By Matthew Price Belgrade

The Bosnian Government has announced a total ban on all arms exports and imports.

The move follows strong international pressure after documents came to light apparently showing that a Bosnian company had been involved in selling military parts to Iraq in breach of a United Nations arms embargo.

The US State Department says the parts - for Iraqi military aircraft - were exported via Yugoslavia.

Sarajevo and Belgrade have reacted swiftly to the news, both apparently fearful of the long-term effects the affair could have on their international reputations.

This is the tough action the international community had demanded of Bosnia's politicians.

Seized documents

In the spotlight is a company called Orao.

Documents recently seized at Orao's offices in Bosnia are said to show that military parts were exported via a trading company in Yugoslavia to Iraq.

The BBC has learnt that some international officials in Bosnia believe other companies in the country may also be involved.

A Yugoslav firm is accused of acting as sales agent

A senior Yugoslav official told the BBC that federal authorities first became aware of the allegations last year, when the US passed on its fears.

Since then, a number of arms transfers from "third countries", as the official put it, had been intercepted and progress, with the co-operation of Western diplomats, was being made on ending the trade.

Belgrade, like Sarajevo, says there was no government involvement.

Observers, however, believe that individuals - including officials appointed by the former president, Slobodan Milosevic - may have continued to take advantage of contacts made with countries like Iraq during the previous regime.

"A transition crime," one observer called it.

Whatever the facts, there is major concern in both capitals that the affair will seriously affect the prospects of reintegration into Western organisations.