Sanctions fail as Kosovo conflict looms

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The Independent Online
SANCTIONS AGAINST Serbia are so ineffectual they are being widely ignored, according to an internal EU report that lists loopholes and criticises most European governments.

The European Commission document, which demolishes British claims that the sanctions regime on Belgrade is tight, says "only a few member- states" have made them effective.

The report comes as the Western powers ponder military intervention in Serb-ruled Kosovo, to stop further atrocities being committed against the province's Albanian majority.

It coincides with doubts over the controversial recent ban on Yugoslav airline flights to EU cities, with fears that Western carriers may be paying JAT, the Yugoslav carrier, for its passengers.

Yesterday it emerged that British Airways was among airlines that have been approached by JAT. Two other big British companies, National Power and RMC, have been advised by the British embassy in Belgrade not to bid for investment projects in Serbia.

The EU sanctions, imposed from March to September in response to Serbia's repression in Kosovo, freeze the state assets of the Yugoslav federation, which consists of two republics, Serbia and Montenegro, but not those of state-owned firms, and they allow investment through third parties.

Unofficial estimates in Brussels suggest that as little as 1m ecu (pounds 800,000) has been frozen, and officials believe Belgrade still enjoys unfettered access to foreign capital in spite of a ban on investment in Yugoslavia.

The Commission document says there is "ample opportunity for ... Yugoslavia ... to use freely other financial assets". It argues that sanctions must be "effective, proportionate and dissuasive. So far, only a few member- states have complied with this obligation."

The document lists loopholes, caused by the drafting of the sanctions rules, which mean the ban on investment in Serbia can be evaded by routing cash through third countries. "More precise and wider definitions are needed and the third-country route has to be closed." The paper has been circulated to governments before a meeting on Monday of EU foreign ministers, which will consider stricter sanctions.

Germany, Italy and Greece have traditionally had the biggest stake in Yugoslavia and their firms are thought to be the biggest offenders.

There are also concerns about the ban on JAT flights to Western capitals. Britain at first refused to implement the measure but had to back down. Several Western airlines have held talks with JAT, which is understood to want half the revenue from any additional passengers it directs towards foreign airlines.

Dusan Sokic, acting head of the commercial section at the British embassy in Belgrade, said JAT had approached all the airlines operating from the Yugoslav capital, which include BA. He added that, to his knowledge, "no British companies are breaking sanctions". A BA spokesman said: "We talk to many airlines about many things all the time. If we had something to announce, we would do so." National Power and RMC had discussions with the embassy but declared an interest in investing only when the sanctions had been lifted, Mr Sokic said.

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