RARELY has discussion of a grave question of public policy been carried on in such a fog of misinformation, misinterpretation, and political posturing as has the current American debate over Bosnia. Atrocities committed in the course of the civil strife in the former Yugoslavia - mostly, though not exclusively, by Serbs - have provoked deep moral indignation in the United States and elsewhere. Unfortunately, moral indignation is not a basis for coherent national policy when it is grounded in ignorance, myth, and recycled historical error. Americans do not understand eastern European nationalism. It is ethnic and religious, not territorial, unlike that of western Europe and the Americas. For this reason, the ideal of a unified Bosnia has little foundation in fact. Other than mixed families in urban centers who once called themselves ''Yugoslavs,'' there are no ''Bosnians'' in Bosnia, only Orthodox Serbs (31 percent), Catholic Croats (17 percent), and Slavic Muslims (43 percent), groups defined by religion and tradition, though not by any differences in ethnicity or language. The struggle among these people cannot be dismissed merely as the continuation of 500 years of fighting. Specific recent events - the uneasy union of Serbs and Croats after World War I, the Croats' grisly record on Hitler's side in World War II, the sudden breakup of Yugoslavia in 1991 as Communism faltered - set the stage for the present troubles. The six constituent republics of Yugoslavia that went their separate ways had borders that did not jibe with the ethnic distribution of the population. When the Croat, Slovene, and Muslim minorities seceded from Yugoslavia, it was just as natural for the Serbs living in Croatia and Bosnia to reject minority status and permanent separation from Serbia proper. The multiethnic ideal collapsed when Yugoslavia was allowed to break up. It never had a chance in an independent Bosnia. American policy toward Bosnia has been misled by the myth that the area is an established country victimized by Serb ''aggression.'' For centuries, Bosnia was only a Turkish province, then Austrian, then revived as a subdivision by Communist Yugoslavia, with no basis for statehood in its modern history or ethnicity before the Muslim-dominated local government declared independence in 1991. This is not to gainsay the Muslims' right to self-determination and their own territory along with the other former Yugoslav nationalities, but it was an illusion to think that they could lead a united Bosnia. Civil war became inevitable when Croatia and Bosnia declared independence without any settlement of the status of their Serb minorities (or of the Croat minority in Bosnia, which also fought the Muslims). By and large the Serbs did not ''seize'' or ''occupy'' their territory; they simply took control where they lived. (This also applies to the Krajina region of Croatia, usually described as occupied by rebels, but now being assimilated and ethnically cleansed by the Zagreb authorities). The Serb government in Bosnia, based on the Serb fraction of the regional parliament elected in 1990, is no less legitimate than the Muslim government in Sarajevo, though it is usually dismissed as a usurper. ''Ethnic cleansing'' was the work of Serb extremists, whipped up by demagogic leadership as their forces pushed through the Muslim territory in eastern Bosnia separating predominantly Serb western Bosnia from Serbia proper. The United Nations arms embargo, often represented as a restriction on Bosnian Muslims alone, was actually imposed on all of Yugoslavia in 1991 in a vain effort to head off civil war. Economic sanctions have been applied to Serbia alone as punishment for its support of the Bosnian Serbs. Serbian ''aggression'' and ethnic cleansing have typically been equated with Hitler's Germany and the Holocaust, while hesitation among Western powers to step in openly against the Serbs is branded as Munich-style ''appeasement.'' While Serbian behavior in the pursuit of ''Greater Serbia'' is undeniably brutal, it is the reflex of a panicky nation of 10 million people trying to hold itself together. Apart from the risk of provoking a confrontation between Western powers and Russia, the Serbs represent no threat to European security. They do, however, appear to have become, at least psychologically, a cold- war surrogate in Western politics. Ironically, NATO, conceived as a defensive alliance, never had to fire a shot in anger until it undertook to support UN peacekeeping in Yugoslavia. The Yugoslav civil war is one of many horrible examples of ethnic strife around the globe that agonize world opinion, even though these conflicts do not constitute direct threats to international security. If the international community feels it should take action in such situations for humanitarian reasons alone, then it needs to develop consistent principles for intervention and apply them in all such instances. It must prepare long-term political plans and mobilize sufficient power to enforce the peace. The weakness of the current UN presence in Yugoslavia is not inherent in the institution itself but rather in the fact that the major powers are not ready to think out a long-term solution and enforce it. Hobbled by American reluctance to send ground troops in, the old UN peacekeeping concept has proved inadequate to resolve an intractable ethnic struggle. Civil war has gone so far in Yugoslavia that no lasting settlement is conceivable without partition and population exchange, backed up by international authority. European efforts to bring about this kind of a solution in Bosnia have been repeatedly undercut by the Bush and Clinton administrations in pursuit of a united Bosnia. Domestic politics are now driving the US to another alternative, despite the absence of any visible national interest. Airstrikes in Bosnia, breaking the arms embargo, and encouraging Croatia's new offensive (with American military advisers) are just the first steps toward a costly and perhaps unilateral US commitment. Stepping in without thinking as a belligerent on the side of the Muslims and Croats to crush the Serbs, we ignore history just as we did in Vietnam.