmoil.

With its refusal to comply with the initial IMF recommendations, the country was "entering uncharted waters," Derek Fatchett, Minister of State at the Foreign Office said, underlining the risk that failure to deal with Indonesia risked undoing all the good work done by Thailand, Malaysia and South Korea in tackling their own financial crises.