He has lost four wars in the past decade and seen his dream of a Greater Serbia shrivel as it became a pariah state. He has presided over the collapse of the economy and watched his army retreat from the nation's most hallowed plot of ground.

Yet more than four months after Yugoslav President Slobodan Milosevic bowed to NATO demands and pulled his troops out of Kosovo, the world's only indicted war criminal to be running a country remains safely ensconced in his hilltop palace outside Belgrade, where he continues to shape the destiny of Europe's most volatile region.

As Serbia's 10 million citizens approach what promises to be an agonizing winter, the likelihood of a bloody political confrontation seems greater than at any time since the 1996 street marches protesting the outcome of local elections nearly toppled Milosevic. Yet interviews with more than a dozen prominent politicians, economists, writers and academics reflect mounting fears that Milosevic may again turn his people's adversity to his advantage and sustain his reign indefinitely beyond the 10 years he has already served.

At a glance, the Yugoslav leader's situation would appear untenable. He is isolated by the West, key domestic allies have abandoned him and support for his Socialist Party is deteriorating rapidly. The economy is in a shambles and sources of government funds used to ensure loyalty have all but dried up. Army officers are reported to be dismayed by what they view as a political capitulation, rather than a military defeat, in the Kosovo war.

During the opening this month of a newly rebuilt railway station in Leskovac, Milosevic acknowledged for the first time that living standards were dropping. "Nobody has to tell us that we are going through difficult times that may get worse," he said. The biting effect of economic sanctions, especially targeted measures such as the ban on 308 Milosevic allies from traveling to 28 countries, have eroded support for the Yugoslav leader even among those considered to be his cronies.

"The fact that Milosevic is going public much more often than in the past is a sign that he is nervous," said Ivan Vejvoda, executive director of the Fund for an Open Society Yugoslavia, backed by U.S. financier George Soros. "He knows that a solid majority of the people are now against him and he no longer has the resources, let alone the backing of the West, to prop up his position."

The Yugoslav army is another source of anxiety for Milosevic, who has never enjoyed good relations with what Momcilo Perisic, a former armed forces chief of staff, calls "the last democratic institution left in the country." Military sources say there have been six foiled coup attempts against the president since 1989, and he has regularly removed top generals to prevent any of them from becoming too ambitious.

"Milosevic has changed a lot in the past few months," says Bratislav Grubacic, a Belgrade editor who maintains close ties with the government and the opposition. "He has grown much more temperamental and does not like to hear bad news. He used to listen to other viewpoints, but now he gives monologues and is surrounded by yes men. Most of all, it kills him that none of those famous Western statesmen come to visit him anymore."

But Milosevic's foes, at home and abroad, have learned to their chagrin not to make premature predictions about his downfall. He maintains absolute control over the police, the banks and the electronic media. He exercises an authoritarian rule that helps him deflate dissent and confuse his opponents. Most of all, he manipulates his political rivals with ruthless guile, leaving many opponents in despair over Serbia's prospects of evolving into a mature democracy.

"Milosevic has used every war--with Slovenia, Croatia, Bosnia and now Kosovo--to consolidate his power," said Zoran Djindjic, head of the Democratic Party and a leader of the opposition alliance. "Whenever he feels weak, he provokes a crisis and seizes upon it as an opportunity to secure even greater control."

For Djindjic and other foes of the government, the Kosovo war ended in the worst possible way. The southern province, revered as the soul of the Serbian nation for more than six centuries, was severed from the homeland and placed under an international protectorate. The refugee burden has grown to staggering proportions, with 700,000 homeless Serbs seeking shelter. Relations with the republic of Montenegro, which along with Serbia forms what is left of the Yugoslav federation, were strained to the breaking point.

Damage from the war and international sanctions has nearly ruined the economy, accelerating an exodus of Serbia's best and brightest that has seen 300,000 educated professionals flee the country in the past 10 years. Facing the truth about the brutal deportation of Kosovo Albanians has plunged many Serbs into a state of moral depression, making them feel, as one writer says, "like the Nazis of the Nineties." And worst of all, Milosevic still retains his grip on power--with no promise that he will soon let go.

"People here feel doubly betrayed, by Milosevic and by the West," said Svetozar Cvetkovic, a well-known actor and theater director. "He tricked us into believing life would get better when it only got worse. And the West made us believe they would destroy Milosevic and his war machine, but instead they bombed the cities and people that have been trying to get rid of him."

Much of the antipathy toward the West evident during the war, as demonstrators ridiculed NATO bombs by wearing mock targets, has subsided. But so has much of the energy that motivated anti-Milosevic protesters to take to the streets last month for nightly demonstrations to persuade the government to call early elections.

Instead, Milosevic has sought to demoralize his opposition by exploiting the rivalry between his two principal challengers, Djindjic and Vuk Draskovic, the head of the Serbian Renewal Movement. Ever since 1996, when protests erupted after Milosevic tried to block an opposition victory in local elections, Djindjic and Draskovic have fought for control of Belgrade city hall and tried to undermine each other's political fortunes.

Early this month, Draskovic was injured in a traffic accident that killed his brother-in-law and three bodyguards after a huge truck veered into their caravan on an open highway. When the truck could not be traced by authorities and the driver escaped, Draskovic accused the government of trying to assassinate him because of fears that his popularity was becoming a direct challenge to Milosevic.

Not to be outdone, Djindjic this week accused Milosevic and his powerful wife, Mirjana Markovic, of ordering security forces to plot his own assassination. He said police were taking pictures of his residence and scrutinizing the weapons of his bodyguards in preparation for an attack on his life. "This kind of organized terrorism shows how nervous Milosevic is getting," Djindjic said. "The only way to stop it is by bringing it to the attention of the people."

Far from outraging the public, the rival assassination claims by Djindjic and Draskovic seem only to have deepened their animosity and held the two up to greater ridicule. During the war, both men found their reputations sullied. Draskovic's position of deputy prime minister held him open to charges of collaborating with Milosevic, while Djindjic was called a coward after fleeing Belgrade for the relative safety of Montenegro.

"Why would anybody want to kill these guys?" said Vojislav Seselj, the ultranationalist leader of the Serbian Radical Party that is allied with Milosevic. "We should be offering to provide for their protection. They are the ideal opposition because they will never be capable of coming to power."

CAPTION: A protester carries a newspaper with headline "Changes" at one of the recent daily demonstrations in the Serbian capital against Yugoslav leader Slobodan Milosevic.

CAPTION: Yugoslav President Slobodan Milosevic maintains his position, despite economic crisis and loss of key allies.