It was Winston Churchill who said that the Balkans "produce more history than they can consume". There has been ample evidence of that over the past 10 years. War after war, atrocity piled upon atrocity, horrors not seen in Europe since the second World War: the Balkans stalked our imagination like some awful dream from which we thought we had long awoken.

Who can explain it, who can tell you why? Sitting quietly in his office in a drab government building in Belgrade, a senior government official sighed that a Pandora's box of rabid nationalism had been opened at the start of the 1990s.

Once upon a time there was a Federal Republic of Yugoslavia ruled over by an elderly autocrat called Josip Broz Tito. He kept the lid on the box very successfully for nearly 50 years and the fact that his methods were not always gentle or kind never bothered the West, which simply rejoiced that a chronically troublesome region was quiescent and off the agenda.

The collapse of the Berlin Wall changed everything. Tito was dead nearly 10 years and his successors were not so much interested in communism or socialism as in what the late Indira Gandhi defined as the essence of politics - the getting and wielding of power.

Such a man was Slobodan Milosevic, described to me by one seasoned observer in Belgrade this week as neither a communist nor a nationalist but a "powerist".

Perhaps if he had quietly accepted his defeat in last September's election and played the long game, he could have returned to power when the 18-party coalition backing his opponent, Vojislav Kostunica, had collapsed from its own internal contradictions. But the arrogance of power meant that he tried to overturn the election result and the people's anger exploded.

Stage Two of the Yugoslav democratic revolution came last weekend when the new administration took its courage in its hands and sent an arrest team to the Milosevic villa. Western aid was on offer but the price tag was putting Milosevic behind bars.

Previously occupied by Tito, the villa is located in a huge compound behind high walls in the suburbs of Belgrade. "That is Milosevic's former residence," my driver said and added with a touch of black humour: "He has a new one now."

Milosevic's new home is more like a hospital than a prison on the outside - but a grim place nonetheless. There are no walls, just high railings in front and, strangely, there was no overt security presence when I drove there this week. "Tito built it for anti-communists," my guide said. "The communists made this, and now they are inside."

THERE are mixed feelings in Yugoslavia about sending Milosevic to face the war crimes tribunal at this stage. Some I spoke to saw it as necessary and inevitable in the longer term, if the flow of Western aid was to be maintained. But others were insistent he should be dealt with on his home patch. There was some concern that the UN might cast its net very wide.

Milan Komad, a young university graduate, was never an admirer of Milosevic. "I was forever in protests," he says. "I could write a book about it." A supporter of the anti-Milosevic campaigner, Vuk Draskovic, Komad nevertheless believes a domestic trial is the right approach because the greatest evil Milosevic inflicted was on his own people. He had led them to defeat in four wars, isolated his country from the world community and presided over the disintegration of law and order in Serb society.

"He ruined the country, he ruined the people and it is necessary to prosecute him here in Serbia," Mr Komad said. "He must pay for what he did." Yet he acknowledges that, before things went badly wrong, Milosevic had a lot of support from the people, though not from himself. He shakes his head now in disbelief: "He was very, very popular. He had unbelievable support."

Held in check by Tito, with the collapse of the communist system Serb nationalism was given free rein. Milosevic presented himself as a tribune of the people but he led them up a dead end of war, lost territory and diplomatic isolation. Serbia's stock had never been lower and Mr Komad puts most of the blame on Milosevic. He would not rule out the death penalty. "Why not? I am not a judge, but in my opinion he deserves it."

At first blush, Belgrade could be any large continental city. Acres of restaurant tables stretch out in the afternoon sun, couples stroll hand-in-hand in the park, rock music blares from car loudspeakers. But then there is the Chinese embassy, devastated by NATO bombs, likewise the television station where 18 mostly-young people died and a monument nearby asks the simple question: "Zashto (Why)?"

The formidable Serbia faces were described to me by a senior government official in a background briefing. In addition to the problems of post-war reconstruction (it would take many billions to repair the damage inflicted by NATO), there were continuing political and security difficulties, in Kosovo, in south Serbia and in Montenegro, which may well be about to leave the Yugoslav federation after elections later this month.

Last but not least, there was the question of Milosevic and the tribunal in The Hague. "It is a very sensitive matter because the wounds from the NATO bombing campaign are still very deep."

There was also the point that Milosevic's Socialist Party was the biggest opposition faction in the Serb parliament. "He should be judged and prosecuted here first." By the time his Yugoslav trial was over, a law allowing for his transfer to The Hague would probably be ratified.

Nevertheless the senior official was quite optimistic. Moves were under way to improve the climate for foreign investment and it was hoped an association agreement could be signed with the European Union sometime this year. Full membership would hopefully follow and Belgrade could take its place once again as a great cosmopolitan capital. It was a question of keeping up the momentum, he said. "Nothing succeeds like success."

Meanwhile, Slobodan Milosevic sits in a prison cell, considering his narrow range of options. Whether in Belgrade or The Hague, or both, he can be expected to mount a vigorous defence. After 13 years in power he knows a secret or two and may not be slow to reveal them in his own interest.

Keep your seats, the show has only just started.