‘Crazy Times’--Ethnic Squabbles May Split Yugoslavia : Eastern Europe: The country is used to unrest. But the growing rivalry between Serbs and Croats is a fearsome matter.

Viewed from the hilltop Venetian fortress towering over the town, Knin would seem as blameless and bucolic as any of the tidy, tile-roofed communities tucked into the valleys of the Krka River, twisting through the coastal ridges of Croatia.

It is, in short, peaceful here. Lazar Matsora, an English teacher, translator and deputy leader of the town council, showing visitors the view from the fortress walls, acknowledges that the notion of Knin at war with the rest of Croatia is, somehow, hard to swallow.

“Yes, it is completely crazy, I admit,” says Matsora. “But these are crazy times in Yugoslavia.”

The craziness that Matsora refers to has been building in Yugoslavia for nearly three years now, and it has descended recently on widely scattered areas of Croatia.

Knin is a community of about 45,000 living primarily off a nuts-and-bolts factory, orchards and the uncertain agriculture of the rocky, scrub-brush land. The problem here, and in half a dozen similar communities, is that virtually all of the population is ethnically Serbian surrounded by a sea of Croatians.

Such a formula, in present-day Yugoslavia, is an almost certain recipe for trouble. And trouble arrived here in August when Serbs threw up roadblocks and stormed police stations to hand out weapons to militant citizens preparing for what they assumed was an imminent assault by forces of a newly militant and nationalistic-sounding government in the Croatian capital of Zagreb.

The assault did not come, although some now say that it was prevented only by the intercession of jet warplanes from the federal air force, intercepting heavily armed helicopters on their way to rout the Serbian militants in Knin.

As with most of the ethnic squabbles in Yugoslavia, it is no easy matter to separate threatening rhetoric from actual intention, much less get a clear account of actual events after the fact. The incident with the helicopters and the jets, for example, is now passed off as a problem of “air traffic control” by some authorities. To others, it was an interference in the republic’s “sovereignty.”

But, as virtually everyone in Yugoslavia agrees, the incidents in Knin have given the country’s ethnic problems an ever-more-intractable appearance. More and more, Yugoslavs are doubting that their fractious conglomeration of republics and provinces can hold together, at least not in the way it has since the end of World War II.

Recently, Janez Drnovsek, a Slovenian member of Yugoslavia’s collective presidency, warned that “it is a very real possibility” that the country could break up in the next year unless its republics agree soon “on a radical reshaping of the existing federation.”

The Serbian National Council, which says it represents 500,000 Serbs living in Croatia, proclaimed a state of “autonomy” within Croatia on Oct. 1 and temporarily sealed off road and rail traffic.

Slovenia’s president, Milan Kucan, said last week that the federal presidency was deadlocked over whether the country should keep a central government or turn into a loose federation. The question took on new urgency with a move by Yugoslav federal forces to occupy Slovenia’s regional defense force facilities. Slovenian lawmakers then called for a plebiscite on independence from Yugoslavia.

The Serbs in Croatia claim the Croatian government discriminates against them, a charge the government denies. It countercharges that the Serbs are trying to destabilize it to rally support for Serbia’s hard-line socialist policies.

By now, a major portion of the blame for the increasing and debilitating ethnic tensions in Yugoslavia have been laid at the doorstep of Slobodan Milosevic, the Serbian Socialist (formerly Communist) Party leader, who has risen to political prominence by whipping up Serbian nationalism.

Milosevic’s first target was the predominantly Albanian ethnic province of Kosovo, once the historic stronghold of the Serbs, now the poorest region of Yugoslavia, where 250,000 Serbs are outnumbered by 1.8 million Albanians.

Since 1988, thanks to a Serbian drive to regain control of the area, Kosovo has been a virtual tinderbox, its desperate economic problems unaddressed and its frequently broken peace maintained only through a massive application of Serbian police muscle.

