FEDERAL Yugoslavia and Croatia decided yesterday to establish diplomatic relations at the end of the month, the Greek Prime Minister, Mr Costas Simitis, said.
President Franjo Tudjman of Croatia and his Serbian counterpart, Mr Slobodan Milosevic, representing the Federal Republic of Yugoslavia, made the decision at a summit meeting here, Mr Simitis said.
Mr Milosevic's delegation included the Federal Yugoslav Foreign Minister, Mr Milan Milutinovic.
The ties would be established following a meeting of foreign ministers of Croatia and the Federal Republic of Yugoslavia, which comprises Serbia and Montenegro, in Belgrade, he added.
Mr Simitis said a joint statement from the two leaders containing "answers for all the questions concerning the two countries," would be published later yesterday.
The decision was announced at the end of a special one day summit - the first official bilateral meet ing between the two men since mid 1991.
The summit was called eight months after an accord in principle on complete normalisation was reached on the sidelines of the Dayton peace negotiations. Its signature has since been blocked by several contentious issues.
Belgrade and Zagreb are the last of the former Yugoslav republics which still do not recognise each other following the break up of the old Yugoslav federation in 1991.
Belgrade backed the rebel Serbs in the Serb Croat war which followed and which cost an estimated 10,000 lives.
Outstanding contentious issues include the problem of the eastern Slavonia region of Croatia, which is still held by rebel Serbs, and the fate of prisoners of war and Serbs wishing to return to Croatia. Diplomatic sources said the two presidents had also discussed the future of the contested Prevlaka peninsula.
The two capitals disagree over the rights of succession to the spoils of the former Yugoslavia. Belgrade claims it has sole right to the assets of the former Yugoslavia but other former Yugoslav states dispute this.
Speaking to Croatian television before he left Zagreb, Dr Tudjman said intensive diplomacy had been under way in recent months to create stability in former Yugoslavia.
The main issue in the whole process is the normalisation of relations between Croatia and Serbia. . . Everyone is dear about it and that is what my trip is all about, he said.
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