The North Atlantic Treaty Organisation yesterday signed an agreement removing Bosnian Serb police protection from indicted war criminals, including the former president, Dr Radovan Karadzic.
NATO sources said the alliance already had the power to disarm Dr Karadzic's bodyguards, but it wanted a Serb-signed document before any such operation was contemplated.
Speculation is growing that NATO plans to snatch Dr Karadzic, who is wanted by the war crimes court in The Hague and considered a major obstacle to reconciliation in war-shattered Bosnia.
Meanwhile, a UN spokesman said two Muslims were killed and one injured in an apparent ambush in the north-eastern Zvornik region, which local radio blamed on Bosnian Serbs.
In Geneva, the UN High Commissioner for Refugees said the Bosnian Serb refusal to allow Bosnian refugees to return to their homes was creating an "explosive situation."
The policing agreement rem oves the right of the heavily-armed specialist police to protect indicted war criminals, said Maj John Blakeley, the spokesman for the NATO-led Stabilisation Force (SFOR).
Serb police can be seen guarding Dr Karadzic's mountain villa complex near the Bosnian Serb capital, Pale, from where he has been accused of wielding power behind the scenes despite stepping down as president last year. SFOR said there was no specialist police base at that location and no authorisation for police units to guard war crimes suspects.
"If Special Police are employed in that role then that would be in contravention [of the agreement] and the appropriate measures will be taken," Maj Blakeley said, without specifying what they might be.
Mr Mirza Hajric, spokesman for Bosnia's Muslim co-president, Mr Alija Izetbegovic, said yesterday that Dr Karadzic's influence on the power structure of the Serb Republic was undermining peace efforts: "The war criminals must not be allowed to control police and political structures, otherwise terrorist activities could be expected."
Serb special police units will in future be limited to protecting VIPs, guarding official buildings, controlling crowds, conducting counter-terrorism and civil defence work, Maj Blakely said.
US and other diplomats see Dr Karadzic as a major obstacle to reconciliation between the factions which fought in the 43month war in Bosnia. It ended in December 1995 with the Dayton peace accords, which US envoy Mr Richard Holbrooke brokered.
Last month British NATO elite troops arrested one Serb war crimes suspect and killed a second in a gun battle. Meanwhile the Serbian president, Mr Slobodan Milosevic, has made an apparent attempt to improve his image by inviting international observers to monitor next month's elections.
Although former Yugoslavia was suspended from the Organisation for Security and Co-operation in Europe in 1992 because of its support for the Bosnian Serbs' war, the Serb strongman now wants to invite the organisation in.
He has also ordered the state television company to guarantee equal access to all candidates and parties running in the September 21st election for a new parliament and president.
Weeks of mass demonstrations rocked the country last year after municipal elections which the opposition coalition said were won fraudulently.