By William Drozdiak and John F. Harris
Washington Post Staff Writers
Tuesday, June 9, 1998; Page A17

Facing the threat of a new Balkan war, the Clinton administration yesterday signaled its intent to join European nations in imposing fresh sanctions on Serbian-dominated Yugoslavia as NATO accelerated plans for possible military intervention to stem the conflict in the Serbian province of Kosovo.

Meeting in Luxembourg, foreign ministers of the 15 European Union countries announced a ban on new investments in Yugoslavia -- comprising Serbia and its satellite republic, Montenegro -- and froze its foreign assets to punish Belgrade for its military offensive against ethnic Albanian guerrillas seeking independence for Kosovo.

In Washington, Clinton administration officials said the United States will follow suit within days barring an immediate -- and, they acknowledge, unlikely -- move by Serbian or Yugoslav leaders to resume negotiations with Kosovo and forswear further violence there.

The Clinton administration had pushed last month for international sanctions to be lifted as an incentive to Yugoslav President Slobodan Milosevic to participate in talks aimed at giving Kosovo greater autonomy. But the U.S. gambit quickly backfired when the talks broke down and Belgrade resumed its military operation with new intensity.

The U.S. position was further muddled yesterday by conflicting statements from the Clinton administration. Speaking with reporters aboard Air Force One while Clinton traveled to New York to address the United Nations, White House national security adviser Samuel R. "Sandy" Berger said a U.S. military intervention "is not something that is on the table."

Alarmed by the impression Berger had conveyed, other administration officials rushed to assert that he was simply describing U.S. expectations in the near term, not ruling out the military option if economic pressure backfires. On the contrary, they said, the United States is moving within NATO to identify military options that are politically and logistically workable.

"We are working closely with allies and partners on measures intended to end the violence and promote a peaceful resolution," State Department spokesman James P. Rubin said. "This includes accelerated contingency planning in NATO. We and our partners have a variety of options available to us. No decisions have been made, but nothing has been ruled out."

Ethnic Albanians account for nine out of 10 residents of Kosovo, but Serbs control the government and security forces. At least 250 people have been killed there since February, when military forces and special police units launched a campaign to crush the Kosovo Liberation Army, an ethnic Albanian guerrilla group.

At least 10,000 refugees have fled to neighboring Albania to escape the violence, but the flow of arms across the border to the guerrilla force reportedly continues unabated.

EU foreign ministers, at their Luxembourg meeting, declared that Belgrade's campaign to suppress the Kosovo rebels went "far beyond what could legitimately be described as a targeted anti-terrorist operation." They said Milosevic bore "special responsibility" for what they called a new wave of Balkan "ethnic cleansing."

"Modern Europe will not tolerate the full might of an army being used against civilian centers," British Foreign Secretary Robin Cook said.

Seeking to lay the foundation for future intervention, Britain has circulated a draft U.N. Security Council resolution that would endorse the use of "all necessary means" to stop the conflict from spreading. Similar language was employed to justify military deployments in the 1991 Persian Gulf War and the Bosnia peacekeeping mission.

In Brussels, NATO officials said defense planners were preparing a series of military options that could be presented to alliance defense ministers this week, including the possible preventive deployment of thousands of troops along Kosovo's borders with Albania and Macedonia, which has a large ethnic Albanian minority.

U.S. officials said if military force does come to pass, they anticipate air power being used to prevent government security forces from carrying out attacks in Kosovo, but not the insertion of ground troops within Kosovo.

For all the tough talk and diplomatic maneuvering, it remained unclear how far the Western powers are willing to go in pressing Milosevic to meet their demands. These include the immediate withdrawal of security forces from Kosovo, a restoration of regional autonomy for Kosovo -- which Milosevic ended in 1989 -- and a willingness to engage in serious political negotiations with Ibrahim Rugova, leader of Kosovo's ethnic-Albanian separatist movement.

Russia and France have expressed reservations about a NATO military intervention in Yugoslavia. And some NATO military experts have questioned whether deploying troops in Albania and Macedonia would deter Belgrade -- capital of both Serbia and Yugoslavia -- from mounting further offensives in Kosovo.

"If you send in NATO troops to Albania and Macedonia and tell them to stop the flow of arms and guerrillas across the borders, it would probably be the biggest favor we could do for Milosevic," a NATO official s aid.

Milosevic has been adroit at exploiting divisions in the international community. When he agreed to open talks with Rugova last month, the United States pressured its allies to revoke an investment ban that had been imposed at the end of April. But the talks collapsed after one round when government security forces launched a new assault in late May against villages that purportedly were serving as guerrilla sanctuaries.

A team of diplomats who visited Kosovo over the weekend said they were appalled by the destruction of civilian targets inflicted by security forces in their latest offensive. Their report condemned the razing of homes and entire villages, clearing the way for today's restoration of the investment ban and asset freeze.

Drozdiak reported from Berlin, Harris from Washington.