Critics of Milosevic say he has been playing the nationalist card in order to maintain himself in power in Serbia. They say that while the rest of Yugoslavia, particularly Croatia and Slovenia, have jettisoned the Communist Party and Communist economics and are moving toward liberal free-market policies, Milosevic is prisoner of a dead ideology and is largely responsible for Serbia’s deeply troubled economy.

The larger question now, however, is whether the genie that Milosevic uncorked has turned into a monster that could tear apart the Yugoslav federation.

For this reason, the troubles in Croatia have taken on special significance. Yugoslavs are by now used to the periodic violence and the general strikes called in Kosovo, but the spread of ethnic unrest to Croatia seems particularly ominous.

“Yugoslavia will not fall apart because of Kosovo,” said Zoran Bosnjak, an editor of the Zagreb newspaper Vjesnik. “But if there is a major rupture between the Croats and the Serbs, then Yugoslavia cannot stand.”

The bitterness of World War II, when the Croats sided with the Nazis and fought a vicious war with Serbian partisans, is still vivid. Now, in an atmosphere of charge and countercharge, every grievance and presumed imbalance of power or privilege is potentially explosive.

In June, Croatians elected a new president, Franjo Tudjman, a former army general who won office in a campaign that emphasized a reawakening of Croatian pride. Since taking office, he has begun to install Croatian nationalists in positions of power in the media and the police, a page taken directly from the Milosevic handbook.

When the government set up a program to install more Croats in the largely Serbian local police department of Knin, the Serbs of Knin began to get seriously worried. They scheduled a communitywide referendum for Aug. 19, designed to demonstrate their determination to resist any assault on their “national culture.”

The Croatian government declared the referendum “illegal” and ordered it canceled.

With dire rumors rampant that the Croatian government was about to mount an attack, the Serbs of Knin blockaded the roads with downed trees and, on the eve of the referendum, raided the police stations and handed out about 70 firearms (kept on hand for reserve officers) to Serbian militants.

Croatian opinion is divided over what to do about the problem, but any poll on the question would probably reveal a populace in favor of strong action.

“The legal system is breaking down in Knin,” said Bosnjak, the Zagreb editor. “I think people want the government to do something about it.”

Against this backdrop, the governments of Croatia and Slovenia, the most prosperous republics in Yugoslavia, are preparing new constitutions to be forwarded to Belgrade within months, and both are certain to demand a diminution of federal authority. In essence, both republics want to be shed of the Serbian drag on their progress toward a democratic system and a modern economy. If Serbia wants to spend its resources fomenting nationalist concerns and tinkering with its creaky socialist economic planning, the thinking goes, Serbia can do it alone.

The Knin problem, however, illustrates how difficult that may be. A major Croat-Serb rupture could throw everything into deadlock and heighten the chances for disaster.

“If Milosevic and Tudjman cannot talk to each other, then we are in trouble,” Bosnjak says.

Serbian forces in Belgrade sent a delegation of businessmen and representatives from the Belgrade City Council, a Milosevic stronghold, to Knin to offer assistance, a sign that Milosevic may be planning to exploit the conflict.

“They brought some managers of businesses,” said Lazar Matsora, the Knin town councilman, “and some of them talked about opening factories here. They want to help out.”

The delegation also brought an offer of equipment to increase the power of the local radio station, Matsora said, which would further amplify any Serbian call to arms in Croatia, should any amplification be needed.

“We don’t think there will be any war here,” Matsora said.

On a slow Saturday afternoon, war, indeed, seemed a distant possibility. In harmony with the mood of the day, Matsora promised to do “anything I can to calm the situation down.” Still, he made clear where the Serbs of Knin stand. Although he did not couch it in such grandiose terms, it is a challenge that faces the whole of Yugoslavia.

“If the republic of Croatia says it can separate, then we say the people can separate as well,” he said. “We will separate from Croatia the way Croatia separates from Yugoslavia.”