Panic’s First Aims: Halt Bloodshed, Reform Economy : Yugoslavia: The Costa Mesa businessman also pledges elections after he becomes prime minister.

Milan Panic, the Belgrade-born Costa Mesa businessman who has been named Yugoslavia’s new prime minister, said Thursday his first task would be to end the fighting in breakaway republic Bosnia-Herzegovina and “work for real and lasting peace.”

At a press conference called to announce his acceptance of the post, Panic (pronounced PAN-eesh) also said he would continue to ensure that no regular Yugoslav army troops are stationed in neighboring republics and would “strongly oppose any activity by irregulars.”

He also vowed to begin “revitalizing” the Yugoslav economy by moving to a free-market economic system and by converting inefficient state-run industries into private corporations.

And he pledged that one of his first acts as prime minister will be to see that “free, fair and democratic elections take place at all levels throughout the country within a matter of months.”

Panic, 62, listed his goals in a three-page statement distributed Thursday morning at his brief appearance. He declined through a spokesman to answer questions, ending the session with the call: “God bless Yugoslavia. God bless America.”

After the briefing, Panic flew to New York, where he was to meet with United Nations officials, said Arnold Burns, a New York lawyer and counsel for Panic’s international drug manufacturing company, ICN Pharmaceuticals Inc. in Costa Mesa.

He was expected to fly to Belgrade today, Burns said, and has 30 days in which to form a government. He did not say what would happen if Panic fails to form one.

In Costa Mesa, ICN spokesman Jack Sholl said employees of the firm Panic founded in 1960 wished him well and were excited that he was considered a potential Balkan peacemaker.

“This designation is a reflection of the characteristics that employees admire in Mr. Panic,” Sholl said. “Everybody here is extremely pleased and happy about it.”

That personable demeanor has helped Panic win contracts--and influence--in Yugoslavia and other Eastern European countries. Last year, he negotiated with Serbian strongman Slobodan Milosevic to acquire controlling interest in Yugoslavia’s largest drug company, now called ICN Galenika.

Since then, he has developed strong ties in the country from which he defected in 1956. Panic received U.S. citizenship in 1963.

Panic was tapped for the Yugoslav post by newly appointed President Dobrica Cosic. The federal parliament is expected to approve the appointment.

The evolving Yugoslav federation is composed of just two of the six former Yugoslav republics. The job of federal prime minister is not expected to have much power, since the control of the army, monetary system and security and foreign policy are believed to rest with Serbia’s president, Milosevic.

Panic had declined the post earlier, because he felt that he did not have sufficient support from a broad enough range of Yugoslavia’s political, cultural and economic sectors.

But Thursday he indicated he now believes that he would enjoy the broad-based support that he was seeking. “This support was one of the conditions on which I accepted the mission,” he said.

Although Panic himself was born in Serbia, he said his family includes both Croats and Muslims and “reflects the diversity of this complex region.

“I will work for a day when this diversity is cherished and celebrated, instead of one in which our different histories, religions and homes contribute to such hatred and bloodshed,” he said.

His peace effort will be the most challenging yet for the man who built a $1.1-billion worldwide corporation out of a $200 investment.

Some leaders in Southern California’s Croatian and Bosnia-Herzegovinian communities express doubt that he is the person for the job. Whatever his motives, they say, Panic will ultimately be used by Milosevic, whom they accuse of committing genocide during the battles raging in Bosnia-Herzegovina and earlier attacks in Croatia.

“I am not anti-Serbian,” said Val Ivankovic, treasurer of the Bosnia-Herzegovina Club of Southern California. “I wish we could all live in peace. But I believe (Panic) will be maneuvered and used.”

In fact, local Bosnian and Croatian leaders speculated, Milosevic may have chosen Panic to placate the United States and other Western powers and soften the embargo. After all, they pointed out, he’ll have little real power as prime minister.

They also said that, if Milosevic succeeds in gaining the confidence of the United States and the United Nations, he could continue to expand “greater Serbia” into neighboring borders.

“It’s just a tactic, a very deceiving act,” said Felix Vuhovic, a retired Torrance businessman and member of the South Bay Croatian Club. “I hope he can help. But what can an outsider do? I don’t think anything.”

Sources in Yugoslavia indicated that part of the reason Panic was picked is the hope by Yugoslav officials that as a U.S. businessman he will provide badly needed links with the West.

The Bush Administration greeted the announcement coolly. State Department spokeswoman Margaret Tutwiler noted pointedly that Panic was “not a United States candidate” for the job.

“We do not endorse or support or have any views about his serving” as prime minister, she added. “It is entirely Mr. Panic’s decision.

Tutwiler said it is not clear whether Panic will be able to serve as an official of a foreign government and keep U.S. citizenship, an issue that she said is complex and not often brought up.

However, Panic said he believes that the legal hurdles over citizenship have been cleared--a factor in his decision to accept the post.

Experts say the U.S. Supreme Court has made it almost impossible for the government to take away an American’s citizenship, though it has upheld denial of U.S. passports to individuals whose travel was found not to be in the U.S. national interest.

Times staff writer Robert C. Toth contributed to this report.