EVERY hour in what used to be Yugoslavia, the bitter fight between Serbs and Croats moves closer to all-out war.Serbian President Slobodan Milosevic and the federal Army are escalating their military campaign this week. Yesterday at press time the Serbian-controlled Yugoslav Army was on the outskirts of Zagreb, and continued to pound Dubrovnik on the Adriatic coast. Croatia is mobilizing troops of all ages. Serbia threatens Army reservists with stiff punishment if they don't respond to the call to arms. The European Community peace talks in The Hague have been consistently ignored by both sides. Despite EC threats of embargo on trade and oil, and despite the logistical problems of holding great amounts of hostile land, Serbia's strategy is to grab as much territory as possible, according to informed sources in Belgrade close to the military. The Yugoslav Army's strategy is to destroy as much of the Croatian forces as possible. In one of the most important power shifts of the three-month-old civil conflict, leaders of four republics hand-picked by Mr. Milosevic last Thursday declared a "state of emergency" and took control of the federal presidency. Under the powers the new presidency claims, federal Prime Minister Ante Markovic could be removed, and the Constitution rewritten overnight. Most important, the move gives the Army impunity to act as it sees fit. Until last week, the federal presidency was the only check on the Army. The four leaders are from Serbia, the Serbian provinces of Kosovo and Vojvodina, and the pro-Serbian republic of Montenegro. They have met since Thursday in daily sessions, which were also attended by the Yugoslav Minister of Defense Veljko Kadijevic, and Army Chief of Staff Gen. Bogoje Adjic. "It's like the coup in the Soviet Union, except there's no [Soviet President Mikhail] Gorbachev and there's no [Russian federation President Boris] Yeltsin," says a Serbian opposition member in Belgrade. "There's been no resistance here. People are too scared to do anything." "This accelerates the recognition that there is no more Yugoslavia," says one US State Department official. The takeover of the federal presidency by Serbia puts more pressure on the EC conference at The Hague, the official says, noting that, "The Hague will have to amount to something" because the EC is engaged "too deeply" now to ignore the Yugoslav crisis. An embargo on oil is being pursued, including consultations with Greece, which now ships oil to Serbia. "Milosevic may have the upper hand right now," the official says. "But he can't continue indefinitely." In the past two days, the Serbian government has threatened to impose martial law in Belgrade. To counter widespread resistance to military service, Serbia has also announced 10 new laws against "Army deserters,Army resisters," and those "who avoid military service." Crimes carry a maximum punishment of death. Last night marked the end of the three-month Brioni accords - a grace period signed by Slovenia and Croatia after they declared independence June 25.