I first met Radovan Karadzic in September 1992 at the town of Lukavica in Bosnia. He told us that the heavy weapons of Serb forces were concentrated in 11 positions around Sarajevo as had been requested under the ceasefire.

The UN commanders were adamant that “he was lying through his teeth”. And indeed in the journey that we took in an armoured vehicle from Sarajevo airport to the meeting we had passed scattered tanks and artillery pieces. As he started, so he continued, fabricating stories and making flamboyant statements.

Within two weeks I had a major clash with him in Banja Luka over his denial that Serb troops had bussed refugees - old people and women with children - to the Serb-Muslim border and then fired rifles and mortars at the civilians as they crossed the field.

Dr Karadzic is a gambler, who played at the tables as well as gambling with the lives of others. His bitten-down nails revealed an inner tension, masked by his apparent self-confidence. His final gamble was an attempt to continue to practise medicine in Belgrade, albeit now with a long white beard, in the knowledge that a dramatic change had taken place in the government of Serbia with the defeat of the nationalists. Ironically, the junior partner in President Tadic's ruling coalition in Belgrade is the Socialist Party, once led by Slobodan Milosevic.

It is easy to underestimate Dr Karadzic, a poet and specialist in psychiatry, who became president of the Serbian Democratic Party in 1989. In the summer of 1990 he and Alija Izetbegovic, the Bosnian Muslim leader, went to a memorial meeting on a bridge over the river Drina, for Serb and Muslim victims of the Second World War. Both said that “blood must never flow down the Drina again”.

But the blood did flow - because of Dr Karadzic's belief, as reported in a newspaper, that “Serbs cannot live together with Muslims and Croats”.

“I told Owen not to dump us into the same sack like cats and dogs,” he said. He became coarsened by the three-year war in Bosnia, and, by 1995, he would boast to me about hostage-taking and dismiss, with callous disregard, any representations made about war crimes or crimes against humanity.

At first, Dr Karadizic appeared under Milosevic's thumb. But that changed dramatically after the Bosnian Serb Assembly meeting in Pale in May 1993, which disowned the Vance-Owen peace plan that Dr Karadzic had signed in Athens that month. The two Serb presidents, Dobrica Cosic and Milosevic, and the Montenegrin President, Momir Bulatovic, spoke at the meeting to try to gain acceptance for the plan, but it was here that General Ratko Mladic, the head of the Bosnian Serb Army, emerged as the most important figure opposing the settlement. Never again would Dr Karadzic accept Milosevic's leadership automatically.

He became contemptuous of the refusal of the US, UK and France to enforce any settlement and three further peace plans were rejected. In December 1993, Dr Karadzic refused to concede to Izetbegovic less than 1per cent of the territory he needed to agree the EU action plan. In the summer of 1994 the US, UK, France, Germany and Russia Contact Group's peace map was dismissed with little short of contempt by both Dr Karadzic and Mr Mladic.

The Bosnian Serbs' seizure of the UN “safe haven” of Srebrenica in July 1995 was followed by the massacre of some 7,500 Muslim men and boys. Mr Mladic masterminded that operation but it is likely that the International Criminal Tribunal for the Former Yugoslavia (ICTY) will conclude that Dr Karadzic had a major responsibility for the massacre.

Shamed by Srebrenica, President Clinton was ready to commit US troops through Nato to enforce a settlement. Dr Karadzic was indicted as a war criminal and excluded from the Dayton negotiations, beginning his 13-year life as a fugitive. Nato troops knowingly let him through a roadblock, accompanied by his bodyguards, soon after the Dayton accord had been signed because of Nato commanders' obsessive fear that a military encounter would endanger policing of a settlement.

It is a considerable achievement that Mr Tadic, the democratically elected Serbian President, who is deeply committed to EU membership, has been able to ensure that his security forces captured Dr Karadzic. But Mr Mladic must be arrested too. A heavy responsibility falls on the prosecutor of the ICTY to learn the lessons of the long-drawn-out prosecution of Milosevic, who died before a judgment was passed. I hope that the ICTY will bring only a limited number of charges relating to Srebrenica and the siege of Sarajevo, and can reach a verdict no later than 2010.

For the first time in my involvement in the former Yugoslavia I feel a sense of hope about the Balkans. Serbia is so crucial, economically and politically, that a new momentum for peace and reconciliation could now be established and the nationalist element in Serbian politics, while never to be underrated, should fade in significance and power.

Lord Owen is a former Foreign Secretary and was EU co-chairman of the Conference for the Former Yugoslavia, 1992-95

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