Mirko Sarovic, 46, has submitted a resignation that is "irrevocable," speaker Dragan Kalinic told journalists.

A report by Western intelligence services obtained by AFP Tuesday linked Sarovic to secret arms sales by the Serb military aviation company Orao to Iraq while he was president of the Serb part of the country, known as Republika Srpska (RS).

The top international envoy in Bosnia, Paddy Ashdown, was due to make a series of decisions concerning the Orao affair on Wednesday and news reports had said he was ready to fire Sarovic. Ashdown's mandate here gives him power to sack elected officials.

Bosnian Serb Prime Minister Dragan Mikerevic welcomed Sarovic's resignation, calling it a "personal and moral act aimed at setting new standards for all those in public office."

"I can only support such an attitude from politicians in the Republika Srpska. I believe it will help restore credibility to institutions in the RS," Mikerevic told journalists.

Sarovic is an official in the Serb Democratic Party (SDS), the nationalist grouping founded in the 1990s by fugitive war crimes suspect Radovan Karadzic, one of the most wanted criminals of the UN tribunal in The Hague.

The intelligence report said Sarovic was politically responsible for the refurbishing and supplying of spare parts by Orao for Iraqi aircraft in violation of a UN arms embargo.

The illegal sales were discovered last September after NATO, acting on a tip-off by US intelligence, raided Orao's premises.

From 2000 to 2002, Sarovic was president of the Republika Srpska, which along with the Muslim-Croat Federation makes up post-war Bosnia, as well as commander-in-chief of the military. This was the period when the secret arms sales to Iraq took place.

A NATO investigation also implicated Sarovic in another scandal that charged the Bosnian Serb military intelligence with spying on the NATO-led peacekeeping Stabilisation Force (SFOR) in Bosnia, as well as on individuals and international and local institutions.

Spying activities were in violation of the 1995 Dayton peace accord that ended Bosnia's three-and-a-half-year long war.

Along with other members of RS supreme defence council, Sarovic "appears to have been an accomplice" in authorizing the spying that went back "a couple of years", a NATO official said earlier.

The RS army chain of command and spying targets "suggest RS government support for anti-Dayton or obstructionist activity", SFOR said in a statement Tuesday referring to the scandal.

Sarovic was elected in October as the Serb member of Bosnia's tripartite presidency -- comprising a Croat, a Muslim and a Serb -- for a four-year term, with the chairmanship rotating every eight months in Bosnia's last October general polls.

His successor will be elected by Serb MPs within in the central parliament, from among their ranks.

The RS parliament was to hold an extraordinary session Thursday.

SPACE.WIRE