NEWS ANALYSIS : Serb Stance Foreshadows More Bosnia Carnage : Balkans: Rejection of peace plan seems to taunt Western governments that have threatened military strikes to put an end to the bloodshed.

Stung by rejection of his peace plan by Bosnia-Herzegovina’s rebel Serbs, Western mediator Lord Owen left Belgrade on Monday with a warning that Balkan Serbs are risking a dangerous confrontation with the rest of the world.

But from this seat of Serbian nationalist power to the front lines where Serbian forces have dug in, those bent on building an ethnically pure Greater Serbia seem fully aware of--but unmoved by--the stakes.

The Bosnian Serbs’ rogue legislature vowed to “continue the fight till the end” after unanimously rejecting the peace plan worked out by the European Community’s Owen and fellow negotiator Cyrus R. Vance of the United Nations.

Only a few hours after that dawn decision in the rebel-held town of Bijeljina, Serbian gunmen encircling the desperate eastern enclave of Srebrenica demanded the withdrawal of 150 U.N. peacekeeping troops deployed there--a sign that they may be planning another offensive against the hungry, homeless and diseased Muslims taking refuge there.

Even a call for compromise by Yugoslav and Serbian leaders in Belgrade evaporated after the Bosnian Serbs’ defiant vote. Swiftly dropping the conciliatory pose struck for Owen’s benefit in Belgrade, the personal emissary of Serbian strongman Slobodan Milosevic, Vladislav Jovanovic, announced that “Yugoslavia has not abandoned Serbs in Bosnia and will never do so.”

The bold declarations in the face of harsh new sanctions aimed at totally isolating the bellicose Serbs foreshadowed continued bloodshed and seemed to taunt Western governments that have threatened military strikes to put an end to savagery unmatched in Europe since World War II.

Washington and the 12-nation European Community have been making off-and-on warnings that force might be employed against the Bosnian Serbs, who have taken advantage of the huge arsenal bequeathed by the Yugoslav federal army to seize 70% of Bosnian territory and expunge it of non-Serbs.

“The Serbs want all of eastern Bosnia, and they make no effort to hide that,” said a Western diplomat based in Belgrade. “The Vance-Owen plan denies them that goal, which is why they think they cannot accept it.”

While some war fatigue has set in among the Serbian civilians living in the ruined and economically idle regions under rebel control, Bosnian Serb political leaders like Radovan Karadzic are essentially confronted with a choice of appeasing Western countries demanding an end to the war or fulfilling promises to their own people to achieve the Balkan Serbs’ centuries-old dream of an expanded state.

Karadzic appeared to waver before the threats of Western air strikes and what was presented as opposition to continued warfare by Milosevic and other Belgrade patrons.

But a last-minute appeal by Milosevic and Yugoslav President Dobrica Cosic for Bosnian Serb approval of the Vance-Owen plan was widely believed to be posturing aimed at deterring any Western use of military force.

The Bosnian Serb offensive would quickly grind to a halt without fuel and weapons supplies from Serbia, which means that Belgrade could effectively override its Bosnian brothers’ intransigence if it was motivated to do so.

On the contrary, Yugoslav federal army troops and hardware have been sighted crossing the Drina River border into Serb-held Bosnia in recent weeks, indicating a tendency toward stronger support for the rebels rather than any pressure to halt the fighting.

The Vance-Owen peace plan, which has been accepted by Bosnian Muslims and Croats, would have given the Serbs control of 43% of the republic where they account for less than one-third of the population. But the Bosnian Serb gunmen, in their current position of power, have refused to cede any of the territory they conquered with an intent to link it with Serbia and Serb-held areas of neighboring Croatia.

Owen did not declare dead the peace process that he has spearheaded with Vance since last August. But he left with no plans for further talks, and his parting words made clear that the Serbs have crossed the West’s tolerance threshold.

“I think that confrontation is now inevitable, and it will be faced up to by the world community. It will be faced up to economically, politically and, if they continue, in my view, militarily,” he told reporters before leaving for a whirlwind series of visits to Western European cities.

Tightened U.N. sanctions that freeze Yugoslav assets abroad and virtually seal this country’s borders to all trade and transport had been expected to take effect Monday but were interpreted by U.N. officials in New York to be applicable only starting today.

Regardless of the one-day reprieve, neither the Bosnian Serbs nor their patrons in the two republics remaining in Yugoslavia, Serbia and Montenegro, seemed fazed by the world’s collective censure.

An official of the U.N. Protection Force headquartered in Zagreb, Croatia, said that the Canadian peacekeepers deployed in Srebrenica have been warned by the Serbs to leave.

The official said the U.N. mission has no intention of complying but conceded that the demand raised fears of an impending attack.

It was the Serbs’ bombardment of Srebrenica two weeks ago, in which nearly 60 civilians were killed, that prompted the U.N. Security Council to invoke harsher sanctions against Belgrade.

Russia at the time abstained, choosing not to take further punitive action against fellow Slavs who share their Orthodox faith. But Russian Foreign Minister Andrei V. Kozyrev indicated after the Bijeljina vote that Russia’s patience has also worn thin.

Some observers are worried that the end of the Vance-Owen peace process and flagging support from Russia may have removed the last levers of influence that the international community had to use with the Serbs.

“It’s very uncertain how the Serbs are going to react under total isolation,” said a Western diplomat here. “They may feel they have nothing to lose by moving against their last targets in eastern Bosnia. Maybe they think the West won’t really do anything to stop them. Or maybe they are expecting air strikes and are willing to go for broke.”