U.S. to Free Up $40 Million and Back Loans for Yugoslavia

VIENNA — After a seven-week hiatus, the Bush administration announced Tuesday that it would resume economic aid to Yugoslavia, saying the Balkan nation had met U.S. requirements that it cooperate with the war crimes tribunal in The Hague.

The tribunal has demanded that the Yugoslav government arrest and send to the Netherlands suspects who have been indicted for war crimes committed during the last decade of wars in Croatia, Bosnia-Herzegovina and Kosovo, a province of Serbia, the main Yugoslav republic.

At stake for Yugoslavia, struggling to make the transition to a market economy, is roughly $40 million in U.S. aid and crucial U.S. backing to obtain loans from the World Bank and other international lenders and investors.

When American aid to a country is suspended, U.S. officials at international lending institutions are required by law to vote against loans to the nation from those organizations. The U.S. aid to Yugoslavia was suspended March 31.

The pro-Western government in Belgrade, the Yugoslav capital, hopes that the U.S. decision will open the way for a stream of international economic support.

“Earlier this morning, I signed a certification required under U.S. law that we have been receiving the necessary cooperation” from Yugoslav authorities with the International Criminal Tribunal for the Former Yugoslavia, Secretary of State Colin L. Powell said. His announcement coincided with one in London that Britain was forgiving $350 million in Yugoslav debt. Last week, presumably with the U.S. decision already in the offing, the World Bank announced it would give loans worth about $825 million over the next three years to the Balkan nation.

Present for Powell’s announcement were Zoran Djindjic, the prime minister of Serbia, and Yugoslav Foreign Minister Goran Svilanovic. The two had come to the U.S. to lobby for an end to the aid suspension in light of their governments’ efforts to transfer war crimes suspects to The Hague.

After Powell’s announcement, prosecutors in The Hague criticized the Yugoslav efforts.

“We find the level of cooperation to date with the tribunal by the Belgrade authorities leaves a lot to be desired,” said deputy prosecutor Graham Blewitt. “We haven’t seen one individual apprehended by the Belgrade authorities. We hope that will occur.”

Although none of the Serbs indicted in war crimes cases were arrested after the suspension of aid, the Yugoslav government negotiated the surrender of six indictees and transferred five of them to the Netherlands. In addition, the Yugoslav parliament passed a law facilitating the transfer of others who could be arrested.

All of those who have surrendered have pleaded not guilty. In the latest plea, former Serbian rebel leader Milan Martic told the court Tuesday that he was innocent of charges that he ordered rockets to be launched on the Croatian capital, Zagreb.

Although Yugoslavia has moved--albeit slowly--to comply with The Hague, it has made clear that it is unlikely to arrest the two most wanted war crimes suspects, Bosnian Serb leader Radovan Karadzic and his military commander, Gen. Ratko Mladic. Karadzic is thought to be outside Yugoslav jurisdiction; Mladic’s whereabouts are unknown.

Though Powell praised the new Yugoslav laws as well as the surrender of suspects, it was clear that the U.S. decision also was based on Washington’s desire to shore up the new government in Belgrade.

“This is an important step forward in relations between our two countries,” said Powell, adding that the U.S. planned to free Yugoslav state assets that were frozen before the 1999 war between the Balkan country and the North Atlantic Treaty Organization.

Djindjic promised that police would proceed with the arrests of those who have not yet surrendered. He later told Serbian state television, “Our task is to remove all of the obstacles in the way of our country taking its rightful place in Europe.”

Times staff writer Paul Richter in Washington contributed to this report.