The decision of the UN International Criminal Tribunal for former Yugoslavia to indict President Slobodan Milosevic for war crimes will greatly complicate negotiations with him for a withdrawal of Serbian forces from Kosovo just as they are reaching a delicate stage.
The tribunal's chief prosecutor, Ms Louise Arbour, is expected to announce the indictment of Mr Milosevic today. The arrest warrant for the Yugoslav President is said to be already signed.
It remains to be seen how this dramatic step will affect the efforts of the Russian mediator, Mr Viktor Chernomyrdin, to persuade Mr Milosevic to accept the NATO terms for an end to the air strikes. Mr Chernomyrdin was due to return to Belgrade this week for more talks following meetings with Mr Strobe Talbott, US Deputy Secretary of State.
It will be first time that a head of state in office will be indicted for war crimes. The warrant will give the NATO commander, Gen Wesley Clark, the authority to order the arrest of Mr Milosevic and for him to be brought to the tribunal at The Hague to be tried.
In practice, however, NATO forces will be unlikely to get an opportunity to arrest Mr Milosevic. There is still no agreement among NATO allies for ground troops to enter Kosovo but even if there was, Mr Milosevic is unlikely to leave Serbia to make himself available for arrest.
Several Serb leaders in Bosnia, such as Mr Radovan Karadzic and Gen Ratko Mladic, who have also been indicted for war crimes, have been living fairly openly without any attempt to arrest them by the international peacekeeping force. The arrest warrant will also be given to Interpol so that police forces around the world would have the authority to arrest Mr Milosevic if he were to travel abroad.
In the US, there was no official comment on the first reports of the indictment. A White House spokesman at a holiday resort in Florida where President Clinton is having a short holiday would say only that "we support the work of the war crimes tribunal".
The US Secretary of State, Ms Madeleine Albright, also refused to comment on the report, while adding that the US was fully supportive of the work of the tribunal.
On Capitol Hill, however, members of Congress urged the Clinton administration to make available all evidence of atrocities in Kosovo to the tribunal.
The first report of the indictment of Mr Milosevic came from Christian Amanpour of CNN, citing "sources in Europe". The spokesman for the tribunal in The Hague, Mr Jim Landale, refused to comment but said that Ms Arbour would make an announcement today.
Later, Reuters news agency cited a source "close to the court" as saying that the tribunal had indicted Mr Milosevic and that the arrest warrant was already signed.
It is not clear yet whether the charges will be crimes against humanity, genocide or war crimes under other international conventions. The news has increased speculation that NATO is moving closer to ordering ground troops into Kosovo rather than awaiting negotiations with Mr Milosevic for a prior withdrawal of all Serbian forces.
"I don't see how anyone can negotiate with Milosevic on behalf of the West now, other than take his surrender," one European diplomat told Reuters. NATO may also be asked to provide photographic evidence from aircraft and satellites of the mass graves and other evidence of atrocities in Kosovo to back up testimony from Kosovan refugees who have fled the country.
Until now some legal experts have argued that it would be difficult to link Mr Milosevic directly with mass murders in Kosovo committed by the MUP special police, but as commander-in-chief, he could be held responsible for atrocities committed by the Yugoslav army.