BELGRADE, Serbia -- He was on the run for seven years, the last Serbian fugitive sought by the U.N.'s Balkan war crimes tribunal.
Goran Hadzic, the former leader of Croatia's ethnic Serbs, was arrested Wednesday by black-masked Serbian secret police in a hilly forest as an accomplice delivered cash to him -- the end of a money trail that began with a photo of a Modigliani painting.
The arrest was hailed as the symbolic closure of a horrific chapter in Balkan history and an important step toward the former pariah state of Serbia joining the European Union.
It came less than two months after the capture of Bosnian Serb Gen. Ratko Mladic, who was accused of some of the worst atrocities of the war in the former Yugoslavia.
Western-leaning Serbian President Boris Tadic told his nation in announcing the arrest of Hadzic, 53, that "we have turned a difficult and grim page of our history."
"It was our moral duty," Tadic said on national television. "We have done this for the sake of citizens of Serbia, we have done this for the sake of the victims among other nations, we have done this for the sake of reconciliation."
Hadzic was a warehouse worker in 1991 when Yugoslavia broke up and Croatia's minority Serbs rose in opposition to the country's independence.
He swiftly gained prominence through his links to Serbian leader Slobodan Milosevic's secret police, taking charge of an ethnic Serbian ministate created by the brutal expulsion of non-Serbs from one third of Croatia's territory.
Black-bearded with a dark, piercing stare, he worked closely with criminal gangs that made huge profits from smuggled cars, gasoline and cigarettes.
He also cooperated with paramilitary forces that became notorious for their brutality, including the "Tigers" led by Zeljko Raznatovic, known as Arkan.
According to the war crimes tribunal in The Hague, Netherlands, Hadzic was among those responsible for the 1991 leveling of Vukovar, said to be the first European city entirely destroyed since World War II.
About 10,000 people died in the war, which ended after Croatia retook the territories in 1995.
The Hague tribunal indicted Hadzic in 2004 on 14 charges including war crimes and crimes against humanity, among them the murder, torture, deportation and forcible transfer of Croats and other non-Serbs.
He narrowly escaped arrest for years, apparently due to tips from the Serbian security services. Defense lawyer Toma Fila said Hadzic had spent some time out of the country, but did not specify where or when. Serbia's postwar authorities have long faced accusations that they were not doing enough to hunt down war crimes suspects.
Last year, Serbian authorities found a photo of a painting by Italian master Amedeo Modigliani while searching the home of Hadzic's good friend Zoran Mandic.
They determined that Mandic was trying to sell the work, "Portrait of a Man," along with other valuable paintings, and realized that Hadzic might be running out of cash and financing his continued freedom through the sale of art owned by him and his friends, authorities said.
"The painting opened Pandora's box," deputy war crimes prosecutor Bruno Vekaric said, adding that he believed it was worth 22 million euros ($31 million). That estimate could not immediately be confirmed.
For months, state security agents monitored Hadzic's suspected aides and his support network, including friends and family.
"This, combined with stepped-up pressure on the family and constant searches of the houses of Hadzic's family and friends, finally led to results," Vekaric said.
Serbian security police found out that Hadzic was meeting a money courier and arrested him in a forest outside the village of Krusedol in a hilly region of northern Serbia where many of his relatives live, war crimes prosecutor Vladimir Vukcevic told reporters.
The balding Hadzic, without a beard but retaining a mustache, was armed but did not resist, they said.
Hours later, he was brought for questioning at the war crimes court in the capital of Belgrade, a key step toward his extradition to The Hague. His lawyer said Hadzic will not appeal the process, paving the way for extradition within days.
State TV showed Hadzic entering the courtroom escorted by guards. He walked slowly, slightly hunched.
Fila said Hadzic is a "reasonable man" who only wants to see his family before his extradition.
In October, the EU's executive arm is due to present a progress report on Serbia that is now expected to conclude it has fulfilled the requirements for candidacy. That report is scheduled to be adopted by member states by December, allowing talks on accession to open by spring.
It would then take several years for Serbia to negotiate and meet the political and economic reforms demanded by the EU. New laws will be required on everything from farming to financial markets.
Tim Judah, a London-based Balkan analyst, said Hadzic's arrest should "end any kind of lingering doubts about Serbia's sincerity within the EU."
EU leaders welcomed the arrest and saluted "the determination and commitment" of Tadic's government.
"This is a further important step for Serbia in realizing its European perspective and equally crucial for international justice," said a joint statement by EU president Herman Van Rompuy, European Commission chief Jose Manuel Barroso and foreign policy chief Catherine Ashton.
Tadic, leader of the center-left Democratic Party, needs support from the EU to boost his government's position ahead of next year's general elections.
Recent surveys have shown that Tadic could lose to the conservative opposition unless he manages to raise hopes of economic recovery, foreign investment and new jobs.
Serge Brammertz, chief prosecutor of the war crimes tribunal, said the arrests of Mladic and Hadzic "mark a long-awaited step forward in Serbia's cooperation."