EU says Karadzic arrest is boost for Serb ties

BRUSSELS (Reuters) - Serbia's arrest of wartime Bosnian Serb leader Radovan Karadzic is a milestone on its road to joining the European Union but Belgrade must go further to reap the full benefits, EU ministers said on Tuesday.

EU foreign policy chief Javier Solana said the arrest of the man wanted for planning and ordering Europe's worst atrocities since World War Two showed Belgrade was willing to cooperate fully with the U.N. war crimes court in The Hague.

That was the precondition set by EU states in April for implementing a deal on closer ties with Serbia, putting it fully on track to ultimate membership of the bloc.

EU Enlargement Commissioner Olli Rehn called on the bloc to allow Serbia to enjoy improved trading conditions, insisting Belgrade must have something to show for the step.

But some countries at the EU foreign ministers' meeting, including the Netherlands, were reserved about the idea.

Several stressed that Karadzic's wartime military commander, Ratko Mladic, also wanted for genocide, was still at large.

"We've been waiting for this for 13 years," said French Foreign Minister Bernard Kouchner, whose country holds the presidency of the 27-nation EU.

"Things will be easier, but let's not prejudge anything ... Karadzic has been arrested but Mladic has not."

Karadzic and Mladic were indicted for genocide over the 1995 Srebrenica massacre, in which some 8,000 unarmed Bosnian Muslim males were murdered and bulldozed into mass graves.

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The EU signed a long-delayed Stabilization and Association (SAA) pact with Serbia in April but vowed not to ratify it or unlock its trade benefits until all 27 member states agreed that Belgrade was complying fully with the U.N. war crimes tribunal.

Rehn told reporters he believed it was time to offer Belgrade the economic boost of better trading conditions.

"While recognizing that it is the (EU) Council's right to decide, from the Commission's point of view, we should start implementing the interim agreement, that is the trade-related part of the SAA agreement now," Rehn told a news conference with Serbian Foreign Minister Vuk Jeremic.

However, German Foreign Minister Frank Walter Steinmeier said the Netherlands and Belgium had insisted at the meeting that any such step should be linked to an overall review of Serbia's cooperation by U.N. Chief Prosecutor Serge Brammertz.

Dutch Europe Minister Frans Timmermans told reporters that the Netherlands would look at any proposal from Rehn. For a full implementation of SAA, he said that other criteria -- notably the pursuit of Mladic -- would be taken into account.

"This is also something for us to judge, not just for Mr Brammertz to state," he said.

Italy's Franco Frattini said the EU had a duty to give "an immediate positive answer" to Serbia, for example via the trade agreement. He added that Italy would also consider ratifying the full SAA after the summer break.

In a statement issued after the talks, the EU reaffirmed statements that Serbia could still "accelerate its progress towards the EU" but gave no timeframe for winning candidate status -- the next rung on the ladder which Belgrade wants to secure as early as the end of this year.

EU-Serbia ties are further complicated by the standoff over Kosovo, whose Western-backed secession in February was opposed by Serbian politicians across the spectrum.

Jeremic said he would recommend to the cabinet in Belgrade on Thursday returning withdrawn Serbian ambassadors to EU member states which recognized Kosovo's secession in February, while continuing to defend his country's territorial integrity.

(Additional reporting by David Brunnstrom in Brussels and William Schomberg in Geneva; Editing by Paul Taylor and Janet Lawrence)