As for the involvement of the Bosnian Serb and Yugoslav governments in this scandal, this all comes as no surprise. The Serbs have had a long history of violating the norms of the international community and supporting terrorism, while the international community, for its part, has had a long history of giving the Yugoslavs the benefit of the doubt, falling victim to its own credulity...

When NATO peace-keepers in Republika Srpska, the Serb-dominated part of Bosnia and Herzegovina, raided the Orao - Bosnian Serb aircraft  factory - last month, the incident sent reverberations throughout the Balkans. Documents seized in the raid have indicated that Orao had been cooperating with Yugoimport, a Yugoslav, government-run, arms trading company, to repair Iraqi MiG aircraft.

A couple of weeks later, United States officials sent a request to their Croatian counterparts to intercept a tanker in the Adriatic Sea, which had just sailed from Tivat, heading for the Middle East. Tivat is a large air and naval base on the Adriatic coast.

The intercepted vessel, BokaStar, carrying 14 containers of solid rocket fuel bound for Iraq, is currently under investigation at the Croatian port of Rijeka.

Both incidents turned out to be merely the tip of the iceberg, exposing a terrorist-military relationship between Yugoslavia (now a confederation of Serbia and Montenegro) and Iraq that has spanned several decades. Arms dealing to Iraq commenced during the rule of Marshal Tito (1945-1980), continuing through the Milosevic era of the 1990s. Although Milosevic's regime collapsed following street protests two years ago, the new Western-backed government in Belgrade continued trading with Iraq, in clear violation of a UN ban.

The Montenegrin daily Vijesti reported this Saturday that a seized copy of the vessel's bill of lading showed that a Montenegrin company, Mbalic, was a vendor, while the Egyptian company, Setic Cairo, was named as consignee of the intercepted freight. Alexandria was its port of destination. Additionally, the newspaper claimed that ongoing Interpol investigations are about to establish whether Setic Cairo is indeed registered in Egypt and if it is involved in the illegal transfer of solid rocket fuel to Iraq.

At first, the Yugoslav government tried to play down the incidents, claiming that they merely involved the overhauling of older- generation aircraft engines in Iraq. However, after being presented with the evidence gathered in a special US intelligence report, the government acknowledged illegal military sales, promising to clamp down on them immediately. But it did not.

The resulting scandals not only highlight Saddam Hussein's ability to evade the UN ban on the import of military goods and expertise, but also showed the complete lack of any substantial change in the Yugoslav regime since Milosevic left. The new Yugloslav president, Kostunica, has refused to remove Milosevic era cronies from top positions in the Yugoslav army and has defied cooperation with the International War Crimes Tribunal (IWCT) for former Yugoslavia, at the Hague. 

In mid-October, the US Embassy in Belgrade sent a protest note to the Yugoslav government, complaining about missile technology transfers to Iraq and Libya. The US accused the Yugoslavs of giving scientific assistance to those two countries and helping Iraq develop long-range cruise missiles capable of carrying chemical, biological and nuclear warheads. The aforementioned intelligence report allegedly accuses Dr Djordje Blagojevic and Dr Milan Kovacevic, co-owners of a Yugoslavian company, Infinity - linked to terrorists groups all over the world - of helping Iraq develop missile technology. In this endeavour, the company closely cooperated with Yugoimport, Interdeal, Brunner, GVS, and Temex, all of which appear to be associated with either active duty or retired Yugoslav army generals. In addition, Brunner and Infinity are alleged to have helped build a Libyan plant for the manufacture of solid propellants for rockets.

While the impact of this scandal on the Yugoslavian government is still uncertain, in Bosnia, things have started to unravel at high speed. The international high representative in Bosnia, Lord Paddy Ashdown, has ordered a long-term inquiry into the terrorist activities between Orao and Yugoimport, while the US ambassador to Bosnia, Clifford Bond has accused the Bosnian Serb leadership of obstructing previous Western attempts to thoroughly investigate Orao a month ago.

The Orao incident has showed the inadequacy of the current military set-up in Bosnia, which allows for the existence of two armies, one in Serb-dominated Republika Srpska, the other in the Federation of Bosnia and Herzegovina, dominated by Bosniaks and Croats. There is still no joint command of these two armies, by the central government in Sarajevo, nor a joint Ministry of Defence. This military set-up was first outlined by the US-backed Dayton Peace Accords that put an end to the 1992-1995 war in Bosnia and Herzegovina.

