ATHENS, June 25, Reuter - Serbia has proposed to Greece that the two Balkan countries form a confederation, including a joint military command, Serbian President Slobodan Milosevic said in a television interview broadcast on Thursday.

"I believe a Greek-Yugoslav confederation would not only be a factor of stability in the area but would also serve the interests of both the Greek and Serbian people," he said in an interview with Athens' private Antenna television channel.

Milosevic said he had proposed the idea of a confederation to Greek Prime Minister Constantine Mitsotakis, who has close relations with the Serbian leader.

When asked about Mitsotakis's reaction, he said: "Certainly we do not have differences as far as targets and interests are concerned but possibly there are differences as far as timing is concerned."

When reporter Panos Panayotopoulos asked whether Mitsotakis had not immediately ruled out the suggestion of a confederation, Milosevic said: "I don't believe there could be a Serb or Greek politician who could rule out such an idea."

Greece and Serbia view with alarm the rise to regional power of their traditional rival, Turkey. But were Mitsotakis to show any real interest in confederation it would cause consternation, if not outright outrage, among his European Community partners.

There was no immediate reaction to Milosevic's comments from the Greek foreign ministry or the office of Mitsotakis, who had left for Portugal to attend the EC summit.

Asked whether the confederation would have a joint military command, Milosevic said: "Those are matters which would take long discussions but certainly I mean this."

"This would not be in disharmony with our tradition. We always fought for each other and never against each other," he added in the interview recorded on Tuesday night in Belgrade.

He was asked what confederation would mean for the newly- independent state of Macedonia, which broke away from the old state of Yugoslavia and sits between Serbia and Greece.

"Certainly with an invasion neither you nor we would settle anything but I am sure under conditions of integration the government of Skopje (Macedonia) would have nothing against taking part in the developments, in the integration process," he said.

The Yugoslav federal army withdrew from Macedonia this year, leaving the land-locked state of 2.2 million Slavs and Albanians to its independence without a fight.

But Athens is locked in a bitter dispute with the republic, saying its name implies territorial ambitions against Greece's own province of Macedonia. As a result, it has blocked EC recognition of the republic.

Mitsotakis is the only leader who still meets Milosevic, who has been isolated by the international community and branded the aggressor in the wars which have torn the old state of Yugoslavia apart since June 1991.