By Anatoly Verbin

BELGRADE (Reuters) - U.S. mediator

Chris Hill Friday handed to Serbian

President Milan Milutinovic the latest draft of

a peace deal aimed at securing a political

settlement for the conflict-torn Serb

province of Kosovo.

Fresh reports of violence in Kosovo marred

Hill's efforts.

And, speaking in the Scottish city of

Edinburgh, NATO's supreme commander in

Europe, U.S. General Wesley Clark, said

Friday that ethnic Albanian separatists and

Serbian forces were rearming for fresh

confrontation in Kosovo within four months

unless a political settlement was reached.

Serb sources in the Kosovo capital Pristina

said one Serb soldier was killed and two

others were wounded when Kosovo ethnic

Albanian separatist guerrillas ambushed a

Serb army convoy south of the capital.

There was no independent confirmation of

the attack and no details were immediately

available.

Details of Hill's peace plan were not made

public but a draft, dated November 1 and

seen by Reuters, provided for wide

autonomy for Kosovo which would have its

own assembly, or parliament, and police.

Questions of territorial integrity, defense,

foreign and monetary policy and common

market were to be regulated by the laws of

the Federal Republic of Yugoslavia.

The draft also said Kosovo would have a

representative on Yugoslavia's Supreme

Defense Council which at the moment

groups top leaders of Yugoslavia, its

republics of Serbia and Montenegro, the

defense minister of Yugoslavia and its chief

of staff.

An agreement last month between Yugoslav

President Slobodan Milosevic and U.S.

special envoy Richard Holbrooke ended

large-scale fighting and averted a threat of

NATO air strikes against Serb targets.

Since then, Hill has been trying to follow the

cease-fire, endangered by daily, though

low-level violence, with a lasting political

deal.

A carefully worded statement by

Milutinovic's office, published by the Beta

news agency, said Hill had handed him ``a

document with elements for reaching a

solution on Kosovo, pointing out that the

document was based on the essence of the

Milosevic-Holbrooke agreement.''

Milutinovic said he would study the

document.

``Emphasizing that all ideas which could

help in a political solution being reached

were welcome, Milutinovic pointed out that

in order to make headway it was necessary

for participants to sit down at the negotiating

table and begin direct talks.''

The statement said the president of Serbia

would next week personally travel to Pristina

to open the talks.

It appeared unlikely that representatives of

the radical ethnic Albanian Kosovo

Liberation Army (KLA) would agree to talk to

Milutinovic. Hill met KLA representatives last

week.

KLA, outlawed by Belgrade, did not sign the

truce and its guerrillas have moved into

some areas abandoned by Serb forces.

The statement by the Milutinovic office did

not mention KLA by name but said: ``It was

agreed at the meeting that a determined

effort must be made to suppress the

increasing attacks by Albanian separatist

terrorist gangs on innocent civilians, police

and army. Such actions, whose

consequences are serious, represent a

serious obstacle to dialogue and obstruct

efforts to stabilize the situation in the

province.''

General Clark, in his sober assessment

before a gathering of NATO

parliamentarians in Edinburgh, said the

Atlantic alliance had only succeeded in

``dampening and containing this crisis thus

far'' by threatening the use of force against

Yugoslavia.

``We also have to recognize that at this very

time, both he Kosovo Liberation Army and

the Serbs are rearming and preparing for

confrontation again. If even more

destructive fighting is not to occur, we must

turn off the engines driving this conflict,'' he

told NATO parliamentarians.

``We must use this two-to-four-month

respite to achieve a just and durable political

settlement,'' Clark said.

Reut14:48 11-13-98