'For the first time since the beginning of war, Izetbegovic and Karadzic were not only sitting around the same table but they were talking to each other,' said the Serbian President, Slobodan Milosevic, as he emerged smiling from the meeting.
However, Serbian forces intensified their assault around the scarred capital of Sarajevo and around the strategic northern town of Brcko.
Mr Karadzic warned worse would follow if the Muslim-led government refused to agree to ethnic partition. 'This is the last chance for an honest peace,' he said upon arrival. 'If that is not achieved, I foresee more fighting, more bloodshed and possible spreading of the war.' He carried an armload of maps detailing his plans for division.
At the end of the meeting, Mr Karadzic said discussions were going in the 'right direction' despite his 'basic pessimism.'
The mediators, Lord Owen and Thorvald Stoltenberg, planned further direct talks between the warring factions today.
Also attending are the Croatian President, Franjo Tudjman, and Momir Bulatovic, the President of Montenegro which together with Serbia makes up Yugoslavia.
Although Mr Izetbegovic has on several occasions been in the same room as Mr Karadzic since the outbreak of war 16 months ago, he has negotiated through mediators rather than directly with the man he describes as a war criminal.
It was the first face-to-face meeting between the warring factions since Serb and Croat leaders published plans in June for a confederation of three ethnic parts with a weak central government. President Izetbegovic and his multi-ethnic delegation brought along their own proposals for a Bosnia of 'several federal units,' without clear ethnic divisions and with strong central powers.Reuse content