Sanctions lifted as Serbian leaders resign

The Serbian government resigned today, just hours before the European Union lifted key economic sanctions against Yugoslavia.

The Serbian government resigned today, just hours before the European Union lifted key economic sanctions against Yugoslavia.

Yugoslav Prime Minister Momir Bulatovic stepped down along with the legislature in the largest republic, ending former president Slobodan Milosevic's slim hopes of maintaining a power base.

It has also paved the way for new elections, in which new President Vojislav Kostunica will strive to enforce his dominance on the fledgling regime.

Sanctions were lifted just two days after Kostunica became democratically elected president. The EU has offered about £1.4b in aid to help rebuild the country.

British Foreign Secretary, Robin Cook, said: "Today we are welcoming what the Serb people did, and indeed the only condition that we attached to sanctions was that they get rid of Milosevic, and they have."

But he emphasised that the toppled president would have to be held accountable for his crimes.

And he added: "There is no doubt that that must be something we will be looking for from the new leadership in Serbia and the Serb people. How fast and how far we can travel on the path together towards reconstructing Serbia will depend on their meeting those obligations."

Speaking outside an EU foreign ministers meeting, German Foreign Minister Joschka Fischer said they agreed to end an oil embargo, imposed during the Kosovo war in 1999, as well as a ban on commercial flights to and from Serbia.

The end of the sanctions marked a turning point in Serbia's relations with the rest of Europe and was a first step toward integrating the country into the European mainstream, according to the text of an EU statement to be issued later.

"The Yugoslav people have voted for democracy," the draft statement said.

"As a result ... the EU has agreed on a radical revision of its policy towards Yugoslavia."

For starters, the EU will grant £1.4b in reconstruction aid for Serbia between now and 2007.

The EU has always said the funds - part of a larger aid scheme for the entire Western Balkans - would not be given as long as Slobodan Milosevic was president.

Foreign Minister Hubert Vedrine of France, whose country holds the EU presidency, travels to Belgrade tomorrow to brief Kostunica on the lifting of the sanctions and other issues.

Underscoring the EU's desire to normalize relations, Kostunica has been invited to come to an EU summit meeting on Friday and Saturday in the French Atlantic resort of Biarritz.

Serbia is Yugoslavia's largest republic, accounting for 90 percent of Yugoslavia's population of 10 million.

Pro-democracy leader Zoran Djindjic said that new elections for the Serbian legislature, which is separate from the Yugoslav parliament, will be held in December.

Djindjic said: "We have achieved an important step in trying to create a transitional government, to create condition for free and fair elections."

If the Serbian government were allowed to remain in place, it would have been in position to block many reforms desired by Kostunica's new government.

Kostunica's allies have insisted the pro-Milosevic authorities in Serbia had lost all legitimacy after a massive triumph by pro-democracy forces in elections last month.

Given the current popular wave of support for the new president, Kostunica is likely to win a strong majority in the republic's new parliament.

The EU ministers asked the European Commission to draft a plan under which Yugoslav exports of farm and industrial goods will duty-free access to the EU market.

Also to be sorted out is getting Kustinica to pay back his country's old debts. Failing that, officials said, Yugoslavia cannot get fresh loans from the European Investment Bank.

The EU left in effect sanctions targeting Milosevic and his allies by freezing their assets abroad, banning them from travelling to 15 Union nations.

A ban on arms sales will also stay for that is a United Nations measure that can only be rescinded by the UN Security Council.

The EU foreign ministers remained silent on the fate of Milosevic who wants to remain in Yugoslavia.

Kostunica's rejects handing him over to the international war crimes tribunal in The Hague, Netherlands, to stand trial on war crimes. Fischer said bringing Milosevic to court was "not a top priority".

Bernard Kouchner, the chief UN administrator for Kosovo, appeared before the EU ministers with a sobering report. He said Kostunica's emergence guarantees no quick end to the rivalry between Serbs and ethnic Albanians in Kosovo.

"Kosovo remains a society in crisis," Kouchner said.

Its ethnic Albanians, who comprise the overwhelming majority of Kosovo's population, did not fight against Milosevic "but against Serb repression," Kouchner told ministers.

"The pressure for Serb return to Kosovo will even be greater now, as Kostunica already pointed out last Friday in his address to the nation.

Kouchner said a lifting of sanctions must be linked to a Kostunica pledge to shed light on the fate of "thousands of missing persons and detainees".

Meanwhile, Yugoslavia's defense minister attempted Monday to rally opponents of the new government, issuing a last-ditch appeal to Milosevic's shaken supporters not to abandon the ousted leader.

General Dragoljub Ojdanic said the disunity among Serbs is inciting the plans of "our proven (foreign) enemies" to occupy the country.

Milosevic's allies have consistently referred to Kostunica and his followers as Western lackeys bent on taking over the Serb state.

"If we continue like this, we won't get far ... how can we save the people of Serbia, how can we prevent our extinction?" Ojdanic said, indicating that if the pro-democracy forces prevail in the country, the Serbs would "disappear".

Ojdanic, a close Milosevic ally who has also been indicted for war crimes, has not formally recognized Kostunica as the new Yugoslav president and is not expected to keep his position in the new government.

He has no direct control of the military, which has fallen under Kostunica's command.

Still, he retains influence among the military brass, and any call he might make to rally pro-Milosevic forces could be problematic for the new regime.

The military leadership - which consist mostly of Milosevic loyalists - has only grudgingly endorsed Kostunica as the new head of state.

The top generals will likely be all replaced as part of a sweeping purge of Milosevic's supporters which many pro-democracy activists and the pro-Western leadership of Montenegro - Yugoslavia's other republic - have long been demanding.

Meanwhile, a mob of angry workers attacked Radoman Bozovic, a close Milosevic aide and the director of a major trading corporation.

He tried to flee from his car, but he was caught and beaten. His bodyguards snatched him into a nearby building for safety. Later, Bozovic resigned as the head of the export-import company.