THE HAGUE/ZAGREB, Oct 23 (Hina) - Ante Markovic, the last prime minister of the former Yugoslav federation, appeared before the UN war crimes tribunal in The Hague on Thursday as a prosecution witness in the trial of the former president of Serbia and Yugoslavia, Slobodan Milosevic. Milosevic and the late Croatian president Franjo Tudjman personally told me that they had agreed at a meeting in Karadjordjevo in March 1991 to divide Bosnia-Herzegovina between Serbia and Croatia, Markovic said.

"I was informed of what they had discussed in Karadjordjevo. Milosevic and Tudjman agreed to divide Bosnia-Herzegovina between Serbia and Croatia and to replace me because I was in their way," he said.

Markovic said that after the Karadjordjevo talks he met Milosevic in Belgrade and Tudjman in Zagreb and openly told them he knew about their deal.

"Both of them admitted to me that they had agreed to partition Bosnia-Herzegovina. Milosevic admitted it straightaway, while Tudjman took some time," Markovic said in response to the questions put by prosecutor Geoffrey Nice.

According to Markovic, both Tudjman and Milosevic believed that Bosnia-Herzegovina was an artificial structure and Bosniaks an artificial ethnic group, whom Tudjman regarded as "Islamicised Catholics" and Milosevic as "Islamicised Orthodox Serbs".

The two former leaders also thought that the division of Bosnia- Herzegovina would not cause a war, because the Serbs and Croats represented a majority in that republic. They wanted to create an enclave for the Bosniaks, and expected European support because they said Europe did not want a Muslim state on its soil, the witness said.

Markovic said that Tudjman had told him that history would repeat itself and that "Bosnia will fall silently."

Markovic said that he had warned both leaders that their plan would lead to war, victims, refugees and a "Palestinisation" of Bosnia- Herzegovina and that a lot of blood would be spilled. He told them he would fight their plan.

Later on, Markovic informed the late Bosniak leader Alija Izetbegovic, who gave him recordings of intercepted conversations between Milosevic and Bosnian Serb leader Radovan Karadzic about the arming of Bosnian Serbs through the Yugoslav People's Army (JNA) as part of a plan codenamed RAM.

Markovic said he had presented these facts at a session of the federal government, but Slovene Admiral Stane Brovet then said that the JNA had nothing to do with it.

One of the recordings was played in the courtroom and the witness recognised the voices as those of Milosevic and Karadzic. In the recording made in June 1991, Milosevic ordered Karadzic to "mobilise the Banja Luka group" and advance on Kupres, and to call JNA General Uzelac about weapons and helicopters.

Markovic, who served as prime minister of the Socialist Federal Republic of Yugoslavia from March 1989 until his resignation in December 1991, told the tribunal this was the first time he had spoken about his view of the events 12 years ago.

He spoke about the forming of his government, its programme of stabilisation, and economic and political reforms that led to the introduction of a multi-party system.

He explained the opposition of Milosevic and Serbia to the reforms, which he said quickly produced good results: inflation was reduced to zero, foreign currency reserves rose to 11 billion dollars, the foreign debt was cut from 21 billion to 12 billion dollars.

Milosevic constantly obstructed the government and the reforms, the witness said, citing as an example large-scale wage increases in Serbia and a case when the National Bank of Serbia "stole" 2.5 billion dollars of federal funds upsetting the country's monetary system.

Markovic will continue his testimony in the afternoon.