Mr Sanader says he wants Croatia to join the European Union in 2007.
Sanader - who was premier from 2004 to 2009 - had fled the country but was arrested in Austria.
Mr Sanader is now seeking coalition partners to give him the extra few seats he needs for a solid majority in parliament.
In November last year, the country's former Prime Minister, Ivo Sanader, was jailed for 10 years after being found guilty of taking pay-offs from foreign companies.
It seems that Mr Sanader recognises that he has no choice but to arrest the general, who, as it happens, had close links with his political enemies.
In the short term, though, Mr Sanader will have to resolve the problem of Ante Gotovina, a Croatian general indicted by the war-crimes tribunal in The Hague.
This week Croatia's prime minister, Ivo Sanader, unexpectedly stood down, raising new questions over how soon Croatia might actually get into the EU. Most other western Balkan countries have much further to go.
One of the great ironies of the Sanader years is that the changes that he helped oversee and which were part of the EU accession process, were to lead to his downfall and imprisonment.
Mr Djukanovic may hope to keep influence behind the scenes, although he knows that Ivo Sanader, his former counterpart in Croatia, tried and failed to do this (and now stands accused of massive corruption).
Under the headline "Gotovina - a Christmas bonus" - playing the pun on Gotovina's surname which also means cash - the paper says the arrest comes as a gift for the Christmas stockings of UN prosecutor Carla Del Ponte and Croatian Prime Minister Ivo Sanader.
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