EU foreign policy chief Javier Solana and NATO head Jaap de Hoop Scheffer attended the ceremonial transfer of power from the NATO-led Stabilisation Force (SFOR) to the EU's 7,000-strong EUFOR at Camp Butmir in Sarajevo.

"Today the EU assumed a new responsibility in your country ... that will be done with the same spirit and with the same efficiency as our predecessors from NATO," Solana said.

A 60,000-strong North Atlantic Treaty Organization (NATO) mission, including 20,000 US troops, was deployed in Bosnia-Hercegovina to keep the peace after the 1992-95 war and was gradually scaled down to 7,000.

"Although NATO's role is changing today, its commitment to Bosnia-Hercegovina's future development remains as solid and resolute as ever," de Hoop Scheffer said.

"In the safe and secure environment that NATO's presence has created, Bosnia-Hercegovina has made considerable progress. The citizens of this country no longer live in fear. State institutions have been established and human rights are now respected."

His words were echoed by Borislav Paravac, the Serb chairman of Bosnia's tripartitite presidency.

"This undoubtedly confirms another big step for Bosnia-Hercegovina in building a lasting peace on its path to European integration," Paravac said.

The handover had little logistical significance as the majority of the NATO soldiers already deployed in the country will simply change their badges and armbands to become members of the EU's so-called "Althea" force.

It is the EU's third military operation after a small security mission in Macedonia and a French-led force in the Democratic Republic of Congo in 2003.

More than 30 countries including 22 EU nations are contributing to the force, which is being led by British General David Leakey.

While peace has returned to the mountainous republic of around two million people, inter-ethnic tensions between Catholic Croats, Orthodox Serbs and Bosnian Muslims continue to simmer below the surface.

The EU peacekeepers may also have to deal with problems arising from flourishing organized crime and corruption, as well as the possible presence of foreign Islamic extremists who entered the country during the war and remained behind.

But the EU's Bosnia mission is being seen mainly as a key test of the European Security and Defence Policy, the military and security arm of the Union.

If successful it could pave the way for other such missions in areas where NATO has long borne the brunt of the responsibility for collective security on the contintent, for example in neighbouring Kosovo.

NATO will maintain a small contingent of troops in Bosnia, including some 250 US soldiers, notably to hunt alleged war criminals such as wartime Bosnian Serb leaders Radovan Karadzic and Ratko Mladic.

NATO's record here has been blackened by its failure to arrest the pair, who are wanted on charges including genocide.

Chief UN war crimes prosecutor Carla Del Ponte, who was expected to meet General Leakey here Thursday to urge him to step up the hunt for the fugitives, said she hoped EUFOR would do a better job.

"I'm very disappointed with the action of NATO in relation to the arrest of war criminals," she said in an interview with the Tribune newspaper in Geneva.

Scheffer rejected the criticism, saying it "doesn't help the common cause" and pointing out that SFOR has made many arrests of war crimes suspects in Bosnia.

"SFOR has done everything it could. I cannot accept the criticism. SFOR arrested 28 persons," Scheffer said.

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