It's difficult to see how we can avoid the outbreak of war in Montenegro

'As always in the Balkans, the cost of action has to be measured against the price of inaction'

It has become almost routine to have a foreign-policy crisis over the Parliamentary summer recess. This year's comes pre-cooked and shrink-wrapped. War is now oven-ready in Montenegro. Up to now, the hopeful (including me) could believe that, under the subtle and intelligent leadership of its young President Djukanovic, Montenegro could, with a little luck and some help from its friends, be the single component of ex-Yugoslavia which would escape from the curse of Milosevic into democracy without bloodshed. But now I am much, much more gloomy.

It has become almost routine to have a foreign-policy crisis over the Parliamentary summer recess. This year's comes pre-cooked and shrink-wrapped. War is now oven-ready in Montenegro. Up to now, the hopeful (including me) could believe that, under the subtle and intelligent leadership of its young President Djukanovic, Montenegro could, with a little luck and some help from its friends, be the single component of ex-Yugoslavia which would escape from the curse of Milosevic into democracy without bloodshed. But now I am much, much more gloomy.

I do not believe Montenegro is perfect. There is a real problem with corruption, always a virulent Balkan disease. The pace of political and economic reform remains frustratingly slow. And while there is admiration for Djukanovic's cleverness, some still express doubts about the true commitment of this ex-acolyte of Milosevic to Western-style democracy and free-market institutions.

Nevertheless, what astounds is just how far, peacefully, the Montenegrins have managed to break the chains with Belgrade. Remember that, unlike the Bosnians or the Albanian Kosovars, the Montenegrins and the Serbs are basically the same people. A steady 30 per cent of Montenegrins are as pro-Belgrade as any Serb in Serbia. Indeed some of Serbia's nastiest are Montenegrins themselves. Milosevic is, and so is Karadzic.

Then there is the little matter of the Yugoslav army. This is not outside the borders waiting to come in. It is already there in full strength - perhaps as many as 15,000 of them. So breaking from Belgrade is not a matter of throwing out an occupying power, as in Croatia, Bosnia and Kosovo - but of running a daily risk of civil war, aided by a full-scale army in your midst.

It is this delicate balancing act that Djukanovic has played so well. He has successfully managed the beginnings of economic reform.On the political front, he has played the independence of Montenegro with equal skill. He first proposed a referendum, so capturing Montenegrin nationalist opinion. And then was wise enough to know that a referendum on independence would be a casus belli for Belgrade. So, having got everyone's attention, the referendum has been quietly placed on the back burner, for future use if necessary.

But if Djukanovic has played the West with lightness of touch, his weapon with his fellow-Montenegrin in Belgrade has been equally clever. He has simply refused to react.

Milosevic has tried everything. Sending troops to Podgorica's airport; sending more to man the sensitive mountain passes with Kosovo. Ordering others to disrupt the flow of travellers across the border from Albania. Holding up lorries carrying essential food at the Montenegrin/Serbian border. To all of these, Djukanovic has returned the two fingers of dumb insolence and done nothing.

Which is why most Western observers used to believe that, while the possibility of internal troublemaking and disruption was always there, the chances of Milosevic using overt force to coerce Montenegro was slim (not least because of the questionable reliability of his troops).

Now things have changed. Milosevic has used the parliament in Belgrade to slash Montenegro's constitutional rights in a way that the Montenegrin parliament has recently declared illegal. The military pressures are simultaneously being raised. Two British and two Canadians have been seized on the border with Kosovo, accused of planning sabotage against the Yugoslav forces. And Milosevic has now called federal elections for September, insisting that he will run these, with the help of the army if necessary, in Montenegro, too.

It is difficult to see how we will get through the next few months without some reaction, even if only at a low level, to these latest provocations.

The problem is that Milosevic now has an embarrassment of choices for troublemaking in the next few months. His own September federal elections give him opportunities for mischief in three of the Balkans' most explosive areas - Montenegro, Kosovo and Bosnia. Then there are Kosovo's own internal elections, fixed for the end of October. And then the Bosnian ones a month or so later. And over all of these, the US elections offering Milosevic a near-irresistible temptation to do the mischief-making he does best, while attention in the US is diverted

There are those who fear some military coup de théâtre using the Yugoslav army in a lightning strike against the Djukanovic government. I would have dismissed this a few months ago. I cannot do so now. Though I still think Belgrade-fomented internal disruption is more likely. But if, God help us, either happens, then it is less likely to take the form of a full military invasion and more likely to look like the early days of Bosnia, with an unequal civil war in which one side has all the weapons and the support of the Yugoslav army.

So the stage is set for another Milosevic miscalculation. The opportunities for mischief are nicely in place. The West appears divided in its response and uncertain what to do next. Say the word "Montenegro" to any Western general and you will receive immediate return-fire in the form of multiple salvos of reasons why we shouldn't touch the place with a bargepole. I can see what they mean, though I recall the same being said in the early days of Bosnia and Kosovo.

But, as always in the Balkans, the cost of action has to be measured against the price of inaction. The consequences for Western policy in the Balkans, of Milosevic gaining control of Montenegro, would be catastrophic. A basically pro-Western, pro-European Balkan country would have disappeared back into Milosevic's maw and the West's primary aim, the removal of Milosevic, would be in ruins. Is this acceptable, after the sacrifices, the suffering, and the invested will of the mighty in Kosovo and Bosnia?

The bottom line is, we cannot let this happen. This means sending clear messages to Milosevic about the dangers of miscalculation (which we have done, after a fashion) and backing these with credible signals of our resolve (which we haven't done at all).

On the military side, it means drawing up proper contingency plans for the various eventualities, including the most overtly dangerous one of an attempted military coup; considering in what circumstances we could impose a no-fly zone; immediate judicious employment of Western warship units in the Adriatic, etc.

On the economic front, it means continuing to expand Western economic assistance to Montenegro.And doing some very clear but rather small symbolic things to show our presence and active engagement in Montenegro - the establishment of an EU office in Podgorica, for instance.

But what it chiefly means is recognising that whatever we do, it is far better to do it early to avoid a war, rather than late to respond to one.

The writer, former leader of the Liberal Democrats, has just returned from an extended visit to Kosovo and Montenegro