The Serbian province of Kosovo which helped create world villain Slobodan Milosevic - may also be the site of his downfall.

"It could be (Milosevic's) Waterloo," explains a State Department official, speaking of the ethnic tensions now boiling in Kosovo. "It could be sort of ironic justice that Milosevic flames out finally over in the spot that created this irresponsible dictator."It was in Kosovo Polje where the Yugoslavian civil war - which broke up that country - began in 1987. Milosevic was a relatively unknown Communist leader, giving a talk in a Kosovo meeting hall, when Albanian police started scuffling with protesters outside. "No one will ever beat you again," Milosevic shouted to the ethnic Serbs.

In the ensuing weeks, more than 90 Kosovar Albanians were murdered by the Serbian militia, backed by the Yugoslav federal army, and Pandora's box was opened. Further conflict in Kosovo was quelled until this year by the presence of Serbian police forces.

But it's erupted again because Milosevic foolishly - and criminally - chose to use more brutal army and police tactics to stop a small number of armed ethnic Albanian separatist militants. More than 300 people have died in Kosovo since March.

And a small number of militants known as the Kosovo Liberation Army is now growing by leaps and bounds because moderate Albanians are fed up with Milosevic's bloody repression.

Though a Serbian province, Kosovo is populated by 2 million ethnic Albanians and only 200,000 Serbs. This minority rules the vast majority by fiat and gunfire.

An important Serbian battle was fought and lost in that province in 1389; the Serbs don't want to relinquish it because it has the same spiritual resonance to them as the Alamo or Pearl Harbor has to Americans.

"Milosevic has now beaten this drum to rally his Serbian populist position just once too often," a Central Intelligence Agency expert told our associate Dale Van Atta. "Hopefully, we are seeing the beginning of the end for him. Hopefully, he will be even more diminished in the same place that `created' him 11 years ago."

The most serious external indication of this is the apparent unwillingness of the Serbian Orthodox Church to rally to Milosevic's defense. Church leaders, who normally would join any Serbian appeal to "protect" the holy monasteries and churches in Kosovo, condemned Milosevic and recently called for a "council of national salvation" to rule in his stead.

The church leaders said that in the act of immoral repression of the Kosovar Albanians, which have prompted more than 60,000 to flee their homes, Milosevic lost any authority to negotiate peace in Kosovo.

Milosevic has several serious strikes against him among his usually reliable Serbian supporters: He lost the war in Croatia; he has little control over the Serbs of Bosnia who, once unleashed by him, went their own bloody way; and his control of Macedonia is not absolute.

Erstwhile Russian ally Boris Yeltsin also pressured Milosevic to tone down the Kosovo obsession during a recent meeting in Moscow. The Russians and Serbs are ethnic cousins of sorts. But Yeltsin told him it was high time he negotiated a settlement.

That's why U.S. intelligence sources reckon that Kosovo is a lose-lose proposition for Milosevic. Hopefully, the current conflict will spell the end of the line for this murderous thug.

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