IN Sarajevo, the largest Bosnian government-held city, a three-year siege effectively has ended, prices have dropped by 50 percent, and gas stations are opening.
In Banja Luka, the largest Serb-held city, tens of thousands of Serb refugees are fleeing rampaging Bosnian and Croatian forces and jamming the streets and sleeping in their cars.
Bosnia's long intractable war is suddenly being stood on its head, but the result could be the failure of a Clinton administration diplomatic initiative and another winter of war.
While Western attention has focused on a US-brokered deal to end NATO airstrikes and remove some Serb heavy weapons from around Sarajevo, Muslim-led government troops and Croat tanks are establishing a new reality in western Bosnia.
In the largest Bosnian government victory, Bosnian and Croatian forces have seized over 700 square miles of Serb-held territory and are streaking across western Bosnia toward the Serb stronghold of Banja Luka.
In one week, the Bosnian government has effectively increased the amount of territory it holds by approximately 20 percent - making a US-brokered, almost-even partition of the country - far less appealing.
Flush with victory, the Bosnian government may not be willing to give up crucial military and diplomatic momentum. Domestic political pressure to keep fighting may also be growing. "We should keep on fighting because of all the evil things the Serbs have done," says Muharem Imsiragic, a Tuzla street vendor who echoed most other residents interviewed. "I think the Bosnian Army can take Banja Luka."
Over the next few days, events around Banja Luka will show whether Bosnian political leaders intend to keep fighting or turn to diplomacy, and whether Bosnian and Croatian forces can be stopped. Allied Muslim and Croat forces took Sanski Most yesterday, and were at the edge of Prijedor, two traditionally Serb-held cities outside Banja Luka.
Rumors that the Bosnian Serbs are simply giving up territory that they would lose anyway in a peace deal are circulating widely in Tuzla. But the fall of Sanski Most, which would have been left in Bosnian Serb hands in the deal, indicates that the Bosnians and Croats will be moving far beyond the bounds of the US plan, which the Clinton administration is eager to have them accept before next year's presidential campaign enters high gear.
But the capture of Banja Luka would give the government control of all of western Bosnia and end Serb dreams of a "Greater Serbia" that extends into western Bosnia. Banja Luka is also a valuable bargaining chip that could be traded for land linking surrounded Sarajevo and Gorazde to Muslim-held territory.
Bosnian Serb forces must immediately form a defensive line outside Banja Luka - which has long been considered impregnable - or it will quickly be overrun or surrounded by advancing Bosnian and Croatian tanks. With Bosnian Serb military commander Ratko Mladic reportedly in a Belgrade hospital, it is unclear whether the Bosnian Serbs can regroup their forces.
"We could soon be talking about [Banja Luka] being a Serb pocket," says a Western diplomat. "[Bosnian government forces] don't seem to be running into much resistance at all. They're just rolling forward."
As they pick up territory, Bosnian forces are becoming even stronger, soldiers in Tuzla boasted. The Achilles' heel of the Bosnian Army - the lack of tanks and artillery - is partly being overcome as abandoned Bosnian Serb heavy weapons are captured.
In Tuzla on Friday, hundreds of Bosnian government soldiers showed off three battle tanks, three artillery pieces, three antiaircraft guns, and a half dozen trucks full of ammunition captured when the Bosnian Army took a strategic road linking Tuzla and Zenica - the two largest Muslim-held cities in central Bosnia last week.
"This is a salute for Franjo [Tudjman]," shouted one soldier, as he raised his hand. Dozens of others flashed a "V" for victory sign at the site of the Croatian license plates.
THE well-equipped Croatian Army has entered western Bosnia and is clearly turning the tide. Sixteen months after a US-brokered agreement ended fighting between Muslims and Croats and allied their governments against the Serbs, Muslim and Croat forces are fighting together.
But Western observers worry that the ugliest part of the war in Bosnia - Bosnian Serb atrocities against Muslims - may be reversing along with the strategic balance.
More than 6,000 Bosnian Serb civilians were reportedly captured by advancing Muslim-led troops in the town of Donji Vakuf last week, and Serb media reported that drunk Bosnian soldiers reportedly committed atrocities. British peacekeepers have not been allowed to enter the area or investigate the status of captured Serb civilians.
After three years of war and the brutal "ethnic cleansing" of tens of thousands of Muslims and Croats from Serb-held towns in western Bosnia, a vicious cycle of revenge may be playing itself out.
"It's moving so fast. We only know what's happening from the [Bosnian government] news," says the Western diplomat. "This could be a real tragedy."