IN THE mountain village in Bosnia-Herzegovina where Ratko Mladic was born locals scoff atrumours that one of the most wanted men in Europe is about to be arrested.

“They’ll never catch Mladic. He’ll have the unknown grave of a hero,” said the barman in the wooden shack that calls itself the Fontana coffee house.

“He’s a hero. He was just a soldier. He punished his own troops when they did wrong things,” said Boban, who sat at the bar in Kalinovik as two cows ambled down the main street outside. “He’ll only go to The Hague if he decides to go.”

Such defiant talk has been inspired by the media speculation in Belgrade that the former leader of the Bosnian Serb Army, indicted for genocide by the UN War Crimes Tribunal in The Hague, is on the verge of surrender or arrest after a decade on the run.

The speculation was denied by officialdom yesterday. Carla del Ponte, the tribunal’s Chief Prosecutor, said that the speculation had “absolutely no basis whatsoever”.

A Serb Government spokesman called the speculation a “red herring” and decried the “negative effect this might have on the country both abroad and internally”. He insisted Serbia was determined to fulfil its obligations to the tribunal. But they protested in vain. Several Serb and Bosnian newspapers claimed that General Mladic, who led the siege of Sarajevo and the 1995 Srebrenica massacre, was at a secure location negotiating the terms of his surrender. The talks were allegedly taking place at a hunting lodge, a monastery or an underground rocket base.

There were even suggestions that the Serb Government might have inspired the rumours to give the impression that it is “doing something”. It needs to, for one factor undoubtedly driving the stories is the deadline of next Tuesday that the European Union has set for Serbia to hand over General Mladic.

On Monday Ollie Rehn, the EU Enlargement Commissioner, will report to EU Foreign Ministers on whether or not Serbia is co-operating with the tribunal. The stakes are huge. Serbia’s future depends on the outcome. If the ministers decide it is stalling, its attempt to join the EU will be frozen and Serbia will remain a pariah state with all the economic costs that entails.

This week also saw the opening in Vienna of UN-brokered talks on the “final status” of Kosovo, the province with an ethnic Albanian majority that is seeking independence from Belgrade. The Serbs’ hand will hardly be strengthened if they are seen to be protecting General Mladic.

The Serbian Government has undoubtedly tightened the net on General Mladic in recent months, arresting several people close to him, but Signora Del Ponte demands more. “Ratko Mladic is in Serbia. There is no doubt about this. He has been there since 1998. During all this time he has been and he remains in reach of the Serbian authorities,” she declared yesterday. “He can and must be arrested immediately . . . Serbia knows that negotiations (with the EU) may be suspended or may never conclude if Belgrade fails to cooperate fully.”

On the hillside overlooking Kalinovik, close to the old Austro-Hungarian fort, the General’s namesake, Ratko, 65, is herding his sheep. Dressed in his old Bosnian Serb army uniform, the only warm clothes he possesses, he says that he does not want to talk about the general. “I’ve been in this area for the past 12 years and I have not seen the general with my own eyes. I don’t think about him at all. I used to have a hundred sheep. Now I don’t. I’ve lost everything because of war,” he tells me.