Major sees a smiling Sarajevo: As Muslims and Croats sign peace deal, Britain pledges pounds 12m to rebuild Bosnian capital and support international aid agencies

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MAKING the most of the calm over Sarajevo since the cease-fire signed last month, John Major yesterday visited the besieged city for a three-hour tour and a meeting with Lieutenant-General Sir Michael Rose, the British United Nations commander in Bosnia, and the Bosnian Vice-President, Ejup Ganic. The fact that he was able and willing to visit the city - and even to drive across the front line - is proof of what Mr Major called the 'dramatic changes' in the city over the past month.

The Prime Minister announced a pounds 12m package of British aid for the ravaged republic, and hinted that more troops might be needed to maintain the peace process. The package will include pounds 5m to revive public services in the shattered Bosnian capital. A further pounds 7m will go to support international aid agencies working throughout Bosnia.

In Washington yesterday, Bosnia's Muslims and Croats ended more than a year of savage war by signing an agreement to set up a federation on the non-Serb remnants of Bosnia, with a confederal link to Croatia. The factions, which were at war only a month ago, are counting on Serbian territorial concessions to secure a lasting peace in the republic.

After a brief meeting with Mr Ganic, Mr Major, who was driven down Sniper's Alley from the airport, told reporters he was delighted to see for himself the burgeoning peace.

'Streets that were extremely dangerous to walk in just a few weeks ago, people are returning to them, work is being done in them,' he said. 'As I drove here I saw cafes that are open, children that are playing on the streets. That simply would not have happened three weeks or so ago.'

It was important to maintain the momentum of the uneasy peace and end 'the disputes that have wrecked so many Bosnian lives', Mr Major said. He spoke of the slow return to normal life, adding that 'the sooner that normality can be returned the better'.

During a tour of the city, Mr Major and General Rose visited the Bosnian Serbs' front line near Vogosca, and talked to Warrior crews policing the peace in the area. They also drove on to the Brotherhood and Unity bridge, a notoriously dangerous spot linking the government-held city centre to the Serbian suburb of Grbavica. It is a favourite target for snipers.

Rumour had it that the Prime Minister was hoping to ride on the trams that have been running for several days, but he might have been put off by the fact that on Thursday a tram passenger was wounded by a sniper. Still, the traffic system is back in place, although Mr Major's convoy - he travelled in General Rose's armoured UN Range Rover - used its VIP status to drive the wrong way up the main street, a wartime habit now frowned on by the Bosnian police.

And the streets are no longer subject to artillery attacks, so people walk freely where once they could only run. Yesterday, about 100 Bosnians lingered in the sunshine outside the sandbagged entrance to the Bosnian presidency building, hoping for a glimpse of Mr Major or news of Western help to end the siege and rebuild the city.

Mr Major spent several minutes in lively conversation with citizens; among them was Sakib Kazic, 65, who lost his right thumb when shrapnel hit his flat in May 1992. He lectured the Prime Minister on the military might of Serbia, adding that its generals came from the Communist school. 'You have some good generals here,' Mr Major replied, 'You have a British general here now.'

His dress sense - he wore a patterned sweater and a jacket - won approval from Michel Grujic, who chatted to Mr Major in English and announced that she liked him. But her friend, Adis Besic, a 19-year-old who was shot in the leg fighting on the front line on Mount Trebevic, was more sceptical of Mr Major and his visit. 'I don't believe in politicians any more, in names like Major, Mitterrand, Izetbegovic - or Karadzic,' said Mr Besic, who walks with crutches. 'I don't believe them any more.'

(Photograph omitted)