Friday May 25 12:22 PM ET

Ex-Yugo States Agree on Landmark Asset Deal

By Julia Ferguson

VIENNA, Austria (Reuters) - The five states that emerged from the former Yugoslavia initialed a wide-ranging agreement on Friday on the division of the old state's assets, a decade after the break-up of the federation.

The deal, hammered out after nearly two weeks of negotiations in Vienna and the culmination of 10 years' of on-and-off talks between the successor states, is expected to be signed within the next three weeks. {/b]

``The conclusion today is significant for the fact it is the first agreement the five states have concluded between themselves since the break-up of Yugoslavia,'' Arthur Watts, international mediator in the talks, told reporters.

``It marks a very important step in the improvement of relations,'' he said.

The division of former Yugoslavia's assets has been a stumbling block for years in establishing full relations between rump Yugoslavia and its four newly independent neighbors.

The so-called succession talks have also been an imperative for Belgrade to rejoin the International Monetary Fund.

The former Yugoslavia broke up in 1991 when Slovenia and Croatia declared independence, followed by Bosnia and Macedonia. Rump Yugoslavia now comprises Serbia and Montenegro.

The umbrella agreement, which Watts said was not easy to reach due to the breadth of matters included, covers seven key issues.

These are movable and immovable property belonging to the former Yugoslavia; property outside Yugoslavia; financial matters such as the distribution of foreign exchange reserves and liabilities; archives; pensions; miscellaneous categories such as trademarks, copyrights; and private property.

Watts said the foreign exchange reserves due to be distributed among the five states were in the region of one billion dollars, including the $450 million-worth of assets held at the Bank for International Settlements in Basle.

Last month, the five states agreed in Brussels on the division of this first block of assets, which mainly comprises gold.

LONG AND DIFFICULT NEGOTIATIONS

Wolfgang Petritsch, the international peace mediator in Bosnia whose duties also include the region's succession issues, called the deal in Vienna historic, especially given that reaching it at
times appeared to be an endless task.

``This comprehensive agreement reached today is of great importance to the international community as well, as regional stability in south-eastern Europe is in all of our interests,'' he said.

``Today is a historic day and one which sends new and strong signals throughout south-eastern Europe. Regional cooperation and not costly, bloody war will ensure peace and prosperity in the five countries that have succeeded,'' he added.

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