EUROPE UPDATE

Bosnian talks resume, as Serbs claim new gains

Bosnian Serbs said yesterday they were poised to seize the Muslim-held town of Jajce, while commanders of Bosnia's three warring armies prepared to start face-to-face talks in Sarajevo.

Col. Milutin Vukelic, a Bosnian Serb officer, told the Serb news agency SRNA: "It is a matter of hours before a Serb flag is hoisted over Jajce." His assessment could not be independently confirmed, but the Belgrade-based news agency Tanjug said Serb forces had entered parts of Jajce, a town of about 40,000 people northwest of Sarajevo, and were battling its Muslim defenders in the streets.

If Jajce falls and Serbs and Croat fighters succeed in capturing the nearby town of Travnik, the mainly Muslim forces loyal to the Bosnian presidency would be squeezed out of a large chunk of territory in the center of their newly independent country.

Hours before the meeting of the Mixed Military Working Group in Sarajevo, chaired by United Nations Protection Force commander Gen. Philippe Morillon, mortar shells slammed into the Old Town district. The talks were expected to discuss arrangements to restore intermittent water and electricity to the Bosnian capital, surrounded by Serb fighters for seven months. Britons march against prime minister

Britain's political crisis deepened yesterday as a huge crowd marched through London to protest coal mine closures and Prime Minister John Major headed for a final showdown with Conservative Party rebels over European unity.

A crowd of at least 150,000 miners and their supporters marched through rain-drenched London Sunday to oppose the planned shutdown of more than half of the coal mining industry. It was the biggest antigovernment rally in decades.

The march underlined the extent to which the coal crisis has focused resentment about the recession-ravaged economy and apparent turmoil in Prime Minister Major's administration.

In the six months since his election victory, Major has had his authority rocked by the withdrawal of the British pound from the European Community's Exchange Rate Mechanism, by having to accept concessions on the speed and scale of the mines shutdown, and by a party rift over European unity.

Over the weekend, Major appeared to raise the stakes in his fight against "Euroskeptics" in his Conservative Party, threatening to call a general election if Parliament failed to approve the Maastricht Treaty. Dissenters called the maneuver a "scare tactic. German chancellor warns of new taxes before 1995

Chancellor Helmut Kohl called yesterday for a tax increase to finance German unity and warned it could come earlier than the 1995 deadline his party has supported up to now.

Chancellor Kohl, opening the annual congress of his Christian Democratic Union, gave neither a date nor any details for new taxes his party says should start in 1995 to help pay off old East German debts of $265 billion.

He sketched out a five-point savings plan coupled with a veiled threat of tax increases even earlier if business, labor unions, and state and local governments did not support it.

"I assume that improvements in revenues will be needed to overcome this financial legacy [of East Germany]," he said according to an advance text of his speech.

The chancellor, who began speaking of a tax hike late last week as Germany's growth prospects dimmed, said the country was in the grips of a dramatic change that meant everyone must bear his or her fair share of the burden.