Serbia Premier Reportedly Quits as Problems Mount : Yugoslavia: Setback is seen for President Milosevic, a proponent of war against Croatia. His popularity falls.

Serbia’s prime minister reportedly resigned Wednesday amid an escalating economic crisis in the republic and growing conflicts with Germany and other members of the European Community.

Studio B TV said Dragutin Zelenovic, a moderate, described himself as a “peacetime premier” in the resignation letter he read during a private session of Parliament.

His departure is likely to further undermine the position of Serbian President Slobodan Milosevic, whose popularity has plunged in the last month, according to opinion polls.

On the battlefield, fighting in the eastern Croatian stronghold of Osijek abated Wednesday after heavy overnight shelling, but the army claimed that several Serbian-held villages came under Croatian fire.

The army said that 24 Serbs were killed in the village of Divos, 10 miles south of Osijek. There were few details, and the report could not be confirmed.

Milosevic, a former Communist, is the leading proponent of the war against Croatia that is being fought by Serbian irregulars and the Serb-dominated federal army.

More than a third of Croatian territory has fallen to the Serbs since fighting broke out after Croatia declared independence June 25. Thousands of people have been killed.

Croatia’s leaders view the war as a land grab by Serbia, the largest Yugoslav republic, and say it is inspired by Milosevic’s demagogic aspirations. Western Europe increasingly blames Serbia for the war, and Germany and others have said they will recognize Croatia’s independence soon.

Serbia’s leading opposition movement blasted Milosevic for comments Tuesday in which he declared that Serbia would have to combat “dark, conservative” forces in Europe.

The Serbian Renewal Movement said Milosevic “has declared that Europe’s most important countries are fascist and is pushing Serbia into a war against all of them.”

European economic sanctions are taking a growing toll in Serbia. Unemployment, which already stood at 17% a year ago, is rising, industrial production is down and the republic has been printing large amounts of money, boosting inflation.

The Belgrade-based Tanjug news agency said the government plans to ban German planes, trucks and ships from the country starting next week to retaliate for a similar step ordered by Germany against Serbia and its ally Montenegro.

Meanwhile, fighting also was reported around the towns of Pakrac, Daruvar and Lipik, the army said. Radio Zagreb reported that 13 villages have been recaptured by Croatian forces.

Fighting has continued despite a cease-fire resolution agreed upon Nov. 23. The United Nations says it won’t send peacekeepers to Croatia until both sides hold their fire.

Croatian defense officials also reported fighting around Nova Gradiska and Novska on the main Zagreb-Belgrade highway, which is part of the central war front. Two people were reported killed and six wounded near Novska, and five wounded in Nova Gradiska.