EU issues Macedonia aid warning

Macedonian troops leave the village of Aracinovo after clashes on Sunday

LUXEMBOURG -- Macedonian leaders have been warned that vital cash aid is at risk unless they reach a political settlement to the conflict with ethnic Albanian rebels.

The warning came after 45 minutes of "open and frank" talks between European Union foreign ministers and their Macedonian counterpart Ilinka Mitreva in Luxembourg.

Mitreva was told Macedonia's pleas for additional financial and other aid would be refused unless her government and ethnic Albanian leaders settle their differences at the negotiating table.

AUDIO EU chief Javier Solana: "We must have faith" 342 KB / 30 secs AIFF or WAV sound

Meanwhile, rebels in the village of Aracinovo near the Macedonian capital Skopje agreed on Monday to a general ceasefire, CNN has learned.

The rebels said with NATO's assistance they would withdraw one kilometre from Aracinovo, on the condition that Macedonian forces do not enter the village, and that they observe the cease-fire.

AUDIO Reports of explosions in tense area 1.02 MB / 1 min 35 secs AIFF or WAV sound

The EU's top foreign policy official, Javier Solana, brokered a cease-fire in the village on Sunday, but renewed violence erupted there and elsewhere in the country as he left to attend the EU meeting in Luxembourg.

There were reports of shelling on Monday in Aracinovo, journalist Juliette Terzieff told CNN.

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Solana had been attempting to fuel negotiations over the political rights of Macedonia's one-third ethnic Albanian minority in the hope of settling the four-month long guerrilla offensive and persuading the gunmen to disarm.

The rebels say they are fighting for greater rights for Macedonia's ethnic Albanian population, but the government says they are terrorists determined to break up the country.

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Diplomatic sources confirmed that the evacuation of ethnic Albanian rebels from Aracinovo, originally planned to take place by bus on Sunday night, had been delayed by disputes over transport.

But the rebels say they will only withdraw from the Skopje suburb if they are allowed to keep their weapons.

Macedonian forces had used helicopter fighters and long-range missiles in their effort to take Aracinovo, ignoring NATO pleas to stop the "madness," but are said to be currently holding their fire, Reuters reported.

The EU had set a Monday deadline for "substantial progress" in the peace talks to try to end skirmishes between the rebels and the security forces.

EU External Relations Commissioner Chris Patten reiterated further aid was only possible if progress was made in national reconciliation talks.

"We would like to support confidence-building measures, but it is difficult to build people's confidence when money, which is very clearly in short supply, is being spent on bombs and rockets," Patten said.

"There is little we can do in terms of financial support until there is a political settlement," he added. The EU has so far allocated around 120 million euros ($103 million) in aid to Macedonia this year.

Mitreva said her government would hold new talks later on Monday. She insisted her government had done much already to accommodate ethnic Albanian demands for equal treatment under the law and blamed dissidents for bringing the country to the brink of civil war.

Houses in the village of Aracinovo were damaged in the shelling

Ministers hinted that the former Yugoslav republic's political and economic ties with the EU might suffer if it continued to shun dialogue and resort to violence. Macedonia's Stabilisation and Association Agreement (SAA) with the 15-member bloc offers trade preferences, economic assistance, political co-operation and at the end of the process possible membership of the EU.

"I'm absolutely sure the government in Skopje will recognise the importance of sticking to their side of the bargain," Patten said.

Austrain Foreign Minister Benita Ferrero-Waldner told Reuters there are direct links between political reforms and the survival of the SAA.

"We have to really increase the pressure. I personally could imagine for example that we clearly say today that we will not ratify the stabilisation and association agreement unless there is a change in the attitude," Ferrero-Waldner told the news agency.

Britain's new foreign secretary, Jack Straw, said he would travel to Macedonia on Tuesday to assess the situation. "The crucial thing is that arrangements put in place by Javier Solana actually stick and...I shall be relaying (that message) again when I visit there tomorrow," Straw said.

The EU had hoped both the political leaders of Macedonia's Slav majority and Albanian minority would attend the meeting, to help negotiate details of a political settlement to end the ethnic strife, but only Mitreva attended the talks.

"There has been some disappointment on the EU side," Swedish Foreign Minister Anna Lindh told the Associated Press news agency. "We had looked forward ... to the results of the political reform process."

Solana said the latest cease-fire was holding and must be extended beyond the village of Aracinovo to the whole country.

"I think the government recognises that it was a mistake to act (militarily), that it cannot succeed on the military front and that the only solution is a ceasefire that must be extended to the whole of the country," he said before the Monday meeting.

Later on Monday, the EU is expected to name Francois Leotard, a former French defence minister, as Solana's personal representative in Skopje. The appointment is hoped to give the EU more grip on Macedonian politicians to ensure they avoid civil war.