"Although Croatian troops shelled civilian centers, forced the Serbian exodus, torpedoed a verbal surrender accord, waltzed U.N. peacekeepers in front of Croatian tanks as human shields and killed a BBC journalist, Tudjman suffered nary a slap on the wrist from the West."

"Although Croatia's victory in Krajina stirred patriotic sentiments, Tudjman appears to recognize the high price of turning against Bosnia. He would at the very least lose the American and German support he has so carefully cultivated."

From- US NEWS AND WORLD REPORT 8/21/95

False starts have vexed Balkan peacemaking ever since war began in the former Yugoslavia some four years, 100,000 deaths and 2.7 million refugees ago. Another may be looming after the Croatian recapture of Krajina and the flight of the region's Serbian population. Or, just possibly, the endgame in the third Balkan war in this century has finally begun.

Whether it is to be peace or more war now depends largely on two issues: Can Croatia's Franjo Tudjman and Serbia's Slobodan Milosevic swallow their pride and abandon their dreams of a Greater Croatia and a Greater Serbia? And can the West seize the chance offered by Croatia's conquests to forge a settlement in Bosnia that gives all parties enough hope and enough autonomy to offset the still pervasive desire for revenge?

Peace prospects. Inside and outside the Balkans there are limited but encouraging signs that peace won't be elusive this time. Milosevic has shown restraint in the face of Croatia's triumph. Tudjman seems reluctant to play with fire by launching another land grab in eastern Slavonia, on the borders of Serbia proper. Open divisions have appeared inside the Bosnian Serb leadership. And there is belated consensus in Western capitals that if diplomacy is to work in Bosnia-Herzegovina, it must be based on realities created by nearly four years of fighting.

Other developments, however, complicate the peace. Some 150,000 dispossessed and bitter Krajina Serbs now form a new destabilizing element in Serbia and Serb-held territory in Bosnia. In eastern Slavonia large Croatian and Serbian forces confront one another; nonetheless, the United Nations intends to withdraw its 10,000-strong peacekeeping force from Croatia by October. In Washington, a tug of war between the White House and Congress continues after President Clinton last week vetoed a bill that would have forced him to halt U.S. compliance with the U.N. arms embargo on Bosnia. In Bosnia, meanwhile, the uneasy Croatian-Muslim coalition may be tempted to exploit the recovery of the Bihac enclave by opening a new front against the Serbs in northern Bosnia.

A quick end to the conflict is unlikely, but something short of complete war and complete peace at last seems conceivable.

MILOSEVIC UNDER PRESSURE. After the fall of Krajina, thousands of Serbs gathered in Republic Square in downtown Belgrade to denounce the Croats, the Americans and their own leader, Serbian President Slobodan Milosevic. Angry young men waved Serbian flags and chanted "traitor, traitor" as they climbed atop the statue of a Serbian hero, Prince Michael Obrenovic, whose outstretched arm and finger point east, the direction in which he commanded the defeated Turkish Army to leave Serbia in 1867.

Although the protesters compared Milosevic insultingly to the prince - who stood fast against the Serbs' enemies - their anger is unlikely to translate into major political fallout for Milosevic, a master at using wile and his nearly dictatorial powers to defuse the opposition. To tamp down dissent, the government put out the word that draft-age men were soon to be mobilized. That cleared the streets of the fainthearted. When a more determined group stoned the Serbian Parliament and the U.S. Embassy, it was met with hundreds of police in blue fatigues and riot gear.

Troubles ahead. Other forces threatening Milosevic will be harder to control. Chaos looms in Serb-held Bosnia, and Croatia's military has designs on eastern Slavonia, territory that Milosevic is bound to defend. The Serbian president brought these troubles on himself. It was Milosevic who, in the late 1980s, began spouting the ugly nationalist rhetoric that eventually led to war in Croatia and Bosnia. Just a year ago, in a bid to get international trade sanctions lifted, he dropped that rhetoric, accepted an international "Contact Group" peace plan for Bosnia and insisted that Bosnian Serb leader Radovan Karadzic do the same. Karadzic refused.

Karadzic and Milosevic are now locking horns over the question, "Who lost Krajina?" Last week, on TV Pale (the city Bosnian Serbs call their capital), Karadzic said Milosevic's failure to defend Krajina was akin to treason. Milosevic's Serbian Radio-Television charged that the blame lies with Karadzic and his allies, the Krajina Serb political leadership, for failing to accept international peace plans that would have kept Krajina Serbs on their land with some measure of autonomy. That line of propaganda, notes one Western diplomat, "has the advantage of being essentially true."

