WASHINGTON (AP) _ Celebrating the political rebirth of the people of Serbia, President Clinton lifted key trade and economic sanctions to demonstrate support for Belgrade's newly installed government.

``The victory of freedom in Serbia is one of the most hopeful developments in Europe since the fall of the Berlin Wall,'' the president said on Friday. ``It ended a dictatorship and it can liberate an entire region from the nagging fear that ethnic differences can again be exploited to start wars and shift borders.''

Clinton announced the immediate ending of the oil embargo and flight ban that were imposed in 1998 to punish and isolate the regime of Yugoslav President Slobodan Milosevic.

``The removal of these sanctions is a first step to ending Serbia's isolation,'' Clinton said in a written statement.

James C. O'Brien, the senior U.S. official overseeing developments in the Balkans, met with new Yugoslav President Vojislav Kostunica in Belgrade on Thursday to offer congratulations on Kostunica's election victory and to highlight the message that further progress is expected.

Clinton acted just days after the European Union lifted its own oil embargo and ban on commercial flights to and from Serbia, the principal Yugoslav republic.

``We have a strong interest in supporting Yugoslavia's newly elected leaders as they work to build a truly democratic society,'' Clinton said.

The EU did not remove sanctions that froze overseas assets of Milosevic and his allies and prohibited them from traveling to 15 EU nations.

Clinton said the United States would also ensure that the lifting of sanctions does not allow Milosevic's supporters ``to continue the systematic theft of resources that have marked the last 13 years.''

``Our disagreement was with the Milosevic regime, not the people of Serbia who have suffered under the regime's brutal policies,'' the president said.

``In that vein we will continue to enforce a ban on travel to the United States by top members of the Milosevic regime and keep in place measures that help the new government deter a looting of the national patrimony during the current period of transition in Yugoslavia,'' the president said.

He said the administration also would review restrictions on Serbia's participation in international financial institutions ``as Serbia makes its democratic transition and meets its international obligations.''

``There is still much work ahead for the Yugoslav people and their new government: restoring confidence in the rule of law, rebuilding an honest economy, accounting for the past while building for a better future,'' Clinton said.

``Thankfully, that work can now begin _ without the burden of isolation and with the friendship of the American people.''