In his statement tonight, Milutinovic, who heads a government delegation seeking talks with the Kosovo Albanians, also said the government would extend protection for the International Committee of the Red Cross if it resumed its work in Kosovo, which was suspended after the organization received threats last week. There were signs that Belgrade was bracing for sanctions. Diplomats said banks here have been closing some foreign accounts and recalling funds from abroad in the face of Western threats to seize Yugoslav state assets overseas. In general, say analysts, Milosevic seems prepared to suffer additional economic hardship in the form of sanctions rather than back down on Kosovo, which many Serbs consider the cradle of Serbian civilization. His government has rejected suggestions for international mediation and has put forward no significant proposal for defusing the crisis through increasing self-governance or restoring the autonomy in Kosovo that Milosevic, as leader of Serbia, revoked in 1989.
Nothing works with the regime here except pressure, economic or military.
So far, say diplomats here, there has been no apparent progress on the two major items, a withdrawal of special police and negotiations with the Albanians. Major aid organizations are still not working in the region. It has scheduled a meeting in Washington next Wednesday to assess Yugoslavia's compliance. Russia has refused to go along with some of the threatened sanctions, including the asset freeze. But Russia is a relatively minor economic player in the Balkans, and Western diplomats said the threat of sanctions had already taken a toll on export-oriented businesses in Yugoslavia and on foreign investors.