Kostunica Blamed for Iraq Debacle

The furore over Yugoslavia's involvement in arms deals with Iraq is being blamed on federal president Vojislav Kostunica's unwillingness to get rid of key figures from the Milosevic regime.

The authorities have now started a clean-up operation to rid themselves of Milosevic-era officials suspected of masterminding an operation to supply military services and equipment to Baghdad, following strong pressure from the United States.

General director of the main state arms trade company Jugoimport, Jovan Cekovic, and defence ministry arms trade assistant, General Ivan Djokic, were both dismissed from their posts on October 22.

The move followed an official request from Washington, in which the Belgrade authorities were told to crack down on the sale of weapons and equipment to Iraq.

The Americans named Jugoimport and the Orao Institute in the Bosnian Serb town of Bijeljina as the companies involved. The US State Department said it has evidence that Iraqi combat planes were being refurbished by the two firms.

The Yugoslav authorities have now launched an investigation into the matter. "We will honour all international obligations as part of the international against terrorism, and we want to clear this affair up completely," said Serbian police minister Dusan Mihajlovic. Jugoimport's Baghdad office has since been closed down.

Washington welcomed the measures taken by the Yugoslav authorities to put a stop to the illicit trade, which Belgrade analysts blame on Kostunica.

The federal president hit out at Jugoimport's actions on October 23, describing them as being guilty of "gambling, and an entirely irresponsible business move" that will be punished according to the law. He added that this was an isolated incident that should not be interpreted as Yugoslavia's own position.

But Kostunica's great political rival, Serbian prime minister Zoran Djindjic, is not prepared to let the matter drop, describing the scandal as "damaging", as it implied that the federal authorities had lost control of the army.

"President Kostunica is responsible for the army, and he should deal with it. The fact that he has not shows a fault in his professional approach to the post," Djindjic said, although the premier must take some responsibility for the illict trade given that his minister of interior, Dusan Mihajlovic, is chairman of Jugoimport and claims that he knew nothing about the affair.

Since the fall of Slobodan Milosevic on October 5, 2000, Kostunica has opposed any purge of personnel from the former leader's military circle, claiming that such key people should not be replaced at all costs.

Analysts believe Kostunica, who has authority over the army but little else, was determined to win the loyalty of top army officials to gain political leverage in his ongoing battle with Djindjic.

These officials, however, are seen as being "compromised" by their association with Milosevic, and their involvement in the new political setup stopped or significantly slowed down the reform of many institutions, putting the brakes on Yugoslavia's efforts to rejoin the international community.

This was the case with Jugoimport. There have been no personnel changes at the firm - so the Milosevic-era cooperation with Saddam Hussein seems to have carried on long after the ex-president's fall.

A decree signed by Kostunica in spring 2001, confirming Cekovic's retention as company director, is the best proof of his support for the official. The federal president would not comment on this appointment in the wake of the scandal.

This decision went against the wishes of the US authorities, which were opposed to Cekovic keeping his post, as this raised fears that Yugoslavia could retain contacts with Iraq or other blacklisted regimes.

The pressure grew after the September 11 attacks on America, as Cekovic showed no interest in stamping out Islamic extremists and the regimes that supported them.

The Jugoimport director soon became persona non grata - yet Kostunica let him stay in his job.

The defensive wall surrounding Cekovic began to crumble only after documents found at the Orao Institute provided the US with hard evidence that Jugoimport and its director were implicated in the supply of weapons and services to Saddam Hussein's forces.

But even after initial warnings were sent to four leading Belgrade officials, nothing was done to launch an investigation into the affair.

It took the publication of detailed media reports on the Orao affair to nudge the federal government into admitting that deals had taken place without its knowledge or control. Even then, a specially formed investigative commission only visited the Jugoimport offices a day after Cekovic was dismissed.

Yugoslav army sources told IWPR that Cekovic, who had held the post of Jugoimport director since 1996, had conducted weapons deals "like a medieval feudalist". Information about such transactions was kept from the public on the grounds that it was a "state secret".

He established strong ties with China in the second half of the Nineties, and Jugoimport conducted joint development projects on rocket technology and sophisticated artillery ammunition.

Although business with China had top priority, Cekovic did not neglect his traditional buyers from Arab states. There were excellent opportunities to make money from Iraq, which was struggling under sanctions and was willing to pay a high price for any military help.

It would appear that although the new Serbian administration decided to renounce the practices of the Milosevic regime and return to the international community, dealings with Iraq were continuing behind its back.

Borisa Vukovic, Milosevic's foreign trade minister who fled to Iraq after losing his post after the fall of his president, became one of the most important middlemen and led the negotiations in Baghdad.

Sources from Yugoslav intelligence circles told IWPR that Vukovic had wide access to the Iraqi ruling elite thanks to his friendship with Uday Hussein, son of Saddam.

Iraq was particularly interested in striking a deal to ensure maintenance of its ageing air force jets, which are in poor condition and are rarely flown due to a lack of spare parts. Russian engines, with a much shorter life cycle than those manufactured in the West, were of most concern.

Yugoslav air force experts had already proved that they were able to extend the lifecycle of the Russian RD-33 engine - used by the MiG-29, the only modern military plane owned by the Iraqi air force - by a third to 450-500 working hours between services.

The Orao Institute - which has experts and technology capable of performing such overhauls - functions under direct control of the Republika Srpska, RS, defence ministry, but the Yugoslav air force remained one of its most important clients. Within the federal army general staff, the officer in charge of all dealings with the Bosnian Serb company was General Ivan Djokic.

He later became assistant minister of defence for military economic issues, and soon established close relations with Cekovic. Formally, General Djokic had to approve every contract with foreign customers - including weapons and military equipment shipments.

Army sources told IWPR that Djokic is doubly responsible for the Orao scandal - both for authorising the illegal deal, and for organising logistical support to allow the arrangements to be carried out smoothly in Iraq.

Vesna Marjanovic, a spokesperson for Democratic Centre, one of the members of Serbia's ruling coalition, told IWPR that it "seems incredible" that Jugoimport could still have been associating with Iraq. "It is unbelievable that our intelligence services learn from others what companies in this country do," she said.

This whole affair may prove very damaging for Yugoslavia, which stands to lose the trust of the international community after a long, hard slog to improve relations.

Aleksandar Radic is a defence analyst at the Belgrade news agency VIP. Gordana Katana in Banja Luka contributed to this report.