THE WEST, having so far failed to persuade Yugoslavia to sign a Kosovo peace deal with threats of air strikes, is now trying a different approach - offering to lift economic sanctions which have helped bring the country to the brink of ruin.
Diplomats say the EU and the US are both ready to lift a raft of sanctions banning investment, loans and international flights from Yugoslavia.
Yugoslavia is certainly in dire need of help. Its economy, battered by wars, sanctions and corruption, is on its knees.
Crunch-time will come on the last day of this month, by which time it must pay Russia and China for the oil and gas it used to get its people through this winter. The problem is that this bill, about £60 million, is equivalent to the entire remaining foreign exchange reserves.
Talks have been taking place with Yugoslav officials about the shape of a "sanctions for peace" deal, with the EU and the US both likely to lift investment bans imposed when the Kosovo war began last spring.
The EU "has said shape up and show some good faith, and we will see what we can do", said one senior western diplomat. "Ending the investment ban in European terms would be a big thing."
Speculation was heightened by a meeting last week between President Slobodan Milosevic of Yugoslavia and the US envoy, Mr Richard Holbrooke. After eight hours, Mr Holbrooke emerged tight-lipped, saying: "It was a meeting which was very important but the importance of it won't be clear until later."
Sources in Belgrade say money was discussed, though how much, and on what terms, is unclear.
For all its aggression in Kosovo, Yugoslavia is desperate for money - it is struggling to pay to keep its men and tanks in the field.
Already unemployment is high, and would be higher except that hundreds of thousands of state employees are kept in non-producing jobs.
Shortages of cash are so acute that wages of doctors, teachers, and even front-line troops go unpaid for months.
"It's an extremely difficult situation," said Mr Milan Kovacevic of the independent Belgrade economic think-tank, G-17.
"The standard of living is approximately half what it was before the war - only Ecuador and Guatemala have higher inflation than us," he said.
Yet Serbs have grown used to hardships. And so far, Mr Milosevic has stayed a step ahead. In 1997 when the coffers were almost bare, NatWest Bank helped engineer the sale of Serbian telecom to a Greek and Italian consortium.
Now a French construction company, Lafarge, is ready to throw Mr Milosevic a lifeline, buying up the state cement company - but only if the EU lifts the investment ban.
Mr Milosevic may have his eyes on a bigger prize: When most trade sanctions were lifted following the Bosnian war in 1995, the US insisted on keeping what is called the "outer wall" - a ban on the IMF and the World Bank giving cash to Yugoslavia. This ban - with other banks unwilling to take their place - has crippled investment for Yugoslavia.
But despite rumours that Mr Holbrooke discussed this move, diplomats insist the "outer wall" is in place until much wider reforms - for democracy, human rights and a free media - are in place.