Settlement 'in sight' as peace talks gather pace: As the warring parties get down to serious negotiations, the delay in the Serbs' promised pull-out may yet halt progress

TWO documents containing the outlines of a final settlement for the Bosnia war were under intense discussion in Geneva yesterday and diplomats reported significant progress, some predicting that a peace accord could be signed within days.

The talks moved ahead with speed after Bosnia's Muslim President, Alija Izetbegovic, began serious bargaining with Serbian and Croatian leaders in a meeting of delegation heads.

The Serbian President, Slobodan Milosevic, said Bosnia's warring factions were within reach of a final settlement of their 16-month war.

'I believe that we have all the elements we need for a final settlement,' he said after late night talks with mediators and his Bosnian Serb protege, Radovan Karadzic, on maps of an ethnically divided Bosnia. 'But we'll see what happens tomorrow,' he added. The three sides have already agreed to place Sarajevo under the control of the United Nations for up to two years as soon as an overall plan to end the war is signed. It now seems evident that the fate of Sarajevo and the possibility of a solution rest on the ability of President Izetbegovic to conduct a diplomacy of compromise that can be ratified by a majority of the Bosnian parliament. At the same time, the President kept up a defiant stream of complaints and demands in his public statements, apparently intended to placate the intransigent members of his entourage.

'They must lift the siege of Sarajevo,' he said. 'We may have reached an agreement on the arrangement for Sarajevo but this does not solve the problem of the siege of Sarajevo.'

President Izetbegovic added a further seven conditions that he held necessary for reaching agreement. These included a requirement that UN observers and humanitarian bodies be granted immediate access to the city of Mostar and other towns where heavy fighting has taken place between Muslim and Croatian forces.

Announcing to a press conference that he 'would not sign anything', the President gave an impresssion of stubborn refusal to make concessions. But inside the conference chamber his attitude was quite different.

'Izetbegovic began detailed negotiations, unwillingly, perhaps, but making deals on boundaries and so on,' said a conference source. Negotiating alone, the Muslim leader was able to respond quickly and flexibly to issues as they arose, the source said.

In previous talks the Muslim-dominated Bosnian delegation has proved a cumbersome instrument. Diehard members intervened to prevent compromise and the President exhibited deep unwillingness to go beyond the boundaries of consensus. With this in mind, yesterday's talks were deliberately kept to the Bosnian President, Mr Karadzic, the Croatian chief, Mate Boban, President Milosevic and Croatia's President Tudjman. The co- chairmen of the talks, Lord Owen and Thorvald Stoltenberg, maintained pressure on the warring parties through the day.