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ZAGREB (Reuters) -- Croatia has said it would accept a European Union proposal to use international arbitration for settling a border dispute with Slovenia, which has blocked Zagreb's accession talks this year.

But EU member Slovenia indicated it was unhappy with the proposal put forward by Enlargement Commissioner Olli Rehn. Slovenian Prime Minister Borut Pahor said he would seek a national consensus and make some amendments to the proposal.

"We will definitely have some amendments to the draft agreement. I would like to debate and get a consensus on these amendments with all parties in [parliament]," Pahor said.

In Zagreb, President Stjepan Mesic said all parliamentary parties were in favor of the proposal, which could put an end to the dispute that dates back to the 1991 breakup of former Yugoslav republics.

"We will inform Olli Rehn in the next 24 hours. Essentially, we are accepting this proposal," Mesic told reporters after a meeting with Croatian Prime Minister Ivo Sanader and leaders of all parties. "This was a 'take it or leave it' proposal. And we chose to take it," he said.

The maritime row with Slovenia, which seeks direct access to international waters in the northern Adriatic, has held up Croatia's EU accession negotiations this year because Slovenia, as a member of the bloc, has vetoed Zagreb's progress.

Croatian EU Bid Stalled

Unless the dispute is resolved quickly, Croatia could fail to achieve its goal of completing EU talks this year and joining the EU in 2010 or 2011, diplomats say.

Sanader declined to say what would happen in Slovenia rejected it or attached new conditions.

Slovenia's independent Pop TV reported on May 4 that Ljubljana was unhappy because the proposal separates talks about the sea and land borders and demands that Slovenia lifts the veto as soon as the two countries agree to mediation.

The leading Slovenian newspaper "Delo" said reactions in the country ranged "from suspicions to discontent."

Rehn proposed forming an ad hoc arbitration commission for the border, which should operate on principles of international law, which Croatia insists on. The commission should have five members, with Slovenia and Croatia appointing one each.

For Slovenia's access to international waters -- a key worry for Ljubljana -- arbitrators could also take into consideration what is fair and equitable, as demanded by Ljubljana.

The EU's current Czech presidency has cancelled scheduled accession conferences with Zagreb in March and April, because of Slovenia's veto, imposed in December, blocked the opening and closing of negotiating chapters.