In his quest for Western sympathy, Milosevic can now point to refugees like Milka Stojakovic, a Krajina Serb, who sat on the levee of the Drina River just inside the Serbian border last week, her reddened eyes expressing both exhaustion and obsession. "I left two of my three children back in Knin, and God only knows where they are," she said in a quavering voice. When the order came to evacuate, she was visiting relatives in a village with one of her children. Such images of Serbs as victims, plus Milosevic's restraint in not sending troops to Krajina, might persuade Washington to agree to lift sanctions against Yugoslavia.

The current turmoil could strengthen Milosevic's hand in other ways. He now controls tens of thousands of Krajina Serb soldiers flowing into Serbia and will not hand them over to Karadzic for free. Should Croatia attack eastern Slavonia, the larger Serbian fighting force would probably win. Then the young men in Republic Square might demand a statue of Milosevic, right next to the one of Prince Michael.

TRIUMPHANT TUDJMAN. It was a long walk up a steep hill for 73-year-old Croatian President Franjo Tudjman, but well worth it. Atop Knin's medieval fortress, Tudjman kissed and hoisted the Croatian flag, then gazed down at his dominion: a Croatian empire that in a few days' time had swelled 20 percent. Though Knin had been the rebel Serbs' would-be "capital" over the past four years and though it was 89 percent Serbian before the war, Tudjman described the city as a "royal Croatian town," a reference harking back to the 10th century.

Tudjman has adopted many of the trappings of a monarch -- a palace, a glittering coterie of horsemen and a questionable regard for democracy. After guiding his country to independence, sponsoring its most successful military operation of all time and reclaiming its Krajina underbelly, he could rest easy last week inthe knowledge that his name would be chiseled in Dalmatian stone as the "father of modern Croatia." Hardly as an incidental bonus, he could also boast of having rid Croatia of its nagging "Serbian question."

Although Croatian troops shelled civilian centers, forced the Serbian exodus, torpedoed a verbal surrender accord, waltzed U.N. peacekeepers in front of Croatian tanks as human shields and killed a BBC journalist, Tudjman suffered nary a slap on the wrist from the West. The U.S. State Department took the view that in light of the butchery committed by Bosnian Serbs in Srebrenica and Zepa, and given the scale of the Serbs' late-July assault on Bihac, a dose of defeat would serve the Serbs right. Tudjman knew he had also sealed a political victory when, as Croatians stoned Serbian car and tractor processions fleeing Krajina, Western politicians busily hailed the "new opportunities for peace" afforded by the sudden military reversals and map redrawings.

Dogmatic nationalist. The West's quick acceptance of the new status quo in the Balkans could have dire repercussions for Bosnia. "Either Croatia has learned it profits by supporting an integral Bosnia or it realizes it no longer has any need to be nice to Bosnia," said a senior U.N. official. "Either way, Tudjman is a dogmatic nationalist who believes parts of Bosnia belong to Croatia."

Bosnian government and military officials insist that, far from stabbing his ally in the back, Tudjman will continue to stand behind Bosnia's efforts to reclaim its lost lands, by pumping heavy weapons into Bihac and maintaining a role for the Croatian Army against Serbs in western Bosnia. That he struck a formal deal with Serbian President Milosevic on the division of Bosnia is unconfirmed. That the two men have an understanding is irrefutable.

Although Croatia's victory in Krajina stirred patriotic sentiments, Tudjman appears to recognize the high price of turning against Bosnia. He would at the very least lose the American and German support he has so carefully cultivated. Such risks far outweigh the reward of establishing Greater Croatia.

It was U.S. pressure that persuaded Tudjman to sideline his ambitions to annex southwestern Bosnia. But now, as an emboldened president, Tudjman has choices to make: He can sit on his victory, tackle the Serbs in eastern Croatia or make a second go against the Muslims in Bosnia. For the moment, he is most likely to postpone a confrontation with Serbian tanks in eastern Slavonia and hold on to the two hats that fit him so well -- strident Croatian nationalist and nominal Bosnian ally.

[picture captions follow]

Balkan battleground. Croatia's lightning assault recaptured most of the territory that had been held by Serbs since 1991 and set off the largest refugee exodus of the war.

CROATIAN ARMY ADVANCE. Croatian forces pressed toward Eastern Slavonia, the last portion of Croatian territory held by Serbs.

SERBIAN ARMY ADVANCE. Alarmed by the Croatian advance, Serb leaders dispatched forces of the former Yugoslav Army to the border with Croatia.

UNITED NATIONS WITHDRAWAL. Their mission cut short by the departure of the Serbs, some 10,000 United Nations peacekeepers prepared to withdraw from Croatia.

By Paul Glastris; Samantha Power; Robin Knight -END QUOTE-