But he said he hoped that would not be necessary, telling the House of Commons Select Committee on Foreign Affairs: 'If we show enough determination that we are going to enforce it, we won't need to enforce it.'
He also told the MPs that there remained a prospect of a negotiated settlement in Bosnia.
Lord Owen said he and his co-chairman, Cyrus Vance, had detailed breaches of the no-fly zone on Wednesday to Radovan Karadzic, the Bosnian Serb leader, 'and warned him that if this went on, we couldn't see any other option for the UN security council other than to deal with this'.
But he warned that enforcement had to be weighed against the impact on the humanitarian effort which would prevent the loss of tens of thousands of lives this winter.
'The moment the West. . . takes up arms in the sense of taking out an aircraft, helicopter or airfield they immediately put at risk the United Nations Protection Force and the UN High Commission for Refugees,' he said.
The benefits of enforcement had to be weighed against the potential disruption to the humanitarian effort, but his view was that if persistent warnings failed to halt the flights, 'we would be forced to enforce it'.
The lesson of history was that you did not threaten what you were not prepared to undertake, he said. But the implication was that 'we might have to take quite severe action in terms of using air power'.
Yugoslav aircraft or army units might become involved and 'you might have to escalate right up from that,' Lord Owen told the committee. 'It is not a course to embark on lightly.'
Military pressure was needed as one element in achieving a resolution, he said, but he added: 'I do not consider it would be sensible to place a military force on the ground that would interpose itself between the fighting forces. That would be a foolish thing to do'.
There were no simple, clean military solutions, but on the question of a negotiated settlement, he told the MPs: 'I don't believe we should despair.'
There were pressures in the former Yugoslavia that might make a settlement achievable after this month's Serbian elections, he said. Sanctions, after the earlier failure of the oil embargo of which Lord Owen was deeply criticial, were now biting. Millions of Serbs thoroughly disapproved of what was being done in their name.
Bosnian Serbs had underestimated the capacity of the Muslims to fight, and the Croats were combining with the Muslims. There was also a growing recognition, certainly among the Croats, but also recently among the Serbs, that there would be no peace without an honourable settlement for the Muslims. In addition, there was a sense in the area that the world's patience was running out and that 'some further strengthening of military action might have to be considered'. All those, and 'the weariness of war', were pressures to bring about a settlement, he said.
He told the committee that those who said Yugoslavia was 'none of our business' were using the language of the Thirties. 'Ethnic cleansing is too odious and too pervasive - it is racism - that if you don't check it, it will go everywhere in Europe'.
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