WASHINGTON (AP) _ The United States will release five Montenegrin merchant ships seized in 1992 in compliance with the international economic embargo against Yugoslavia, a State Department spokesman said Tuesday.

``We have agreed to initiate a process leading to the release of five Montenegrin ships that were impounded as part of the sanctions regime during the Bosnian war,'' spokesman Nicholas Burns said.

The announcement represents the first chink in the Clinton administration's diplomatic and commercial embargo against Yugoslavia, which remained in force after the United Nations lifted its sanctions at the end of the Bosnian war in 1995.

It comes on the heels of talks Monday between Montenegro's reformist Prime Minister Milo Djukanovic and John Kornblum, the assistant secretary of state for European affairs.

Montenegro and Serbia remained united under the name Yugoslavia after the old, six-member federation disintegrated in 1991. Serbia dominates the union and its neo-communist strongman Slobodan Milosevic frequently speaks for the new nation.

Djukanovic, who has instituted a wide-ranging privatization program for his little state, has been an outspoken critic of Milosevic.

Burns described Djukanovic as ``an important regional official,'' saying he and Kornblum had ``a very constructive exchange of views.''

``We welcome this move by the U.S. government,'' said Ratko M. Knezevic, an adviser to Djukanovic. ``We interpret it as a sign of administration support for the democratic and economic reforms we are implementing.''

The vessels, anchored in New York, Baltimore and New Orleans, will be free to sail after the notification of potential claimants is completed, Burns said, adding that the process could take up to three months.

But he emphasized the move should not be viewed as an easing of the U.S.-imposed economic punitive measures against Serbia, which include bans on membership in international lending organizations such as the International Monetary Fund and the World Bank.

Burns said Milosevic would first have to implement democratic reforms, extradite war crimes suspects, and ensure respect for the rights of the Albanian minority in Serbia's Kosovo province.