ZAGREB, Croatia -- Croatian government officials and Serb rebels who occupy one-quarter of this country agreed early Wednesday on a cease-fire plan, hailed by Russian and American diplomats as another step toward a solution of the two-year-old stalemate in Croatia and the war in Bosnia.


After 18 hours of negotiations, rebel Serbs and Croats finally shook hands at 4:30 A.M. and agreed to withdraw their fighters one kilometer from the 1,000-kilometer confrontation line that at one point cuts Croatia in half. Heavy weapons will be pulled 10 kilometers from the line.


"Our goal is fulfilled. Our armies will not fight any more," Slobodan Jarcevic of the Croatian Serb delegation told reporters after the signing ceremony at the Russian Embassy in Zagreb.


Although the cease-fire, due to come into effect Monday, does not yet bring a durable peace to Croatia, it is seen as an important first step in resolving the stalemate in this former Yugoslav republic, where Croatian Serb rebels have occupied 27 percent of the country -- an area known as Krajina -- for nearly three years.


U.S. Ambassador Peter Galbraith, who along with Russian Deputy Foreign Minister Vitaly Churkin negotiated the deal, said momentum generated by a Feb. 9 NATO ultimatum to Bosnian Serb forces around Sarajevo and a March 18 agreement in Washington between Moslem and Bosnian Croat forces to cease hostilities in Bosnia and create a federation were critical to the accord.


While not directly related to the war in Bosnia, the Croatian cease-fire is part of an intertwined series of negotiations aimed at securing what diplomats call a "global solution" to Europe's worst conflict since World War II.


Diplomats persuaded Croatia to accept a deal with the republic's Moslem-led government in exchange for the backing of Russia and the United States in its struggle to reunite Croatia. Meanwhile, Serbian President Slobodan Milosevic, whose Yugoslav republic has backed Serb nationalist forces in Bosnia and Croatia, has been told that Bosnian Serbs, who occupy more than 70 percent of Bosnia, would be able to keep most of their turf there if Serb-held areas of Croatia are returned to the Zagreb government.


The talks here went on throughout the day Tuesday, with UN soldiers rushing in and out of the Russian Embassy with huge maps. Galbraith described the negotiations as "highly complex," and indeed negotiators approved 34 maps apportioning territory before agreeing to the full plan.


According to Galbraith, the cease-fire is the first step in a three-phase process to bring peace to Croatia and reunite the country. The next step, he said, is to recommence economic and communication ties between Croatia and its Serb-held regions. The final step would be a political solution.


Such a solution would give Croatia's Serb-held areas an extremely high degree of political, economic and cultural autonomy in exchange for the rebel Serbs' recognition of Croatia's sovereignty over the area. In addition, the United States and Russia have agreed to act as guarantors of Serb rights in a united Croatia and to press the Croatian government to rewrite its constitution to represent the country as a nation of citizens and not Croats first.


Diplomats said the main reason to be optimistic that such a political agreement could be reached is that it appears likely that Serbia's Milosevic is poised to cut his substantial military and economic links to the Croatian Serbs. He would do this to convince the West to lift crippling international economic sanctions against Yugoslavia.


"If they don't join the process, the Krajina Serbs are isolated, have no international support and risk being abandoned by Belgrade," said a source close to the talks.


Diplomats said the agreement would require an unspecified number of additional UN troops. Already the United Nations Protection Force has 14,000 men in Croatia; its Bosnian operation is also strapped for troops.


Despite the agreement in Zagreb, the war in neighboring Bosnia raged Wednesday with Serb forces launching artillery and infantry attacks on Moslem enclaves.


Moslem-controlled Sarajevo radio said two people died and 12 were seriously wounded when gunmen pounded 500 shells into the Moslem pocket of Gorazde in eastern Bosnia.


(WP, Reuters)