Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

Croatia, Yugoslavia Sign Agreement

BELGRADE -- Croatia and Yugoslavia signed a landmark mutual recognition accord Friday, ending five years of hostility between two countries whose relations are vital to regional stability.

Croatian Foreign Minister Mate Granic and Yugoslav Foreign Minister Milan Milutinovic agreed to the deal, which diplomats hope will help bring stability to the Balkans.

"This agreement today is in a certain way a historical one for both countries since it represents a turning point in relations between our two countries," Milutinovic said.

"This agreement is the foundation of stability in the region," Granic said.

The ceremony was held in the Serbian hall of the palace of the federation, built when communist leader Josip Broz Tito ruled Yugoslavia. Tito's death in 1980 paved the way for the rise of nationalism and the federation's collapse.

Granic drove through Belgrade to the ceremony in a limousine carrying a Croatian flag -- the first time the Croatian banner has been unfurled on Serbian territory since the federation disintegrated in 1991. Both ministers agreed the accord did not solve all disputes between the governments but provided grounds for their future settlement.

Details had yet to be released but sources close to the talks said it was mostly based on an agreement struck by presidents Slobodan Milosevic of Serbia and Franjo Tudjman of Croatia in Athens earlier this month.

Croatian officials, who asked not to be named, said the accord called for the two countries to exchange ambassadors within 15 days.

The main sticking point in Friday's talks was the future status of Prevlaka, a sliver of land jutting into the Adriatic.

Croatian-held Prevlaka dominates the mouth of the Boka Kotorska bay, the home of the Yugoslav navy.

Diplomatic sources said Granic insisted on the Athens formula that the peninsula was a "security" and not a territorial issue.

"This probably means that Prevlaka will remain Croatian but will be demilitarized," a Western diplomat said.

The Serbs had been dissatisfied with the formulation but by the afternoon the two sides agreed the issue before settling to a lunch of lamb served on plates with the seal of the former Yugoslavia.

Sources said the accord guarantees a safe return of refugees, general amnesty for Serbs who want to live in Croatia and envisages raising of diplomatic relations to embassy level. The current chiefs of missions -- Zvonimir Markovic in Belgrade and Veljko Knezevic in Zagreb -- will most likely be promoted to ambassador, diplomats said.

As for rights to the legal succession of former Yugoslavia, the most important issue for Belgrade, the two sides agreed that all five former republics would have equal successor rights.

Yugoslavia, comprising Serbia and Montenegro, would be allowed to renew membership in international organizations without Belgrade having to submit a formal request.

War erupted in 1991 when Serbs, backed by the Yugoslav army, rebelled against Croatia's bid for independence from Yugoslavia. Croatia recaptured Serb-held territory last August except for one Serb enclave, Eastern Slavonia, which is due to be handed over to Zagreb next year. Belgrade normalized relations with one other former Yugoslav republic, Macedonia, earlier this year.