War In The Balkans: No cash for Serbia until leader goes

President's Fate

NATO MADE clear yesterday that sanctions will stay in place and that reconstruction money will be withheld from Yugoslavia until its president is ousted, making the overthrow of Slobodan Milosevic a long-term objective.

The decision to indict Mr Milosevic for war crimes has brought into focus a central obstacle to an end to the conflict: the status of the Yugoslav leader when hostilities cease.

Nato disclosed yesterday that its member-states had provided evidence to the International War Crimes Tribunallinking Mr Milosevic with specific war crimes.

But it stopped short of saying the handover of Mr Milosevic to The Hague is now a pre-condition of a settlement to the Kosovo crisis.

"We are not going to insist on his surrender to The Hague," said a Nato diplomat, "but he will not be allowed to travel to any civilised country. Any chance of Serbia being given a break in the terms of sanctions, aid to rebuild or reintegration in the the world community are unthinkable while he's there."

Even Nato recognises that the indictment is likely to encourage Mr Milosevic to dig in his heals and delay any deal-making.

In Brussels the hope is that he will be overthrown, by popular protest or a coup instigated by the ruling elite. This can hardly be relied on, even if there are increased signs of civil disturbances.

Consequently, Nato is still not ruling out doing a peace deal with Mr Milosevic as long as he accepts the five conditions it has laid out: an end to the violence, withdrawal of his forces from Kosovo, the return of the refugees, acceptance of an international security force and of a political settlement.

There could be no peace conference outside Yugoslavia, to whose territory Mr Milosevic is confined. But, in the short term at least, Nato is still arguing that he could stay in power so long as his troops leave Kosovo. As a diplomatic source put it: "Obviously it becomes harder to contemplate dealing with Milosevic over the long term. At the same time, if we can get full acceptance of Nato's conditions while he's still there, I don't think we're going to rule out some contacts to that end."

This scenario would, the alliance believes, present more complications, with a resentful and aggressive Yugoslavia continuing to pose a threat to the rest of the region. Another option is for Mr Milosevic to be offered sanctuary in a non-Nato country. But that was made less likely by his indictment, because any nation offering haven would be harbouring an indicted war criminal. South Africa, which had hinted it would not turn away Mr Milosevic, ruled itself out yesterday. As one Nato source said, the only countries that might offer succour are those already considered pariah states.

Nato sources say this option remains a possibility, although one that is likely to be taken by the Yugoslav President only in the last resort.