ZAGREB (REUTERS) - Croatia arrested on Wednesday a former intelligence chief wanted in Germany, responding to an extradition row that overshadowed the Balkan state's accession to the European Union last summer.

Mr Josip Perkovic was one of 10 people arrested, state news agency Hina reported, as an amended law took effect that brought the country's extradition laws into line with most of the rest of the bloc.

He is sought in connection with the 1983 murder of a Yugoslav dissident in Bavaria, allegedly orchestrated by communist Yugoslavia's secret services for which he then worked.

He has denied wrongdoing. His lawyer, Mr Anto Nobilo, told state television HRT that Mr Perkovic would oppose extradition, saying he did not expect a fair trial in Germany and because he had already been investigated and cleared of all charges in Croatia.

Shortly before joining the European Union (EU) on July 1, Zagreb changed its laws to prevent the extradition of suspects in crimes committed before 2002, when new EU extradition rules had taken effect.

The government said it wanted to protect veterans of Croatia's 1991-95 independence war from facing potential prosecution elsewhere in the EU, and denied any connection to the Perkovic case. Some EU member states have the same 2002 time limit.

But the government removed the time restriction in August after the European Commission warned it could face legal action, including the possible loss of EU funds.

The amended law took effect on Jan 1 and Hina said that in addition to Mr Perkovic, police had immediately arrested a second Yugoslav era intelligence chief, Mr Zdravko Mustac, and eight others.

"It is now a matter for the police and the judiciary. The new law is applied equally to everyone," President Ivo Josipovic said.

Mr Perkovic had worked for the communist-era secret service, the UDBA, and led the intelligence service in Croatia after the breakup of Yugoslavia.

His lawyer Nobilo said a local court should rule on whether Perkovic would be extradited within eight days.

Mr Perkovic, who could not be reached for comment, said last month he was ready to testify before a Croatian court as soon as the new law took effect.