The decision came after the Serbian government took steps to extradite Milosevic to the U.N. war crimes tribunal in The Hague, but before the former president was sent there on Thursday.
State Department spokesman Richard Boucher had foreshadowed the positive administration decision Tuesday.
"We very much welcome the moves that the Yugoslav government, the Serbian government have been taking," Boucher said.
"We welcome the Yugoslav decree on cooperation with the tribunal. We welcome the initiation of legal proceedings against Milosevic pursuant to this decree. We're encouraged by these positive developments as we consider participating in Friday's donors' conference," he said.
A State Department recommendation in support of U.S. participation in the conference was sent to Secretary of State Colin Powell on Tuesday.
"We decided to go based on the steps that they have taken and assurances they have made to us about cooperation with the ICTY (International Criminal Tribunal for the Former Yugoslavia)," the State Department official said, speaking on condition of anonymity.
"In Brussels we expect to make significant pledges because we believe it's in our interests to see Yugoslavia continue on a path toward democracy and economic reform. That's important to us. But the signature on the check won't happen until Belgrade has followed through on its pledges to us," he said.
Yugoslav President Vojislav Kostunica had said Tuesday there was no possibility that Milosevic could be transferred to the tribunal's custody before Friday's donors' conference. But on Thursday, officials of Serbia, the larger of Yugoslavia's two republics, handed Milosevic over to a U.N. official. He was then taken to The Hague.
The tribunal indicted Milosevic for crimes committed against the Kosovo Albanian population in Kosovo in 1999.
Sen. Joseph Biden, D-Del., chairman of the Senate Foreign Relations Committee, said Tuesday that American participation in a donors' conference should not be unconditional.
"If the administration decides to participate in the donors' conference, it should condition release of any U.S. assistance on the extradition of Milosevic and the other 15 suspects indicted by the tribunal who are thought to be in Yugoslavia," Biden said.
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