In the countryside just outside Moscow, where the closed side roads and KGB guards of the old communist elite have been replaced by the grim-faced private bodyguards of the new rich, one dacha retains the big green metal gates, the special troops in uniform, and the sinister reputation of the past. Through these gates of Joseph Stalin's Kuntsevo retreat on Thursday morning of last week came two motorcades. One carried Strobe Talbott, the American deputy secretary of state, a man with a passion for Russian history since he wrote a schoolboy essay on Pushkin and the Russian soul, who translated Nikita Khrushchev's secret memoirs while a graduate student at Oxford in 1969.

The other carried Finland's president, Martti Ahtisaari, the European Union's special envoy on Kosovo. Inside the dacha was a billionaire. Viktor Chernomyrdin, former prime minister of Russia and former boss of the state energy monopoly Gazprom, had been selected by Boris Yeltsin as Russia's negotiator. Chernomyrdin showed the two guests into a small room with three chairs around a table, and as the others sat, Chernomyrdin drew up a fourth chair. "That's for Milosevic," he said. "Whatever we say here, we had better not forget that he is part of this too." For Talbott, it was eerie, talking his fluent Russian in a room where Stalin's ghost lingered, with an empty chair symbolising the nearest Europe had seen to Stalin's heir. Two days earlier, Talbott had been informed that President Milosevic would be formally indicted as a war criminal by the international tribunal at the Hague. "We kept turning to that empty chair during the talks, and asking 'What would he do? How would Milosevic react'," Talbott confided when he returned to Nato HQ in Brussels the following day.

That day of talks in Stalin's dacha seemed to have got nowhere at the time. Only now does it emerge as a pivotal moment in the move towards peace, because it convinced Chernomyrdin of two things. The first was that the Americans, and Nato, would not back down on their terms. "Our bottom line is that all the Serbs, or almost all, have got to leave Kosovo. And they have to be replaced by a international peacekeeping force with a clear Nato chain of command and with Nato at its core," Talbott stressed. "That is it. No compromise on those points. No negotiation with Belgrade. We are not talking to Milosevic except in one language: bombing." The second truth that Chernomyrdin recognised was that there would be no dividing the hawks from the doves, no real gap between the Americans and the Europeans which Moscow could exploit.

This surprised the Russian, who had expected a more emollient approach from President Ahtisaari. Finland, occupied by Russia throughout the 19th century, and invaded by Stalin in 1939, had learned to play the neutrality game with something close to genius. One of the four EU member states which was not a member of Nato, Finland was expected to play a compromise role.
But Ahtisaari was not that neutral. He was a close friend of Talbott's brother-in-law, Derek Shearer, who had been US ambassador to Finland. And Ahtisaari had been born in Vyborg when it was still a Finnish border town, before he fled as a boy with his family as refugees from Stalin's 1939 invasion. A veteran diplomat who had worked in the UN and spent 11 years talking to an intransigent apartheid regime, Ahtisaari helped steward the UN-brokered independence talks on Namibia to success. Also a veteran of the European and UN mediation efforts in Croatia seven years ago, Ahtisaari was picked by the German chancellor, Gerhard Schrsder, to be the EU's special envoy.
Schrsder assumed the talks would go on into July, when Finland took over the rotating EU presidency from Germany.

In the dacha, Chernomyrdin had three proposals, which he said would be enough to persuade Milosevic to accept the peace terms agreed by the G8 foreign ministers in Bonn. First, Russian troops should take care of the northern zone of Kosovo, where most Serbs lived. Talbott refused; that threatened a kind of partition of Kosovo, which would itself contravene the G8 principles. Second, while the Russian thought he could convince Milosevic to accept some Nato troops, perhaps they should come from Greece and Portugal, which had not taken part in the bombing, along with neutral troops from Finland and Sweden. The presence of British or American troops would make a deal impossible for Milosevic. "Forget it," Talbott said. Nato troops were part of one command, without national distinctions. But Bill Clinton's old Oxford room-mate noted that, for the first time, Russia was accepting the principle of Nato troops. That must have been said with Milosevic's approval.

Chernomyrdin then made a threat couched as an appeal. This was a critical moment for Russia's relations with the west. He desperately wanted partnership and the west's economic goodwill, but the disappointments of Russia's experiment with capitalism and the Nato bombing was plunging Russia back into permanent hostility. This was the last chance - if these three men could not agree on a common position, then he would have to walk out of the talks,

Russia would abandon its peace effort, and Moscow's anti-westerners would rule the roost. Was Milosevic worth that?

Chernomyrdin then appealed to the Finn, saying he accepted Nato troops would have to be part of a peacekeeping force alongside Russians. But there had to be a UN mandate - as a former UN diplomat, Ahtisaari should surely agree with that.
Of course, replied the Finn. But as a practical matter, only Nato had the troops, the logistics and the command system to make a peacekeeping force work, and to organise the refugees' return.

Chernomyrdin flew to Belgrade alone, stopping briefly to call Yeltsin and tell him there was no shifting Nato or the Europeans. But there were two crucial breakthroughs in principle, Chernomyrdin said. First, Talbott had accepted that some Serb toops could remain in Kosovo, to guard the Serb monasteries and monuments. Second, both the Finn and the American accepted "a major role" for Russian troops.

In Belgrade, where Chernomyrdin was told the rumour that Milosevic had been briefly hospitalised - accounts differed whether it was a stroke or heart attack or nervous breakdown - he told the Serb leader that these two western "concessions" might be just enough to get a deal on the G8 terms. Would Milosevic agree?

