Uncertainty Grips Last Bit of Croatia Held by Serbs : Balkans: Failure to resolve fate of Eastern Slavonia could scuttle regional peace deal. Talks continue today.

“I constantly dream of Osijek,” Dragan Car said Saturday, but the Croatian Serb doubted he will ever return to the hometown he fled four years ago after war engulfed Eastern Slavonia, a patch of land that borders the rump Yugoslavia.

And as international envoys struggle to resolve the status of this last bit of Serb-held land in Croatia, Car wondered whether he is destined to become embroiled in fighting once again.

Efforts to broker a solution acquired new urgency last week, when local Serbian leaders rejected a plan for transitional rule over the fertile and oil-rich land. They instead insisted on a three-year period under U.N. administration, followed by a referendum.

“[Croatian President Franjo] Tudjman wants to get rid of the last Serbs from Croatia,” said Slavko Dokmanovic, a member of the Serbian negotiating team who is also mayor of Vukovar. “There will be no life for Serbs under Tudjman’s government.”

Complicating matters, Tudjman has said he will not renew the U.N. peacekeeping mandate in his country, which expires at the end of this month, and warned that a settlement must be agreed on by that time to avoid conflict.

Diplomats fear the dispute over Eastern Slavonia could undermine prospects for an overall Balkan settlement--the aim of talks being held by Bosnia-Herzegovina, Croatia and the rump Yugoslavia at Wright-Patterson Air Force Base in Dayton, Ohio.

Carrying a revised plan for peace in Eastern Slavonia, U.N. envoy Thorvald Stoltenberg is expected to meet with local leaders in the Serb-held town of Erdut today, while U.S. Ambassador to Croatia Peter Galbraith is to meet with Croatian government officials in Osijek.

The new proposal is also to be reviewed by Tudjman and his Serbian counterpart, Slobodan Milosevic, in Dayton, according to Serbian officials.

Up to 200,000 Serbs fled offensives in May and August, when Croatian forces seized back the rebel-held Krajina region--except for Eastern Slavonia.

Recent reports that the Croatian army is massing in the region have heightened tensions. But local Serbs realize they have few options. Dokmanovic admits that the Croats have all the bargaining chips, “but we cannot sign our death sentence and also put our heads on a platter. . . . We will fight, if necessary.”

Four years ago this week, Vukovar, in some of the bloodiest battles of the 1991 war, fell to Serbian forces after a three-month siege. The dead bodies and wreckage have long been cleared away, but there is scarcely a building that has not been scarred by Serbian shelling of the once picturesque town on the banks of the Danube River.

Since the fall of the Krajina, Serbian inhabitants have not been able to conceal their sense of defeat. It is striking, in marked contrast to their truculent nationalism of earlier years, when they were the strongest force on the ground.

Tudjman, meanwhile, is euphoric, thanks to his military successes against the Serbs. Last month, he said he would be drinking coffee in Vukovar by Christmas. Vukovar is the Croats’ symbol of heroic resistance.

Dragan Car has met both Tudjman and Milosevic. Once the manager of a renowned restaurant in Osijek, the Hunter’s Horn, he served the two presidents lunch at a 1990 summit that failed to halt the march to war.

Soon after the Croats drove him out of Osijek, Car traded in his waiter’s uniform for camouflage.

“I lost everything,” Car said. “Here they gave me a house.”