Balkan Firm Is Supplying Iraq, U.S. Says

BELGRADE, Yugoslavia -- U.S. officials have publicly confronted leaders of Yugoslavia and Bosnia with evidence that a Balkan weapons factory is exporting military equipment to Iraq with the complicity of a leading Yugoslav defense company.

In Washington, State Department spokesman Richard Boucher said Tuesday that the U.S. has “clear evidence” of the transfers.

“The officials have pledged a full investigation of these allegations,” he said. “The U.S. expects the relevant authorities in Bosnia-Herzegovina and Yugoslavia to undertake the necessary steps to immediately halt any ongoing cooperation with Iraq, to conduct a thorough investigation and to hold accountable those responsible.”

The evidence, including computer disks and letters, was gathered in a surprise inspection by NATO peacekeepers of a weapons factory in Bosnia nearly two weeks ago.

A U.S. diplomat who requested anonymity said the Orao weapons factory and Yugoimport defense company had been “refurbishing military aircraft for Iraq.” Officials would not confirm whether Serbian technical experts were helping the Iraqis in person, but there have been local reports that several company employees are in Baghdad.

Yugoimport is based in Belgrade, the capital of Yugoslavia and its main republic, Serbia. Orao in located in Bijeljina, a town in Republika Srpska, the portion of Bosnia-Herzegovina whose population is mostly Serbian. Until Bosnia won its independence with a war that ended in 1995, both companies were part of Yugoslavia’s vast military-industrial complex.

If Yugoslavia fails to move quickly to deal with the incident, diplomats and U.S. government officials said, it could undercut its prospects for joining Western international organizations such as the Partnership for Peace and starting on the road toward joining the European Union and the North Atlantic Treaty Organization.

“We want to do everything we can to bring them into the Western family of nations, but they have to understand we have red lines and this is one of them,” said a senior U.S. Senate staff member who follows the Balkans and requested anonymity.

After a late-night session Tuesday, the Yugoslav government released a statement saying it had dismissed Jovan Cekovic, the former army general who chairs Yugoimport, and fired an assistant to the federal defense minister in charge of military equipment and weapons, according to a local news agency. Yugoimport was ordered to close its office in Baghdad, according to the government statement.

Serbian Interior Minister Dusan Mihajlovic told a Belgrade radio station that “a very serious and detailed investigation has been opened.” Mihajlovic, who is also the chairman of Yugoimport’s managing board, said he had no knowledge of any arms sales to Iraq.

Yugoimport also released a statement saying that although in the past it had extensive dealings with Iraq, it respects all United Nations weapons embargos. The Security Council imposed an embargo on the export of arms to Iraq in 1990.

Neither Serbian Prime Minister Zoran Djindjic nor Yugoslav President Vojislav Kostunica commented on the situation, although they have known about the charges for several days.

Last month, the U.S. asked the Bosnian government to look into reports that the Orao firm was providing Iraq with equipment and technical expertise. After a review, Bosnian officials denied that there was anything suspicious.

However, the surprise inspection by peacekeepers from Oct. 11 to 13 found evidence of illicit links, both in the portion of the company that is housed in a former sugar factory and in documents belonging to top company officials.

“We found a contract between Orao and a third party outside of Bosnia-Herzegovina which shows that Orao has been involved with the unreported export of weapons systems and components,” said Yves Vanier, a spokesman for the peacekeepers.

The evidence was confirmed by a Serbian minister, according to media reports in the Belgrade daily newspaper Blic. It included documentation of the two companies’ ongoing relationship with Iraq and their efforts to cover it up.

In a letter addressed to the Iraqi Department of Defense dated Sept. 25, Yugoimport officials “asked the Iraqis to remove Orao’s name from all of the documents used for maintenance, and to take off Serbo-Croatian language instructions,” the newspaper reported. The letter also told the Iraqis to obliterate the Orao company logo, which is stamped on equipment.

In addition, the letter reportedly said that “in the event of United Nations weapons inspections, Yugoimports experts would be able to disassemble all of the equipment within 10 days and that the Iraqis then should hide the equipment. When the inspections are over, Yugoimports would again assemble the equipment within 10 days.”

Officials refused to disclose the nature of the equipment, but the Orao company produces and rebuilds aircraft engine parts, including those for Russian MIG jets, which are part of the Iraqi air defense.

In addition, Serbian engineers have expertise in building radar systems that elude enemy detection. In its war against NATO in 1999, the far inferior Yugoslav military shot down a U.S. F-117 Stealth fighter and protected Yugoslav military assets by using a sophisticated radar system designed by Serbian engineers.

Military experts say it is possible that Serbian technicians may be helping the Iraqis design a similar system. The deal, they say, is the result of both a long relationship with Iraq dating to the 1970s and the almost complete independence of the army from any government control.

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Times staff writer Rubin reported from Vienna, and correspondent Cirjanovic reported from Belgrade.