BELGRADE July « . Serbian President Slobodan MOosevic today told the people of Serbia. Yugusfewies biggest republic, to be ready for war. reports agen

He also said Yugoslavia could progress better without "those who have decided to

enee to the breakaway re-pubiics of Slovenia and Croatia.

But he said the Yugoslav army should be posted on all territories whose Inhabitants wished to stay in the Balkan federation, dearly referring to the 800.000 strong Serbian

involve in Croatia.

The citizens of Serbia should be ready for the defence of their country," Milosevic said In a statement broadcast on Belgrade radio and tetevtoion.

Milosevic said Serbia should rely for its defence on the Yugoslav army and its own territorial defence units which he said were bigger, better armed and better trained than those of any other of Yugoslavia s six republics and two provinces.

Federal and Slovenian lead era ended initial negotiations

Saturday undecided on who controls the breakaway repub He's borders

Ethnic violence continued In Croatia, the other Indepen dence seeking refill!511c Leaders there warned of possible attack by federal forces In Croatia to separate feuding Serbs and Croats.

Slovenian officials said new talks were planned to try to compromise on federal demands that the republic give up control of Its border posts by noon (1000 GMT) Sunday, but they did not say when the two sides would meet again

Stipe Mesic, the chairman of Yugoslavia's collective presl dency, stressed that the central leadership has no plans to use the army to enforce the deadline, but concerns remained that the army would aet Independently of the national politicians.

Mesic said talks with a European Community delegation due tn Yugoslavia on Sunday could provide the only lasting peaceful solutions to the crisis."

Slovenia has complied with other federal demands In on attempt to end the violence

that followed Its declaration of Independence. But It Insists on control of tts borders with Austria. Hungary and Italy

Slovenia freed 2.316 federal troops taken prison in more than a week of fighting, announced ft had lifted the blockades at federal army bases and began to demobilise most of Its 25.000 member defense force

Mesic told reporters that civilian authorities went in < barge of the army and that there are no plans to use force if Slovenia does net comply

with the noon Sunday deadline for ceding control of the borders. "1 believe reason will prevail in the army ' Mesic told reporters.

Slovenian officials said most of the demands of the presidency were generally acceptable."

But Ciril Zlobec a member of Slovenia's collective leader ship, told reporters in Ljubljana that the border Issue was a "highly complex question which cannot, be solved quteW * '