One-horse state set on survival: The landscape is majestic, the atmosphere poisonous, the people stubborn. Emma Daly reports from Serbian Bosnia

PALE - This is the 'Republika Srpska', the self-declared Serbian state in Bosnia which is defying the world's major powers by refusing to accept their latest peace plan for the region. Now, even its patrons in Belgrade seem to be casting it off. But could it survive, despite the odds?

The putative Bosnian Serb state was born on 6 April 1992, when its soldiers, ably assisted by the Yugoslav National Army, opened fire on Sarajevo. By the end of the year the Republika Srpska was formally unveiled; the Bosnian Serbs had conquered most of the land they now hold and had embarked on their campaign of 'ethnic cleansing'. Radovan Karadzic, former psychiatrist to the Sarajevo football team, was ensconced in the small town of Pale, 10 miles from Sarajevo, as head of the fledgling state, and General Ratko Mladic, tactical master of the Bosnian war, was consolidating his battlefield gains. Their political master in Belgrade, President Slobodan Milosevic, had reason to feel satisfied with his boys.

Two years on, the relationship has soured; Mr Milosevic, whose economy has been ravaged by international sanctions, has apparently cut his clients off in an attempt to pressure them into accepting the latest peace plan. The border with Yugoslavia has been closed to senior Bosnian Serb politicians and to all goods save food, clothing and medicine - at least for the past few days. Republika Srpska faces political and economic isolation at a time when the Bosnian government army is beginning to flex its new-grown muscle.

The Republika Srpska has a rural, low-tech lifestyle; farming and fighting go hand in hand. Parliamentary deputies meeting to reject the major powers' peace ultimatum moved on to approve a law allowing the grazing of goats in towns, and soldiers move easily from tanks to tractors.

The war is commonly portrayed as a battle between the city and the country, particularly around the capital: the sophisticates of Sarajevo versus the peasants in Pale. But the urban elite has seen its metropolis shelled into ruins, and the country bumpkins are determined to build a state of their own.

There are at least three scenarios for the future of this self-styled republic. It could revert to its role as a province within a Greater Serbia; it could maintain its present breach with Belgrade; or, if the world has its way, it could end up as a weaker half of Bosnia-Herzegovina.

At present, Republika Srpska covers around 70 per cent of Bosnian territory, much of it mountainous and wooded, easy to defend but hard to exploit economically. As in the pre-war Bosnia, the Serbs have quantity of land, but not much quality; their only big town is Banja Luka.

The landscape is clean and majestic, but the atmosphere is toxic and paranoid. It is a society built on fear and hatred. There are visible scars of 'ethnic cleansing': thousands and thousands of houses gutted by fire, their remaining walls blackened by fire and scarred by bullets, their red- tiled roofs burnt off. In many towns and villages, a bare patch of derelict land is all that is left of the local mosque.

The peace plan to which the Bosnian Serbs so object would re-draw the boundaries of Srpska, forcing it to surrender about a third of its military gains and effectively creating three Serb chunks linked by narrow corridors. This is viewed with horror in Pale; the resounding cry is 'No surrender.'

'Almost everyone in Republika Srpska will tell you the same story,' said Gordana Djukic, a stall-holder in Pale market. 'It doesn't matter whether Serbia takes us or not, we want to separate from the Muslims and we will do it alone, survive until we are recognised. We are a small people, but very proud and very strong.'

But one need only look around to see how hard the struggle would be. It takes about 60 seconds to drive through Pale, the 'capital' of Srpska. It is a one-cow town, its biggest asset the neighbouring ski resort of Jahorina, its strategic value explained by the spectacular views of Sarajevo from the surrounding mountains. There are a few cafes, a dilapidated factory where parliament meets and officials sit at desks, a couple of hotels also commandeered for official business, and a lot of goats.

The trappings of statehood are confused. There is a national seal - the Serbian eagle and crown, which presumably makes Srpska a royalist republic - but no passport; car number-plates, including a new Cyrillic plate for 'Serbian Sarajevo', but no currency (they use the new Yugoslav dinar and the Deutschmark); a flag, a government, a parliament but no frontier.

At the Famos Koran factory, Slavisa Rakovic, an adviser to the Bosnian Serb prime minister, is working on a plan to go it alone. 'The aim is survival,' he said. 'We are confident that we can survive and defend our territory - that is the maximum we can achieve.' The rich arable lands of northern Bosnia, the meadows and orchards that line the Posavina corridor, should provide food enough this winter; the hydro- electric plants at Visegrad and Jajce should light and heat most homes, he says. And the government has stockpiled ammunition and fuel. As for oil, raw materials, consumer goods and new weapons: 'It's a question of contraband.' Smugglers will save the day, and the nation.

It is probably true, in the short term. The Bosnian Serbs are tough, obstinate, desperate. They are used to privation, to hard work, to suffering - in fact, they like life rough, because it feeds the myth of martyrdom, and proves that, as they suspected, everyone is against them. 'When things get worse, morale gets better,' said Mr Rakovic. The Serbian blockade 'will help us to build a state, because it will mobilise people to contribute more than in a relaxed atmosphere'. But Republika Srpska has a 1,250-mile front line with Bosnia, which will take some defending against a revitalised government army. And there is no way out, other than through Yugoslavia or Croatia, which is certainly hostile territory.

Until last week, there was no need to dial a different country code to telephone Republika Srpksa from Yugoslavia. Today the lines are cut. The frontier restrictions on senior Serbian politicians mean that Mr Karadzic and his cohorts are trapped. But President Milosevic has yet to request the presence of international troops to monitor the border, nor has he recognised Bosnia - actions that would show a genuine desire to cut off his clients.

It would be ironic if he did; for more than two years Belgrade has conducted its campaign to unite all Serbs in one state through the good offices of Pale. The prize is now closer than ever. If Pale, under pressure from Mr Milosevic, finally signs up to the latest peace plan, the international community will release Serbia from the economic embargo. Then all parties can sit down and negotiate over dots on the map, access to the sea, and anything else, for months or even years, until eventually the Bosnian Serbs are allowed to join Serbia proper. Until then, as Mr Rakovic said, life in Republika Srpska is going to get a lot harder.

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(Map omitted)