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Yugoslavia 'sold arms to Iraq'

State Department spokesman Boucher:
State Department spokesman Boucher: "Clear evidence"

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BELGRADE, Yugoslavia -- An inquiry has been launched into claims that a Yugoslav arms dealer sold military equipment to Iraq in violation of a U.N. embargo.

Media reports claim an illicit trade between the state-run arms dealer, Yugoimport, and Saddam Hussein's regime during the presidency of Slobodan Milosevic.

It is also alleged that Serb experts may have helped the Iraqis build up defences.

The affair came to light after a NATO inspection last week of an arms company in the Serb-controlled part of neighboring Bosnia.

A Yugoslav military official, speaking on condition of anonymity, told The Associated Press the raid uncovered documents linking the Bosnian arms company, Orao, and Yugoimport, which acted as an intermediary by exporting defence equipment to Iraq.

U.S. State Department spokesman Richard Boucher said there was "clear evidence" that the two companies have been "refurbishing military aircraft for Iraq."

Following the claims, the Yugoslav government sacked two senior army officials on Tuesday and launched an investigation into Yugoimport.

Nebojsa Covic, a deputy prime minister in Serbia, Yugoslavia's dominant republic, told reporters: "The state needs to react quickly and forcefully now.

"These deals were remnants of the past regime, spurred on by pro-fascist and criminal elements."

After an emergency meeting, the Yugoslav government ordered an investigation into Yugoimport's trade deals and fired Gen. Jovan Cekovic, its director, and Lt. Gen. Ivan Djokic, who was adviser at the Defence Ministry and the person "in charge of weapons and arms equipment trading" within the Yugoslav military.

The government also closed Yugoimport's Baghdad office.

Yugoslav Interior Minister Dusan Mihajlovic told AP: "We must get to the bottom of this affair, hoping it will not have a negative impact on our relations with the international community and the United States in particular."

The U.N. Security Council has maintained a strict embargo on trading with Iraq since Saddam's army invaded neighbouring Kuwait in 1990.

Countries violating the embargo could face punitive U.N. sanctions.

There was no information on the specific military equipment allegedly sold to Iraq.

The Orao company produces aircraft engine parts, including parts for Russian-built MiG jet fighters, and equipment that can be used in air defense.

Although Yugoimport denies it traded with Iraq, the company stated it was "possible" some individuals had been involved in a "private business venture" while misusing Yugoimport's name.

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