Allied Bosnian and Croat forces have advanced to within striking distance of the key Serb stronghold of Banja Luka.
Banja Luka is flooded with Serb civilians fleeing the government and Croat advance.
In the past few weeks, government offensives caused a wave of Serb civilians to flee to the Banja Luka region.
General Stanislav Galic was captured in the northern town of Banja Luka, the main city in the Bosnian Serb Republic.
Relief officials say 120, 000 Serbs have arrived in the Banja Luka region over the past 10 days, fleeing Bosnian government offensives.
An independent television station in Banja Luka has been championing her anti-corruption campaign and the city's residents appear to support her.
In an ominous trend for the now-beleaguered Serbs, the front line continued to expand steadily toward their remaining northern stronghold, Banja Luka.
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Based on their stories, the U.N. believes at least 5, 000 Moslem men of fighting age from the Banja Luka region have been detained or worse.
Serbs in Banja Luka want more autonomy, or even full independence.
One hopeful example is the municipality of Laktasi, near Banja Luka.
He left the town of Banja Luka in the early hours of Saturday morning under a Bosnian Serb police escort and headed for the Yugoslav border.
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Elsewhere in the war-riddled region, the joint offensive by the predominantly Muslim Bosnian government and Croats continues to refrain from attacking the Serb stronghold, Banja Luka.
But her political base is in Banja Luka, a city in the part of the Bosnian Serb republic that is surrounded by Croat and Muslim lands.
In July British-led forces took over the Serb Republic's largest city, Banja Luka, and handed it to the entity's pragmatic, if still nationalist, president, Biljana Plavsic.
Bosnia's Muslims and Croats each run their own affairs, while the Serb republic has split between hardline nationalists based in Pale and more moderate nationalists centred on Banja Luka.
Though he has moved the government from the hardliners' stronghold of Pale to Banja Luka, the Serb Republic's eastern half is still controlled by Mr Karadzic and has its own police force.
Few details of how the current governments will encourage refugees to go back were immediately available, but Croatia is to open a consulate in Banja Luka and appoint a consul to ease the process.
Along with the focus on the development of culture in Bosnia and Herzegovina, the Programme supported the rehabilitation of three symbols of multiculturalism: the Orthodox Church in Mostar, the Ferhadija Mosque in Banja Luka, and the Monastery in Plehan near Derventa.
Dragan Jerinic, editor of Nezavisne Novine, a Banja Luka paper, says the argument is not really about police but about the desire for revenge on the part of Serb politicians who were sacked by Lord Ashdown last year for protecting war-crimes suspects.
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