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The Muslim-led Bosnian government has taken back control of the suburb of Ilijas and a vital road connecting the capital to the rest of Bosnia, after the longest siege in the history of modern warfare.
Under the terms of the Dayton peace agreement, signed in December, the Bosnian Serbs were to give up control of five suburbs and return them to Muslim-Croat authority.
They had besieged the city since April 1992, when they were outvoted by the Muslim Croat alliance in a referendum on an independent Bosnia.
The handover of the five suburbs was one of the most sensitive parts of the Dayton accord and has been the cause of angry protests by Serbian residents who claim they would rather leave their homes than live with Muslims, as they did before the war.
The first suburb to be handed over, Vogosca, was rapidly evacuated in the days preceding the handover last week as Serb residents fled their homes.
As they left, they burned down a children's nursery and several shops.
According to the United Nations, there were 17,000 people living in Ilijas at the end of the war, but only 2,000 of them at the beginning of this week.
The handover is due to be completed by 20 March, by which time it is believed tens of thousands of Serbs will have left their homes.
Most of the Serbs affected are going to towns in eastern Bosnia, where they operated a policy of "ethnic cleansing", expelling Muslims and Croats to create Serb-dominated areas.
Nenad Popovic, a policeman at a Serb checkpoint, told The Independent newspaper: "All the Serbs are aware of the uncertainty we will face in the future and we are aware of the difficulties we will experience. But it is better to leave than to be a second-class citizen."
During the 44-month war, more than 10,000 people are reported to have died in the daily shelling and sniping attacks in Sarajevo. Some 1,800 of the casualties were children.
There have been numerous atrocities - including a single shell fired at Sarajevo's Markale market on 5 February 1994 which killed 68 people and wounded more than 100.
Nato intervened in 1995 after a mortar attack on Sarajevo in which 38 people were killed.
It ordered air strikes against the Bosnian Serbs which finally forced them to return to the negotiating table and sign the Dayton accord.
The war has left Sarajevo deeply scarred. Many buildings have been destroyed and most have suffered some damage.
New cafes are opening, sniper screens are coming down and shops are selling exotic fruits once again, but most people living in the city are unemployed and 70% of the population are wholly or partly dependent on aid supplies of flour, pasta, beans and rice.
Although government employees are being paid in dinars, the only acceptable currency is German Deutschmarks.
The departure of the Serbs has also struck a blow at international efforts to establish Sarajevo as the multi-national capital of a united Bosnia.
The first war crimes trial centring on the siege of Sarajevo ended with a Bosnian Serb general being sentenced to 20 years in jail.
General Stanislav Galic, who commanded the Bosnian Serb forces that besieged the Bosnian capital during the war, was found guilty by the war crimes tribunal.
Bosnian Serb President Radovan Karadzic and General Ratko Mladic, his army chief, were both indicted for war crimes but continue to evade arrest.
The war left about three million refugees. An agreement signed in Sarajevo in January 2005 pledged to resolve the crisis by the end of 2006.
Refugees have also been given the right to return to their pre-war homes - although in many cases they have returned only long enough to sell off their belongings and move back to where they have settled since the war.
The Sarajevo film festival which started as a cultural stand against the Bosnian war in 1994 has grown in popularity and is now the most important cultural event in the country.
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