"In order to prevent further damaging implications of this case, and fully aware of the atmosphere of enormous pressure, I have decided to resign," the statement quoted Sarovic as saying.

Sarovic's resignation followed repeated calls by the international community to sanction those responsible for a violation of the UN arms embargo against Iraqi President Saddam Hussein's regime discovered last September.

Explaining his decision Sarovic, 46, said that he was put in a position where his "arguments were not being considered as important."

Sarovic was the president of the Serb-run Bosnian administration entity, Republika Srpska (RS), which along with the Muslim-Croat federation makes up post-war Bosnia.

At the same time he was the commander-in-chief of the Bosnian Serb army between 2000 and 2002 when the Serb military company Orao exported equipment and refurbished military jets for Iraq.

NATO secretary general George Robertson welcomed the resignation, describing it as "the only possible course of action he could take given his political responsibility for the export of illegal arms to Iraq (...) the international investigations into the affair leave no doubt whatsoever of President Sarovic's responsibility", he said in a statement.

The European Union's commissioner for external relations, Chris Patten, also welcomed Sarovic's decision, saying it was "the right response to the arms-to-Iraq affair.

"This should draw a line under this affair," Patten said in a statement.

Also welcoming the resignation, the international community's High Representative in Bosnia Paddy Ashdown said: "With war now underway in Iraq, possibly involving weaponry exported from this country, it is impossible to overstate the seriousness of this affair."

The Orao affair "has done more damage to Bosnia-Hercegoviona's international reputation than any other event since the (country's 1992-95) war," he said.

A NATO investigation also implicated Sarovic in another scandal that implicated 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.

The illegal spying activity "could very easily have put the stability of this country in jeopardy," Ashdown said adding that it represents a grave violation of Bosnia's 1995 peace agreement.

Sarovic, from the nationalist Serb Democratic Party (SDS) founded by the most wanted criminal of the UN tribunal Radovan Karadzic, was commander in chief of the RS army at the time when illegal spying occured.

Ashdown stressed that these two affairs highlighted the lack of "proper and transparent civilian and democratic control" over the military in Bosnia and Bosnian Serbs' reluctance to accept state authority.

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."

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 the central parliament, from among their ranks.

SPACE.WIRE