A WAR INSIDE CROATIA COULD DWARF THE FIGHTING IN BOSNIA

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All-out war in Croatia would make the fighting, ''ethnic cleansing,'' and anguish of neighboring Bosnia seem tame by comparison, according to Western diplomats. The result could be by far the most intense conflict in Europe since World War II.

Three Croatian Serb airplanes bombed Croatian government troops Aug. 1, and the two armies traded artillery fire. Last-minute peace talks are scheduled for Aug. 3 in Geneva, but a massive Croatian attack is dangerously close, according to UN officials.

The vast number of weapons both Croatia and separatist Croatian Serbs have at hand is far more than currently being used in Bosnia. If Croatia were to retake all of the Serb-held Krajina region, as many as 200,000 Serbs are expected to flee, creating one of the largest ethnic-cleansing and refugee crises of the war.

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The two sides in Croatia are menacing each other with tens of thousands of troops and hundreds of tanks and artillery pieces. Dozens of fighter jets, attack helicopters, and long-range, cluster-bomb-equipped rockets on both sides can be used to attack the Croatian capital of Zagreb, cities throughout Croatia proper, and the Croatian Serb ''capital'' of Knin.

The key to victory will be time, military analysts say. The more rebel Serb forces can slow an expected Croat onslaught, the better.

''If [the Croats] attack, they have to achieve their aims quickly,'' says Tim Ripley of Jane's Intelligence Review. ''The longer the fighting goes on, the greater the chance [Serb-dominated] Yugoslavia will come in on the side of the Krajina.''

Over 10,000 Croatian troops crossed into neighboring Bosnia last week and are positioned with other Croat troops to attack the Croatian Serb-proclaimed capital of Knin from two directions.

But military analysts predict Mile Mrksic, a top Yugoslav Army general dispatched to rejuvenate the sagging 50,000 troop Croatian Serb army in May, could make the price of a Croat government victory high.

''[General] Mrksic is a competent, capable, and professional soldier who is making changes quickly,'' says a senior UN military official.

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