Interior Minister Skender Hyseni said in a statement that police had seized more than 12 kilogrammes (26.5 pounds) of explosives yesterday, and noted had they been "detonated in a public place, human casualties would have been enormous."
Police spokesman Baki Kelani told reporters the car was "filled with a huge quantity of explosive material," and was stopped yesterday while being driven through a residential area in the capital that houses many embassies and diplomats.
Kosovo's prosecutor has launched a probe into what is being considered a plotted "terrorist attack."
Hyseni said in his statement the car's driver "is a citizen of Serbia...With permanent residence in Belgrade, and (carrying) Belgrade licence plates on his car."
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The driver born in 1968 and identified only by the initials SG was immediately arrested, Kelani said.
Police refused to speculate on the intended target.