-Caveat Lector- KLA Challenges U.N. Authority By DONNA BRYSON .c The Associated Press PRISTINA, Yugoslavia (AP) - The United Nations raised its light blue flag over Kosovo Sunday, and with it hopes for order and democracy in the bitterly divided region. But the red-and-black flag of Albania, which flies over their headquarters on the hilly outskirts of Pristina and elsewhere in Kosovo, represents a serious challenge to U.N. authority. The separatist Kosovo Liberation Army is occupying town halls the United Nations says it should administer and intervening in disputes the world body says it should mediate, raising concerns that plans for a multiethnic Kosovo will be hijacked. Sergio Vieira de Mello, the high-ranking, soft-spoken U.N. official appointed to head Kosovo's de facto government of international bureaucrats, expressed concern about the KLA challenge Sunday before raising the U.N. flag to formally open his headquarters. But he said he was confident the KLA ``will not try to impose itself'' as Kosovo's ruling power, particularly after striking a demilitarization agreement with NATO. ``As soon as the agreement is signed, I think we will see the situation on the ground will improve,'' de Mello said. NATO and KLA officials say the agreement will be complete in a few days. While U.N. authority comes from the international community, the KLA draws its legitimacy from ethnic Albanians who see it as the army that saved them from Serb aggression. Its members have moved from fighting in the hills to running civilian institutions. Meanwhile, de Mello is still assessing the situation and determining how many international civil servants he will have to bring in. ``I think (the United Nations) needs to move faster,'' KLA spokesman Lirak Qela said at the mansion converted into guerrilla headquarters outside Pristina. ``We are here, we know the people, we have some institutions here. Things will move faster if they let us, but they want to do things themselves.'' Qela cited a dispute between Albanian and Serb doctors at Pristina's main hospital as an ``emergency'' to which the KLA was suited to respond. But U.N. officials say their efforts to intercede were complicated by the KLA. The dispute has not been settled. The KLA has raised its red-and-black flag over public buildings scattered across Kosovo. That along with reports KLA snipers are exacting revenge on Serbs has contributed to a sense of insecurity among Serbs. Serbs are streaming out of Kosovo, though de Mello says their skills are needed for the rebuilding effort. The KLA respects U.N. authority, but expects to play a key role in postwar Kosovo, said Mehmet Hajrizi. He is deputy prime minister in a KLA-dominated shadow government comprising Kosovo's main Albanian parties. ``The KLA will transform itself into a security force for Kosovo, which will cooperate with the international community and serve the people of Kosovo,'' Hajrizi said. During a news conference Sunday, de Mello repeatedly referred to the U.N. Security Council resolution that establishes his role in Kosovo - that of rebuilding civilian authority and preparing for elections. De Mello is an unelected outsider in Kosovo, with little support beyond the U.N. resolution. Many ordinary ethnic Albanians, though, welcomed the intervention of a well-meaning outsider. ``We were thirsty for freedom, and the U.N. offers freedom,'' said Ukshin Terbunxha, who was part of a small crowd that watched approvingly as de Mello unfurled his flag off a balcony of the former regional headquarters of the Serb-dominated Yugoslav army. ``I hope this is understood as the symbol it is intended, of a takeover of peace, tolerance, democracy and international principles over force,'' de Mello said. Yugoslav security forces, accused of trying to cleanse Kosovo of its Albanian majority, withdrew from the region as part of the U.N. deal. NATO-led peacekeepers moved in as the Yugoslav forces withdrew, and de Mello also looked to them for authority. ``If there is resistance (to U.N. authority), actual resistance, KFOR will support us. I have no doubt about that'' de Mello said. ``I hope we will never reach that point.'' 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