SERBS in Sarajevo released 16 Bosnian civilian hostages following Nato and US pressure yesterday to defuse the first confrontation between alliance peacekeepers and the former warring rivals in Bosnia.
The detainees were handed back in two stages - a group of three men who complained their captors beat them, followed a few hours later by a second batch of 3 including two children.
They were held in the Serb suburb of Ilidza since Christmas when Nato forces reopened roads under the Bosnia peace agreement.
Serb leaders accused them of "illegal activities" and threatened to put them on trial but the Muslim led Bosnian government said the real aim was to test the nerve of the new Nato peacekeeping mission.
The honeymoon enjoyed by the Nato Implementation Force (Ifor) since it started to deploy just before Christmas has begun to fray under growing tensions in Sarajevo and Mostar of which the hostage affair was only part.
A gunman wounded an Italian sentry in the Serb sector of the Bosnian capital overnight and a British transport plane was shot at in what appeared to be the first attacks on Nato troops since they replaced UN peacekeepers on December 20th.
Muslims angered by the killing of a youth in the divided southern Bosnian town of Mostar were reported to have stoned and shot at Croatian registered cars.
The main UN aid agency, UNHCR, halted aid convoys to central Bosnia because Bosnian Croat authorities in Mostar tried to impose taxes on humanitarian shipments.
Sarajevo Serbs released the detainees after Nato commanders intervened and the US put strong pressure on the Serbian President, Mr Slobodan Milosevic.
The three men freed during the morning said they were kicked and punched by Serbs who pulled them off the tail end of a Nato escorted convoy through Ilidza on Christmas Day.
Bosnian ministers accused Nato of failing to take the abductions seriously and the EU threatened to withhold a $77 million (£48 million) aid package for Bosnia unless all hostages were freed.
Political sources in Sarajevo were unimpressed by Nato's slow reaction to the Serb challenge after earlier promises that alliance peacekeepers would not let themselves be sidelined as easily as their UN predecessors.
An easing of the crisis could help clear a way for a visit by President Clinton. White House officials said he planned to inspect American troops in Bosnia in the next two weeks.
In Geneva, Bosnia's former warring factions gave the International Committee of the Red Cross lists of the prisoners they still hold and promised the agency full access to detention camps, an ICRC spokesman said.
The lists of prisoners held by Bosnian Serbs, Croats and Muslims were also given to an ICRC delegate in Sarajevo in line with the Dayton peace accord.
In Vienna, Bosnia's MuslimCroat federation and Bosnian Serbs neared agreement to establish military liaison missions based in Sarajevo, a European security forum official said.
The Croatian President, Dr Franjo Tudjman, visited Sarajevo to discuss the working of the peace agreement.
Dr Tudjman met the Bosnian President, Mr Alija Izetbegovic, as tension rose 80km south of Mostar where Muslims and Croats co exist uneasily despite being nominal allies.
The town is administered by EU officials who acknowledge that ethnic hostility is disrupting their efforts to turn it into a showcase of reconciliation.
Anger rose after a Muslim youth was shot dead by Croatian police and Croatian media reported the shooting and stoning of Croatian cars in the town. The claim was not confirmed by EU authorities.
The UNHCR office in Zagreb said it suspended aid convoys to central Bosnian because Mostar Croats tried to impose a $10 tax on each vehicle.
In Vienna, negotiations on disarming the former warring factions opened yesterday under the auspices of the Organisation for Co operation and Security in Europe.
The talks, which are expected to prove difficult, are crucial to the success of Nato's one year mission to enforce the peace in Bosnia.
Under the Dayton peace accord, the OCSE must secure agreement on confidence building measures by January 26th, and on an international arms reduction treaty between Bosnia and its neighbours by June 6th.