Zagreb - Serbs abandoned a four-year separatist revolt in Croatia yesterday, signing an accord to hand over the strategic Eastern Slavonia region and lifting the threat of fighting that could have wrecked peace hopes in the Balkans.
Crafted at the Balkan summit in Dayton, Ohio, the agreement envisages restoration of Croatian control over Eastern Slavonia after a transitional period of one year under international military authority.
The accord ends a Serb rebellion that erupted in war when Croatia broke away from Yugoslavia in 1991. Almost 100,000 Croat inhabitants driven out of the Eastern Slavonia region in the fighting will be able to return, while Serbs who lived there when the war erupted can retain their homes.
The Croatian army recaptured two other rebel Serb enclaves earlier this year and President Franjo Tudjman had threatened to use force in East Slavonia if peace efforts did not work by the end of November.
Zagreb alarmed the United Nations last week by reinforcing its troops in the region, which borders Serb-led rump Yugoslavia and was regarded as a potential flashpoint for a renewed war.
"This is the beginning of the end of the wars in former Yugoslavia," the UN mediator Thorvald Stoltenberg said in Zagreb. The Foreign Secretary, Malcolm Rifkind, hailed the agreement as a "major breakthrough." He said: "We congratulate the Croatian authorities and the leadership of the Serbs of Eastern Slavonia for this achievement."
President Bill Clinton said that the parties had made a "major step" towards an overall peace in the Balkans.
Eastern Slavonia is prized territory on account of its fertile plains and oil wells.
Hrvoje Sarinic, top aide of President Tudjman, returned overnight from the summit in the US to sign the accord along with Mr Stoltenberg and his fellow international mediator, the US ambassador Peter Galbraith. Mr Stoltenberg and Mr Galbraith had taken the agreement a few hours earlier to the Serb-held town of Erdut, where it was signed by the local Serb leader, Milan Milanovic.
"For the first time since war began in former Yugoslavia in 1991, one of the main issues in contention has been settled peacefully, with signatures instead of bullets," Mr Galbraith said. "It is a significant step for peace."
The agreement said a UN Security Council resolution would establish an "international force" in the region to guarantee human rights and deter violent score-settling over the events of 1991. It did not say whether the authority would be under UN or Nato command.
The agreement calls for a one-year transition to Croatian rule, with the option of a further year if requested by one party. The area would be demilitarised within 30 days of peace-keepers arriving.
Minority Serbs armed by Serbian President Slobodan Milosevic seized 30 per cent of Croatia when it declared independence from Yugoslavia in mid-1991.
Eastern Slavonia saw the bloodiest fighting in Europe since the Second World War. The Serbs' demolition of the city of Vukovar and the suspected massacre of 260 Croat hospital patients seared Croatia, and Mr Tudjman vowed to avenge it.