There was no love lost between the two men. Yeltsin had never forgiven Milosevic for his premature recognition of the coup plotters in the 1991putsch that overthrew Gorbachev. And Milosevic had no faith in the pro-western Chernomyrdin since the Russian cancelled a trip to Belgrade after the bombing of the Chinese embassy to fly to Beijing instead, and then return to
Moscow to see Talbott.

"Chernomyrdin just wants to get Russia back into the west's good graces. So every Nato bomb that falls on us has a Russian stamp on it," Goran Matic, a powerful minister without portfolio in the Left party run by Milosevic's wife, had sneered. But Milosevic, having warned that talks might have to be held in the secret location of the Belgrade yacht club to avoid Nato bombing, agreed to make a deal on the G8 terms. The Americans believe he did so because of the grim news from the battlefront.

The Kosovo Liberation Army, which had already opened one road from Albania into territory they held near Pec inside Kosovo, were opening another to the south, towards Prizren. The Serbian 125th motorised brigade, battered by Nato air strikes, could not hold them. The Serbs ordered in reinforcements, the 52nd artillery brigade and the elite 63rd paratroop brigade. They were desperate to stop the KLA taking control of the crucial road between Pec and Prizren, but Nato air power was decimating their ranks. Only this week Nato spokesmen began calling it "the hogpen", where Serb tanks and guns were being destroyed as soon as they moved. But by the time Chernomyrdin came to Belgrade, Milosevic had finally understood what the full weight of a Nato armada of 1,200 aircraft could do to his troops in Kosovo.

But when Chernomyrdin rang Talbott and Ahtisaari to say Milosevic agreed the G8 terms, they said it was not enough. Milosevic's small print still insisted on keeping 10,000 Serb troops in Kosovo, and refusing British or US troops. At that point, Yeltsin stepped in. Last Sunday, he called Chernomyrdin to a meeting with his new prime minister, Sergei Stepashin, and said he wanted a deal on the best terms Nato would offer, so long as it meant a swift end to the bombing.

Chernomyrdin arranged another meeting, in Bonn. When Chancellor Schrsder rang Ahtisaari to offer the venue, the Finn warned he saw little chance of success. But after his meeting with Moscow, Chernomyrdin was upbeat, telling the Finn he was "97% sure you will come with me to Belgrade". The meeting at the Petersberg conference centre on a hill overlooking the river Rhine and Bonn, went on until 4am. Everything important was agreed - the Serb withdrawal, the return of a token "few hundred" for liaison, the UN mandate, the predominant Nato presence among the peacekeepers - except for one sticking point. The Russian military advisers with Chernomyrdin refused Nato command and control of the peacekeepers. Chernomyrdin tried for a compromise, proposing a neutral commander for the force, a Finnish general, to operate under a UN mandate.

"I want you to come with me to Belgrade tomorrow to see Milosevic and put this plan to him. I am convinced this will end the war," Chernomyrdin told Ahtisaari. "This is the gesture Milosevic needs to accept the principles we agreed at the G8 meeting. This is the only way he can accept Nato troops." Ahtisaari refused. The Americans would not accept such a deal, and nor would the European Nato allies. The EU, having declared that the Nato mission and its bombing were "necessary and warranted", was not going to take a separate line now. Talbott made one final, telling point. President Clinton had arranged to meet his joint chiefs of staff the next day to discuss options for ground operations.

At 4am on Wednesday, they took a break, and when they reconvened at 9.15am, Chernomyrdin tried and failed to reach Yeltsin by phone, and went out on a limb. He overruled the generals with him, and accepted the Finn's proposal to leave the command arrangements for later Nato-Russian consultations, and put their differing interpretations into a footnote.

That was enough of a common position for the Russian and Finn to go to Belgrade. Talbott then briefed the White House and Nato that he thought they might just get a conditional agreement from Milosevic - or the Russian generals might persuade Yeltsin to withdraw Chernomyrdin's mandate. The Russian and Finnish planes heading from Bonn to Belgrade were delayed by a Nato air raid. When they landed, they were taken straight to a meeting with Milosevic, and Ahtisaari read out the terms. This was the only deal on offer, he stressed. He had no authority to improve it. The choice was to accept it now, or suffer more bombing - and possibly a ground invasion - and accept it later.

Milosevic asked two questions. Would the UN be the authority in Kosovo rather than Nato? Yes, said Ahtisaari, but Nato would have operational command. The second question was whether the Rambouillet text, which Belgrade rejected as a "diktat", was still operative. It had been superseded by the G8 deal, said Ahtisaari, and Milosevic sat back and half-smiled. That was it. No more questions, no more haggling. The question of his war crimes indictment had never been raised.

Ahtasaari, exhausted, went to bed, saying whatever the Serbs decided, it had better be soon. He would leave no later than 4pm the next day. Milosevic that night held a meeting with advisers and other Serb political leaders, who agreed to convene the extraordinary session of the national assembly the next day. At that point, Ahtisaari realised it was make or break; Milosevic wanted political cover, either to accept or reject.

In "the hogpen" in Kosovo, the Serb paratroops were pinned down, their mortars hit by warplanes as soon as they opened fire, and the 52nd artillery had lost almost half its guns. Milosevic folded, and Nato had won its first war.

In Tirana, they were holding the Miss Albania beauty contest. A 19-year-old Kosovo refugee, Ara Mustafa, won. "This goes to show that Albania and Kosovo are one people, one nation," she declared as she was crowned.