A promising democratic experiment is at risk in the small but strategic Republic of Montenegro, junior partner in Slobodan Milosevic's rump Yugoslav federation. Frustrated by the moribund economy and stifling dictatorship, Montenegro has charted its own course since the inauguration of President Milo Djukanovic last January. Largely, Montenegro has achieved de facto independence from Belgrade's diktats, becoming an independent-media safe haven and a thorn in Mr. Milosevic's side. Montenegro's democratically elected parliament and government are multiethnic - including two parties representing the ethnic Albanian minority, which comprises 7 percent of the population. This is a rarity in the region and a stark contrast with the federal Army's and Republic of Serbia's treatment of Kosovo's Albanian majority, which has lived under martial law since 1990 and has been subjected to a brutal war since February. Montenegro has borne the brunt of caring for the tens of thousands of refugees hardy enough to make the trek from Kosovo. Indeed, by creating such a refugee influx into Montenegro, Milosevic is deliberately creating trouble for Mr. Djukanovic and the Montenegrin government. Because of Djukanovic's break from the fold in '97 and the independent path the republic has taken since, Montenegro has been threatened repeatedly with a military intervention from Belgrade. Having fended off an attempted seizure of power by former President and Milosevic proxy Momir Bulatovic, and survived tense parliamentary elections in May, the current government is wary of the likelihood of imminent unrest. The signs are clear. Milosevic has been purging his military and security services of figures thought to be less amenable to a crackdown on Montenegro, including former chief-of-staff Gen. Momcilo Perisic, a Montenegrin. The Socialist Peoples' Party - headed by Milosevic - is planning Orthodox New Year celebrations tomorrow, probably aiming to promote violence that would be a pretext for declaring a federal state of emergency. Any violence could rapidly escalate, and civil strife, whatever the outcome, would severely hinder Montenegro's transformation into a liberal, market-oriented democracy. The ripple-effect of a crackdown in Montenegro would be felt throughout the region, further dampening hope for Serbia's beleaguered civil society advocates as well as its opposition, endangering international monitors in neighboring Kosovo, and strengthening the virulence of Serb nationalists in Bosnia. The US must succeed in Montenegro where it failed in Bosnia and Kosovo: by deterring Milosevic's aggression. The Clinton administration needs to draw a credible "red line," declaring Montenegro off-limits for Milosevic. The US failure to deliver on its threat of force in Kosovo, and Milosevic's willingness to push the West to the brink, have created a massive credibility deficit for the US and NATO. The US can't afford another failure in its Balkan policy, having been unable to prevent four wars in the past seven years. Making a clear stand now in Montenegro - by extending security guarantees and international monitors - could signal a new, more comprehensive approach to the Balkan crisis. If, as State Department spokesman Jamie Rubin recently said, Milosevic is the problem, the US must act accordingly to deny him the ability to generate the chaos and bloodshed upon which his criminal regime thrives. Because Milosevic has been allowed to create crises throughout the region, this turnaround in policy would necessarily involve a number of fronts. These would include the willingness to undertake forceful measures in Kosovo to ensure a peace under political conditions acceptable to its population; a committed effort to spur refugee return and arrest of war criminals in Bosnia; and a decision to support civil society and democratization in Serbia, thereby hastening the end of the Milosevic era. The US must not be blindsided in Montenegro. The Clinton administration has an opportunity to save a democratic and multi-ethnic republic in the Balkans from Milosevic's predictable strategy of destabilization. Should the administration fail yet again, who will put full faith in the US and its diplomacy? Kurt Bassuener is associate director of the Balkan Action Council, in Washington, D.C.