ECONOMIC factors have played a relatively marginal part in attempts to ascertain the origins of the recent Balkan war. In contrast, myth and legend have been writ large, often obscuring realities on the ground, and clouding the judgment of international protagonists at crucial junctures in the war. These components are already performing a similar role in Kosovo.

Described as the heartland of Serbian medieval culture, Kosovo has been the scene of a number of historical landmarks through the centuries. But myth takes over in the bid to portray this reality as a major impetus behind the imposition of a Serbian police state on the 90% Albanian majority population in Kosovo.

The rationale governing the Belgrade government's current action in Kosovo might also be usefully examined in political and economic terms, as a framework within which to determine international policy in the region.

It is a paradox that, although Kosovo was always the most under-developed of Yugoslavia's federal units, it was at the same time the repository for much of the country's mineral wealth, including lead, zinc, and nickel, and half of Yugoslavia's coal. The Trepca mines, one of Yugoslavia's largest industrial complexes was, in 1989, the scene of a seminal strike by 1300 Albanian miners. More than 3000ft deep in the shafts of the lead and zinc mine, they staged a nine-day sit-in, many on hunger strike, in protest against the Milosevic-led retreat from the principles of the 1974 constitution which had conferred autonomous status on Kosovo. The action led to a general strike, and a demonstration half a million strong, including students and school children, in the streets of Pristina. The strikers, tricked by Milosevic and the Yugoslav League of Communists into believing their demands had been

met, did not succeed in their objectives, while Milosevic preserved his political reputation as saviour of the Serbs, including de facto military rule in Kosovo and abolishing its autonomy.

The experience was to harden the respective positions of both sides. On the Albanian side, it led to nine years of non-violent resistance to Serb rule, and the formation of a parallel political and economic system, supported by the diaspora. Belgrade, meanwhile, determined never to relinquish Kosovo into Albanian hands.

But the situation is even more complex than might initially appear. Kosovo was the supplier of a substantial proportion of Yugoslavia's electricity, and continues to supply most of Serbia, Montenegro, and Macedonia. It is, consequently, of great strategic and economic importance to Serbia. Yugoslavia's state electricity company, EPS, is currently in the process of privatisation, with the Italian firm, ENEL, interested in acquiring the Kosovo EPS plants: 49% of the Serbian telecommunication system, privatised last year with the assistance of NatWest Markets on the initiative of ex-British Foreign Secretary Douglas Hurd, has already passed into the hands of the Italian and Greek companies, STET and OTE, with negotiations taking place for the rest.

The apparent irony of transferring these utilities and mineral wealth into the hands of foreign firms becomes clear when considering the short-term benefit to the coffers of Serbia's faltering economy. And in the longer term, the foreign investment interests may be invaluable in opposing Kosovo's secession from Serbia, since President Ibrahim Rugova's government has already made it clear that it is not likely to honour foreign commercial transactions made with the Belgrade government.

There are several agendas currently at work to ensure that Kosovo remains with Serbia. This week in the Greek and Serbian press, a plan for the regionalisation of Serbia is discussed, according to which, part of Kosovo would be given autonomy within Serbia, with the richest area in mineral resources falling to the Serbs. But such a plan, to ensure success, would inevitably entail substantial bloodshed, and result in a large-scale exodus of Albanians, probably mainly to Macedonia, with predictable consequences.

The strategy which led to the displacement of millions of civilians from Bosnia and Croatia in the early 1990s is in evidence once more in Kosovo, where whole areas have already been cordoned off from outsiders. In the case of the other two republics, it was not until later that the full scale of the onslaught became evident to outsiders.

The lesson to be learned from Bosnia is that appeasement did not pay. Milosevic is used to embarrassing international protagonists and, presumably, they are used to being embarrassed. But he is essentially a discredited and disliked dictator of an economically bankrupt Balkan state, who could not survive without international backing, other than Russia's which, for the most part, he already has.

The United States has made its position clear on a number of occasions, although it appears for the moment to be wilting under the combined forces of Serbian myth-making and European pusillanimity. Britain, however, appears to be backing the American stance, and the EC Commissioner for External Relations, Hans Van den Broek, has called unequivocally for a united European front, and the activation of the Western European Union, to prevent further bloodshed. The price of ignoring this may be to plunge Europe into a wider regional war, involving Nato powers on opposing sides.

n Carole Hodge is head of research and study at the South East European Research Unit, Glasgow University.