ISTANBUL -- An international court Friday acquitted two Croatian generals of war-crimes charges, sparking nationwide celebration in the small country where the recapture of territory from ethnic Serbs in 1995 has long been seen as an act of liberation, not a crime against humanity.

By a 3-2 margin, the appeals chamber of the International Criminal Tribunal for the Former Yugoslavia reversed a lower chamber that had sentenced Gen. Ante Gotovina to 24 years in prison and Gen. Mladen Markac to 18 years for crimes against humanity and violations of the rules of war.

Theodor Meron, the American president of the U.N. tribunal, said the lower court had made erroneous assumptions about the margin of error for artillery in finding that Croatian forces had indiscriminately shelled four towns in the Krajina region. Also rejected was the trial court’s finding that both men were part of a “joint criminal enterprise” intended to terrorize ethnic Serbs into fleeing.

“I thought the verdict was consistent with my understanding of the facts,” said Peter Galbraith, who was the U.S. ambassador to Croatia in August 1995, when Croats mounted Operation Storm. “Serious crimes took place in Krajina after Operation Storm, but I had no indication that there was a conspiracy to expel the Serbs.”

Galbraith said the decision was a major victory for Croatia. “It takes away the stigma that the homeland war was a war crime,” he said.

A crowd estimated at 100,000 packed the main square in Zagreb, the capital of the small, mostly Roman Catholic nation, to welcome Gotovina and Markac as national heroes after their release from imprisonment at The Hague, where the tribunal meets. Cardinal Josip Bozanic conducted a special Mass in their honor.

“Delirium has taken over the country,” said Luka Misetic, the Chicago-based lawyer who represented Gotovina before the court and then flew to Zagreb. “It was as if the pope had delivered the World Cup.”

Croatia’s reconquest of its Krajina region was the first major reversal of the expansionist drive by neighboring Serbia, which under President Slobodan Milosevic sought to seize as much territory as possible as the multiethnic Yugoslav federation began to crumble in the early 1990s.

After Croatia and Slovenia seceded in June 1991, protesting Milosevic’s heavy-handed domination of the country, the federal army, dominated by Serbs from Serbia and ethnic Serbs from other republics, seized at least 30 percent of Croatia’s territory. Serbs are mostly Orthodox Christians and long had a rivalry with the Croats. In seizing the Krajina region and setting up a mini-state there with army backing, Serb militias cut off Zagreb and the grain-producing plains of Zagoria from most of the Adriatic coast.

Ethnic Serbs went on to declare a Serb state in the Serb-dominated areas of mostly Muslim Bosnia-Herzegovina later that same year, starting a 3 1/2 year war in which at least 100,000 people died. Ethnic Croats in the melting-pot republic also seceded, with the backing of then-President Franjo Tudjman, adding to Bosnia’s woes.

In an attempt to untangle a set of intertwined conflicts that was raising tensions throughout southern Europe, the United States played a critical role in supporting the Croat reconquest of Krajina, providing not only diplomatic and political support but also extensive intelligence, according to top Croatian intelligence officials.