The winds of war are blowing once again in the Balkans. The State Department's destructive policies in the region have been overlooked by Washington's conservatives for too long. As the Bush administration remains focused on wiping out the remnants of Saddam's loyalists in Iraq, it has neglected to confront the re-emerging instability and ethnic extremism in the volatile former Yugoslavia. President Bush's policy has been one of indifference. Rather than forging a coherent policy, he has given the State Department free reign in the region. The result is that ethnic tensions are on the rise again. Since NATO's bombing campaign that helped to topple Serb strongman Slobodan Milosevic from power, the State Department has championed an amoral realpolitik that seeks to preserve "stability" at the expense of self-government and democracy for the peoples of the area. State Department officials did little to oppose Milosevic's ethnic cleansing campaigns in Croatia, Bosnia and Kosovo. They now have become a major obstacle to pro-Western reformers in the region. A case in point is Bosnia. Since the signing of the 1995 Dayton Peace Agreement, the country's three constituent peoples - Bosniaks, Serbs and Croats - are no closer to genuine reconciliation than they were nearly a decade ago. But that hasn't prevented the State Department from resisting calls by Bosnian President Dragan Covic to revamp the country's outdated political and economic institutions. Mr. Covic rightly argues that if Bosnia is to remain a united national entity, it must be transformed from a unitary, centralized state into a Swiss-style confederation based on local autonomy and full cultural rights for the nation's three ethnic groups. Rather than embracing Mr. Covic's bold vision for far-reaching constitutional change, Foggy Bottom remains obsessed with preserving the status quo. However, the greatest danger to regional peace comes from the rebirth of radical nationalism in Serbia. In recent presidential elections, nationalist extremists led by the odious Tomislav Nikolic won the largest share of the vote. Luckily, the results were annulled because of inadequate voter turnout. But Mr. Nikolic's call for a "Great Serb" state is met with wild applause on the campaign stump. Opinion polls show that Mr. Nikolic's Radical Party and Milosevic's Socialist Party are poised to dominate the country's parliamentary elections later this month. A victory by the ultra-nationalists would spark alarm across the region, setting off preparations for a possible new round of ethnic fighting. By insisting upon "unconditional cooperation" with the International Criminal Tribunal for the former Yugoslavia (ICTY) in The Hague, Netherlands, the State Department has directly contributed to the nationalist fires simmering in Serbia and elsewhere. The tribunal's chief prosecutor, Carla Del Ponte, has issued deeply flawed indictments against leading Croatian and Serbian generals based on the bogus charges of "command responsibility" for purported war crimes. Drunk with power, Mrs. Del Ponte continues to issue a plethora of indictments, without any regard for their legal merits or whether her office is capable of effectively handling the growing number of cases. Most Serbs now view the tribunal as being biased against them, while the Bosniaks and Croats feel that their desires for justice are not being adequately met. A recent example was the decision by the ICTY to sentence Gen. Stanislav Galic, the Bosnian Serb commander who masterminded the savage siege of Sarajevo from 1992 until 1994, to 20 years in prison for crimes against humanity. The ruling was met with outrage by Muslims in Sarajevo. "If you have a 20-year sentence for the deaths of 16,000 people, it means Galic will only be in prison for a few hours for each of them," said Jasmin Odobasic, deputy head of the Muslim Commission for Missing Persons. Originally formed to foster ethnic reconciliation and give the victims of Milosevic's genocidal campaign the justice that they deserve, the Hague tribunal under Mrs. Del Ponte's leadership has degenerated into a political circus. She is openly reviled by most reformist leaders in the region. Notorious Bosnian Serb war criminals Radovan Karadzic and Gen. Ratko Mladic remain at large. The Milosevic trial continues to lag. It was precisely Mrs. Del Ponte's prosecutorial abuse of power and overall ineffectiveness that led to her removal from the International Criminal Tribunal for Rwanda by the U.N. Security Council earlier this year. But rather than cutting her loose from the ICTY as well, the U.S. ambassador for war crimes, Pierre Prosper, continues to stubbornly back Mrs. Del Ponte. A progeny of the State Department, the ICTY has become an institutional Frankenstein that threatens the long-term stability of the region. The Bush administration must not allow the State Department to wreak havoc in the Balkans. Mr. Bush should extend his full support to the current reformist governments in Zagreb, Belgrade and Sarajevo, by assuring them that the ICTY's excessive judicial activism will be significantly scaled back. The tribunal should only focus on a few high-profile cases, leaving the domestic courts to handle the rest. Most importantly, Mrs. Del Ponte must be replaced before her circus-court provokes another Balkan tragedy.