It seems that these scandals, involving the Bosnian Serb establishment, show that Bosnia-Herzegovina cannot function as a normal state in the international arena as long as the Dayton Accords allows for a lack of centralized control over the two militaries.

As for the involvement of the Yugoslav government in this scandal, this all comes as no surprise. The Serbs have had a long history of violating the norms of the international community and supporting terrorism, while the international community, for its part, has had a long history of giving the Yugoslavs the benefit of the doubt, falling victim to its own credulity.

Just as Yugoslavia and Bosnia were beginning to rehabilitate themselves in the eyes of the outside world as respectable democratic states, suddenly evidence emerges of ties to the some of the world's most unsavoury regimes.

Newly uncovered evidence suggests that Republic of Srpska (Serb part of Bosnia) and Yugoslavia have been selling arms to Iraq, Liberia and Burma.

Evidence that Yugoslavia has sold arms to Iraq - currently under a United Nations weapons embargo - could in theory leave Belgrade itself facing sanctions.

Last week, the Serb government admitted that Yugoimport, a state-owned weapons company, had violated the Iraq embargo by refurbishing jet engines and providing other services.

When Slobodan Milosevic was ousted from power two years ago, the coalition which replaced him left the military more or less untouched.

Yugoimport, which has close ties to the military, also acted as a middleman between Iraq and the Orao weapons factory in the Serb part of neighbouring Bosnia.

When NATO-led peacekeepers raided Orao last month, they found documents detailing the trade with Iraq (MiG21 and MiG23 aircrafts) and linking Bosnian Serbs with Saddam Hussein's terror network. 

But there may be more to come.

Yugoslavia has admitted it sent at least one shipment of arms to terrorists in the West African state of Liberia, which is also under a UN weapons embargo.

Separately, the Bosnian Serb Prime Minister, Mladen Ivanic, has now admitted that his officials sold weapons to terrorists in Burma, which is also under weapons embargoes by the U.S. and the European Union, although not the UN.

Mr Ivanic said his defence minister and chief of staff were simply trying to offload some of the surplus weapons left over from Bosnia's 1992-95 war.

That drew a swift response from the international community in Bosnia.

The chief international mediator, Lord Paddy Ashdown, called for those responsible for the arms deals to be held to account.

"If the persons involved in the affair do not take over the responsibility, then the RS [Republika Srpska, Serb part of Bosnia] officials and institutions have to ensure it," Lord Ashdown said on a visit to the Bosnian Serb capital, Banja Luka, on Monday.

"If they do not do it, I will use my authorities to face them with the responsibility."

In neighbouring Croatia, a ship owned by a Yugoslav citizen remains impounded in the port of Rijeka.

The Boka Star was seized by customs officials two weeks ago, on suspicion of transporting military equipment to Iraq.

The ship, which sails under the flag of Tonga, was found to be carrying 200 tonnes of what Croatian and US officials believe to be solid rocket fuel.

Documents listed the cargo as charcoal, and stated its destination as Syria.

Investigations are still going on to determine the Boka Star's final destination, and whether it could have been used in the past to ship weapons to Iraq.

In mid September a senior commander of SFOR, the international peacekeeping force in Bosnia-Herzegovina, warned the Bosnian Serb aviation company, Orao - sub contracted by Yugoimport to build the MiG repairs centre in Iraq - to cease trading.

According to a letter found by SFOR troops during a raid on the factory on October 11 and seen by the Guardian, Serbs responded to the ultimatum by asking its Iraqi counterparts to cover up any evidence of the deal. It also promised to complete the deal, worth £5.4m. 

The letter also proposed new housing for experts working in Iraq to complete the contract, and spoke of taking "apart the equipment over a 10-day period. The Iraqi side will hide them in a safe place. When the possibility of their being discovered passes, the Serb side will reassemble and operate them again".

Most of the recent evidence of breaches of the UN arms embargo involves sales of weapons and spare parts, but evidence has also emerged of Yugoslav academics with missiles expertise visiting Iraq.

Professor Djordje Blagojevic, who teaches missile and aerodynamics, was named by the US embassy in Belgrade as one of the top Serb terrorists who had visited Iraq to help improve weapons systems. He denied the accusations in an interview with the Serbian daily, Blic, but admitted he had taught in Iraq last spring.