Associated Press

June 13, 1997

WASHINGTON (AP) -- In a sign that the United States may block further international aid to Croatia, the State Department delivered a strong warning Friday over that country's continuing failure to extradite war criminals or ensure the return of refugees.

``Our basic position ... on how Croatia should be treated by the West is going to be a direct function of what Croatia does on issues concerning the Dayton'' peace accords, said State Department spokesman Nicholas Burns.

He was referring to the 1995 peace agreement concluded in Dayton, Ohio, that ended the Bosnian war. Under the accord, neighboring Croatia and Serbia were to hand over to the international war crimes tribunal all suspects and to repatriate refugees.

``Croatia is failing on war criminals. Failing.

Croatia is not doing very well on refugee return,'' Burns said.

Two weeks ago, Secretary of State Madeleine Albright visited the region and lambasted Croatian leaders over their failure to ensure the safety of returning Serbs. She said Croatia would be barred from joining Western economic and military alliances as long as it pursued its nationalist policies.

After Albright's visit, Croatian President Franjo Tudjman attempted to mend fences by reopening a bridge between Croatia and Bosnia and opening an investigation into attacks on Serb refugees. In a campaign speech, Tudjman also committed Croatia to ethnic reconciliation.

In return, the United States approved a small, $13 million loan by the International Finance Corp., an arm of the World Bank.

``That does not take away the lever that Secretary Albright is clearly exercising here,'' Burns explained. ``When you ask someone to take a positive step and they do it, if you don't respond to that, then you're confusing them about the carrots and sticks.''

But he said further loans -- Croatia has several pending before the World Bank and International Monetary Fund -- would depend on strict adherence to U.S. demands.

``If the Croatians backtrack on any of these issues, we can certainly resort to punitive treatment,'' Burns said.