(Edits, adds comments from Croatian prime minister)

By Alexandra Hudson

THE HAGUE, March 11 (Reuters) - Former Croatian general Ante Gotovina went on trial at the Yugoslav war crimes tribunal on Tuesday for driving up to 200,000 Serbs from a rebel enclave in a military offensive that made him a hero in his homeland.

Gotovina and his fellow generals Ivan Cermak and Mladen Markac are accused of orchestrating the killing of hundreds of people and the shelling and torching of towns and villages as Croat forces retook the Serb-controlled Krajina region in 1995.

"Serbs were in panic-stricken flight, not by accident but by design," U.N. prosecutor Alan Tieger told the court. "For those who remained, life became a nightmare."

Years of international pressure on Croatia to deliver its last war crimes suspect finally ended in 2005 with Gotovina's seizure in Spain's Canary Isles.

His capture triggered large protests in Croatia, but also an invitation to Zagreb to start European Union accession talks.

The mountainous Krajina region, which skirts the borders of Bosnia in southern and central Croatia, had been heavily settled by ethnic Serbs for centuries.

After Croatia declared independence from Yugoslavia in 1991, they drove out around 80,000 Croats in a campaign of "ethnic cleansing" that has also led to convictions in the Hague, and proclaimed their own Serb republic.

Prosecutors say Gotovina, 52, and his fellow accused were instrumental in planning "Operation Storm" to recapture the territory from August 1995.

WASTELAND

While the legality of the recapture of Krajina is not in question, the prosecution said crimes against humanity and war crimes took place during a massive military operation that left behind a wasteland of destroyed Serb villages and homes.

As the overall commander of the offensive, prosecutors say Gotovina knew of the mistreatment of Serbs but failed to prevent the crimes or punish the perpetrators. They said he had known that among his troops were Croats who had suffered at the hands of Krajina Serbs and so were predisposed to revenge. The prosecution presented video footage of burning Serb houses and the bodies of elderly or handicapped Serbs who had been unable to flee and were murdered in their homes.

The start of the trial was being televised live in Croatia, but it has so far caused little public anger.

Bruno Lopandic, a foreign policy expert at the daily Vjesnik, said Croatia was now more focused on its EU bid.

"The Gotovina trial is no longer a big issue, and this shows Croatia is one of the few countries in the region that has embraced the rule of law," he said.

All three accused, who have pleaded not guilty, are charged with participating in a joint criminal enterprise alongside Croatia's late nationalist president, Franjo Tudjman.

Prosecutors played a recording of Tudjman, who died in 1999, describing a campaign of disinformation that would pretend to guarantee Serbs civil rights. The recording ended with Tudjman giving what prosecutors called "a knowing laugh".

Prosecutors also quoted him describing Serbs in Krajina as a "cancer on the underbelly of Croatia", and multi-ethnic states as "unsustainable".

Gotovina's defence counsel, Greg Kehoe, said outside the court that, seen in a wider context, the operation had helped bring peace to the region:

"Gotovina brought Serbs to the negotiating table ... and helped bring about the end of the war." Croatian Prime Minister Ivo Sanader, who made cooperation with the Hague a priority for his reformist centre-right government, said he believed Gotovina would be vindicated.

"I expect that the defence teams will refute the prosecutors' claims and that the presumption of innocence will be confirmed," he told reporters in Zagreb. (Additional reporting by Zoran Radosavljevic in Zagreb; Editing by Kevin Liffey)

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