BRUSSELS -- NATO agreed to maintain an arms embargo against Bosnian Moslems on Tuesday following Washington's withdrawal from the operation in a move which threatens alliance unity at a critical time.


NATO ambassadors approved an assessment from the alliance's military committee that Washington's break with its European partners would be "unlikely to degrade the overall military effectiveness of the operation."


"NATO, together with the WEU" or Western European Union "will continue to conduct Operation Sharp Guard with the objective of fully enforcing the UN embargoes in the Adriatic," a NATO spokesman said after the meeting.


The WEU is a defense forum of nine countries which are members of both the European Community and NATO -- Germany, Britain, France, Italy, Spain, Portugal, the Netherlands, Belgium and Luxembourg.


Although NATO diplomats agree the U.S. decision not to enforce the embargo against the Moslems will have little impact militarily, its political implications are still reverberating around NATO's Brussels headquarters.


"The rules of engagement have been changed by one party with no consultation, it's as simple as that," said one NATO diplomatic source.


NATO Secretary General Willy Claes will fly to the United States on Wednesday for talks on the issue which Europeans fear could lead to a collapse of the embargo and torpedo attempts to broker a peace plan for the area.


A meeting of the contact group, comprising Russia, the United States, Germany, France and Britain, will take place in London on Thursday to assess where it leaves current peace initiatives. Foreign ministers from Russia, France and Britain will also meet in Paris on Friday to discuss the matter.


As NATO reconfirmed its commitment to the embargo, fighting in Bosnia raged for the strategic Grabez plateau northeast of the Serb-besieged Bosnian town of Bihac, and shells fired by Bosnian Serbs rained down on Tuzla, another government-held city declared by the United Nations to be a "safe area."


The U.S. Defense Department said late Tuesday that it was considering the possibility of establishing a heavy weapons exclusion zone around Bihac. Officials added that the United States had raised the issue and the meeting in Brussels agreed to look into it.


Fears that intense fighting near Bihac could drag neighboring Croatia into the conflict receded after warnings from the West appeared to persuade Zagreb to remain on the sidelines.


Diplomatic sources said European governments put strong pressure on President Franjo Tudjman not to endanger months of delicate negotiations between his country and Serbian-led rump Yugoslavia by intervening in the conflict on the side of government forces, as Croatia has recently threatened to do.


A defeat of the Bihac enclave by the Serbs would be a strategic blow to Croatia, reinforcing the Serb military presence on its doorstep and providing the Serbs with a rail link between Banja Luka in Serb-held northern Bosnia and Knin, the capital of Serb-held Krajina.


Croatia is also under a moral obligation to aid the Moslems since agreeing to a confederation with Bosnian Croats and Moslems as a first step toward a solution to the three-sided war in Bosnia.


The situation around Bihac was complicated Tuesday by reports that a rebel Moslem leader, Fikret Abdic, was preparing a force to join the onslaught on the enclave on the Serb side.


(Reuters, AP)