SARINIC ON TENTATOVE ECONOMIC AGREEMENT WITH KNIN SERBS

ZAGREB, Nov 16 (Hina) - Chief Croatian government negotiator Hrvoje Sarinic today held a news conference about talks with local Serb representatives from the UN Protected Areas. Sarinic first distributed copies of a Nov 15 letter from international mediators Owen, Stoltenberg and ambassadors Galbraith and Kerestediants. The letter, which was also sent to Serb representatives, suggests that the sides should sign an economic agreement on water supply, power grids, the opening of certain roads and the oil pipeline. Further negotiations on the return of refugees, pensions, and the reopening of other communications were being prepared, the letter said. The signatories expressed the intention to begin consultations on the main political issues - within the framework of the Vance Plan and all relevant UN Security Council resolutions - after the signing of the economic agreement. After reading out the letter, Sarinic answered reporters' questions. Asked what had prompted this overnight change of heart over the economic agreement, Sarinic said that yesterday he had not yet received the letter. The letter was brought by the chairmen of the Peace Conference on Former Yugoslavia to a meeting with the Croatian delegation this morning, Sarinic said. "The letter is part of an overall agreement which we are going to sign," Sarinic said. ""It's the political part of the agreement, so to speak," he said. Without the letter - which contains references to the UN Security Council Resolutions confirming Croatia's sovereignty over the occupied areas - the Croatian negotiators would not have been prepared to sign the agreement, Sarinic said. On the other hand, the Serbs had insisted on signing only the technical part of the overall agreement. Sarinic said Croatian President Tudjman also received a letter, which he would disclose when he deemed appropriate. He said Croatian negotiators would probably sign the agreement next Sunday in Zagreb. The agreement will be endorsed by the signatories of the "letter" and probably also by UNPROFOR Gen. Pierre Peeters. The deadline for signing the agreement is Nov 21. Sarinic then detailed several provisions relative to water supply and high-tension power lines both in the free part of Croatia and in the UN Protected Areas. He emphasised that the agreement only dealt with electric power grids in Croatia and that the Serbs' attempts to introduce the subject of power supply to Prijedor and Trebinje (occupied part of Bosnia-Herzegovina) had been rejected. As for the Slavonia highway, it would be open to traffic as far as Lipovac (eastern Slavonia). Sections running through the free part of Croatia would be supervised by Croatian police, while portions situated in UN Sectors West and East would be controlled by UNPROFOR police. The pipeline was the most prickly issue of all, Sarinic said, adding that a section running through Un Sector North would be opened now but no oil would flow through until an agreement on distribution had been reached. Finally, the agreement binds the sides to immediately start negotiations on the return of refugees, payment of pensions to residents of occupied areas and the opening of several other communications. Asked whether Croatia was considering a military option for the liberation of the occupied areas, Sarinic said it was the last resort, to be envisaged only when all other means had failed. "Now we are expecting the signing of the agreement," he concluded. (hina) jn as 162206 MET nov 94