Milosevic scents victory while Serbia crumbles

SLOBODAN MILOSEVIC dominates the political stage in Serbia as never before. In six years as Serbian leader, he has never looked so completely in control of the agenda. His opponents abroad and at home are in disarray. United States threats to arm Bosnian Muslims and bomb Bosnian Serb positions have evaporated. Lord Owen is slowly realising Mr Milosevic's verbal support for his peace plan for Bosnia is a cheque that cannot be cashed. Serbia and Croatia move towards rapprochement.

Serbia's seizure of one-third of Croatia and 70 per cent of Bosnia looks secure, so secure that Mr Milosevic can consider a territorial deal with Croatia, handing back some Serb-held land, in return for regional consolidation of Serbia's position.

By pledging support to Lord Owen for his peace plan, Mr Milosevic ensured his war gains in Bosnia would remain untouched. It is unlikely he ever intended to put serious pressure on the Bosnian Serb leaders to accept the plan, which is why the promised embargo against Bosnian Serbs never took off. But the pretence of support removed the one factor he genuinely feared, US military intervention, and sowed dissension between Washington and its European allies over ways to stop the Bosnian conflict.

Mr Milosevic, once dubbed the 'Butcher of the Balkans' for his role in the murder of at least 100,000 Bosnian Muslims and the displacement of millions, has been elevated in the eyes of Western diplomats into a Balkan statesman, whose favour must be curried, without having to give up an inch of conquered territory. The reasons for this about-turn are simple. The West fears intervening directly in Bosnia but hopes Mr Milosevic will do the dirty work of restraining the Bosnian Serbs for them. Mr Milosevic excels at this kind of diplomatic push- me-pull-you and will tease the West for as long as he can, promising much, delivering little, signing nothing.

The disarray over the former Yugoslavia abroad is matched only by the almost laughable chaos among Mr Milosevic's opponents at home. His only serious rival for the leadership of Serbia, Vojislav Seselj, chief of the ultra-nationalist Radical Party, has stomped off in a huff, accusing the government of planning to sell out Serbs in Bosnia and Croatia.

The other tiny Serbian parties are at one anothers' throats over Bosnia, some moaning Mr Milosevic is too tough in his dealings with the West, others that he is too compliant. The Serbian public do not believe Mr Seselj when he shouts that Serbia has been betrayed. They sense that Mr Milosevic in Bosnia - as in Croatia - walked off with the prizes.

With the smell of final military victory in the air, changes are afoot inside Serbia. State-run television no longer devotes hours of prime-time viewing to war propaganda pitched to keep Serbs in a state of patriotic frenzy. And supporters of Mr Seselj's Radicals are being squeezed out of their jobs in the state-run media.

The only question is whether Serbia can foot the bill for these military triumphs. Serbia's chamber of commerce boasted this week that the country's firms had produced 'thousands of new products' to cope with the effects of Western sanctions. But the statistics are less upbeat.

Less than 10 per cent of enterprises work at their normal pre-war level, while around 1 million jobs - 40 per cent of the workforce - have been lost through sanctions. Under the United Nations sanctions, Serbia can neither export goods, nor import the raw materials needed to keep its factories working. The average annual income has dropped from dollars 3,000 ( pounds 1,950) to about dollars 400 ( pounds 260). Hyper- inflation has made the currency worthless. Every serious transaction is conducted in German marks.

Mr Milosevic has emerged from wars in Croatia and Bosnia with the reputation of a consumate chess player. In the Belgrade bunker where he reportedly spends most of his time, he sits while Western 'peace envoys' vie for his attention, and hammer out futile peace plans and draft maps. But the grand chess master of the Balkans appears to have no long-term strategy other than political survival, while his country is disintegrating.

(Photograph and map omitted)