Yugoslavia conceded Thursday that a state arms dealer had violated U.N. trade bans with Iraq.

The admission comes two weeks after evidence surfaced that a Bosnian Serb factory in cooperation with a Yugoslav arms dealer had refurbished Iraqi military aircraft. Previously, the government only indirectly admitted the clandestine arms trade.

In a statement released after a Cabinet meeting Thursday, the government said that "because of imprecise regulations on arms trading, there have been several cases of breaching the U.N. embargo" with Iraq.

The U.N. Security Council has maintained a strict embargo on Iraq since Saddam Hussein's army invaded neighboring Kuwait in 1990. Countries found to be violating this trade embargo could face punitive U.N. sanctions.

According to Belgrade, the breach of U.N. sanctions occurred in connection with Yugoslavia's role in the "overhaul of jet engines for Iraqi military aircraft MiG 21 and MiG 23, and also in providing certain military and technical services."

The government also said it would "suspend all trade protocols on military and economic cooperation with nations under U.N. sanctions for the entire duration of those sanctions."

It also banned "any export of arms and military equipment" to these countries. The government statement did not list the nations under U.N. sanctions.

Evidence of the trade with Iraq came after NATO inspected a Bosnian Serb military factory in neighboring Bosnia's northeast.

The NATO raid on the Orao plant uncovered documents showing the manufacturer was selling instruments for the aviation industry to Baghdad through Yugoimport, the Yugoslav state arms dealer.

After the discovery, the government of the Bosnian Serb republic, on whose territory Orao is located, admitted the aviation manufacturer was at fault and promised to discover and punish the culprits.

In Belgrade, the Yugoslav government promptly fired Yugoimport's director, Gen. Jovan Cekovic as well as a deputy defense minister, Ivan Djokic. It also ordered Yugoimport to shut down its office in Baghdad.

Although the United States welcomed the dismissals, it urged Yugoslavia to halt any ongoing cooperation with Iraq, conduct a thorough investigation and hold accountable those responsible for the arms trade.

The scandal — which could lead to renewed U.N. sanctions against Yugoslavia — became a major embarrassment for Belgrade, where democratic leaders who ousted ex-president Slobodan Milosevic two years ago clashed over who was responsible for the affair.

Under Milosevic, the country was under embargo for his role in stoking the Balkan wars of the 1990s.