Under the regulations of the embargo, introduced on 4 August, lorry traffic from Serbia into Bosnia can only cross via the rickety railway bridge at Sremska Raca. Only food, clothes, medicine and humanitarian aid are allowed to cross. There are long queues of coaches, cars and lorries that must be subjected to lengthy searches of boots, bonnets and trailer beds.
While truckers and passengers wait for permission to cross, the Karalije is packing them in. It is a place for truckers and smugglers to gulp down a meal, ply customs officers with drink, and, if that fails, a place to complain. The cafe offers cold beer, strong coffee and, from its veranda, a view of perhaps the most thorough customs inspection in the Balkans.
President Milosevic, keen to get sanctions against his country lifted, has gone to great lengths to show that unlike past so-called blockades of the Bosnian Serbs for their defiance of international demands, this time he means business. Units of the powerful, 80,000-strong, police force have fanned out along the boundaries of the rump Yugoslavia. Police and customs officials with relatives in Bosnia have been transferred to jobs away from the border. All but a few telephone links with the Serb-held areas of Bosnia have been cut.
Mr Milosevic has told United Nations officials that the closure of Serbia's border with Serbian- held areas of Bosnia was a policy that would remain in place until the Bosnian Serb leadership accepted the latest international peace plan. He has even accepted, despite criticism, the deployment of international observers in Serbia to verify the embargo.
Nonetheless, last week the US Secretary of Defense, William Perry, cast doubt on the sincerity of Serbia's efforts to cut off fuel and arms supplies to the Bosnian Serb army. He suggested that the embargo was leaking badly. Based on 'incomplete reports', Admiral Perry said the blockade was not a 'complete stoppage'.
At a table on the veranda of the Karalije cafe this weekend, two men watched with a hint of satisfaction as Serbian customs officers sniffed coca cola bottles and watering cans in a quest for illegal petrol. The men, obviously foreigners, with baseball caps, bum bags and overnight luggage, looked more like tourists than international spies, which is more or less what they are. They are some of the 135 international observers, whose report on the effectiveness of the embargo will determine whether the UN eases trade sanctions against Serbia.
All the observers are ostensibly from humanitarian organisations. But many are ex-military men with experience in the former Yugoslavia. Some admit privately - because they are not supposed to speak to the press - that they were UN military observers at some time in their careers.
The observers are cautious about reaching a conclusion. But they say their impression is that the embargo is serious and that if there is any leakage, it is unlikely to have been officially sanctioned.
'I'm optimistic that the embargo is being enforced,' one senior member of the observer mission said. 'I have not seen anything that indicates there is any great danger. However, we have not been everywhere.'
The history of the Serbian- Bosnian border is rife with tales of smuggling. It is unlikely that any blockade will ever prove to be watertight along all 350 miles of rivers and mountains.
But it is also unlikely that the customs officers outside the Karalije have cracked down on fellow Serbs for the benefit of outside observers. Even the police officers who dare to utter to foreign journalists criticism of the President's decision say they would not dare to ignore it. 'It is the most difficult thing I have ever had to do, but orders are orders,' one officer on the border at Mali Zvornik said.
Judging from conversations overheard at the Karalije this weekend, these are black days for Serbian smugglers. 'This is more serious all the time,' one unshaven truck driver told his friends in a thick Bosnian accent, after a car with illegal petrol was turned back. 'We have to be very careful now. We just can't transport our stolen goods anymore, like we did before.'