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DATE=10/09/00

TYPE=CORRESPONDENT REPORT

TITLE=E-U/YUGOSLAVIA (L-O)

NUMBER=2-267669

BYLINE=DOUGLAS BAKSHIAN

DATELINE=LUZEMBOURG

CONTENT=

VOICED AT:

INTRO: European Union foreign ministers meeting in Luxembourg have announced the lifting of most sanctions on Serbia in the wake of the election victory by President Vojislav Kostunica. Douglas Bakshian reports from Luxembourg.

TEXT: The European Union says it is lifting its embargo on oil shipments to Serbia along with the ban on flights into E-U airports by the Yugoslav airline. France's Foreign Minister Hubert Vedrine, speaking through a translator, made the announcement.

// ACT VEDRINE, INTERPRETER //

I can tell you that the European Union has revised its policy vis-a-vis the Federal republic of Yugoslavia, and radically so. We have taken clear, precise decisions. We are lifting the sanctions on Yugoslavia we have had since 1998 the flight ban and the oil embargo.

// END ACT //

France currently holds the E-U Presidency and chaired the foreign ministers meeting. Mr. Vedrine said both decisions take effect as soon as they are published in the official journal of the European Union, a move expected Tuesday.

Mr. Vedrine also said that the ministers are proposing major financial cooperation with Yugoslavia, including projects to clear the Danube River, the economic lifeline of the Balkans region. Key bridges along the Danube were destroyed during the 1999 NATO air campaign against Serbia after it launched an offensive against breakaway Kosovo province, which has an ethnic-Albanian majority.

Despite the lifting of the oil and air embargoes, the E-U visa ban on former President Slobodan Milosovic, his family, and close associates, along with a freeze on the assets they might hold in the 15 E-U member states will stay in effect.

Meanwhile, Mr. Vedrine gave an unclear answer on the question of linking aid and assistance to Serbia with bringing Mr. Milosovic before the Yugoslav War Crime Tribunal in The Hague, which has indicted him as a war criminal. The French Minister said that from a legal angle the matters are not linked, but there is a general political link.

Mr. Vedrine travels Tuesday to Belgrade to meet new Yugoslav President Vojislav Kostunica to discuss the future of Serbia and its neighbors. He said he would also touch on the question of a possible release of some ethnic-Albanian prisoners taken during Mr. Milosevic's military campaign against Kosovo. The U-N chief administrator for Kosovo, Bernard Kouchner, said the people there would view such a release as an important good will gesture from the new Yugoslav government. (SIGNED)

NEB/DB/GE/RAE