Russia agreed to supply $360 million worth of arms, including sophisticated missiles, to Serbia and Serb-controlled areas of Bosnia-Herzegovina and Croatia, the Observer reported yesterday.

The British newspaper said generals from the Russian Army and intelligence service signed a secret arms agreement with Serbian leaders in January following negotiations in Romania and Bulgaria.

Such an agreement would violate the United Nations arms embargo against all factions in the former Yugoslavia.

The Observer said the Serbs agreed to buy T-55 tanks and an array of antiaircraft and antimissile missiles.

The newspaper added that Russian soldiers and technicians had already been sent to operate the missile batteries.

The Observer said it was not clear whether Russian President Boris Yeltsin was consulted before the deal was signed. Russia is trying to boost arms sales to earn badly needed foreign currency. The Observer said the agreement was signed by Serb leaders from Krajina so that the Serbian government could not later be incriminated.

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