AT a refugee camp in the village of Kovilo, north of Belgrade, 170 Serbs who fled war-torn Bosnia and Croatia await the long Balkan winter in a disused army barracks with more resignation than fear.

'It is better than in the Second World War,' said Pero Zajelac, 55, a refugee from Pakrac, central Croatia. 'Then, we spent the winter hiding in the forest. Now I have a bed. This evil is better than that evil.' His wife Milica chipped in: 'No point us doing anything or moaning. We are at the mercy of the world. It depends on the world if they want to feed us.

The refugees are bunched 12 beds to a room in the draughty barracks. An 80-year-old pensioner lay sandwiched between a married couple with a baby and a teenage boy.

Some refugees have been in Kovilo for 18 months. Many of the older people will probably die here. The young want to start life anew but have scant chance of finding jobs in sanctions-hit Serbia. Their hopes of returning home to Croatia are almost nil.

The Red Cross supplies Kovilo with basic foodstuffs and the local authority gives fuel for heating. Although the refugees raise chickens and grow vegetables, many children have ulcers because of a poor diet.

'We eat too much canned food which has passed the sell-by date,' said the camp secretary, Mila Nesic, a refugee from Novi Travnick in Bosnia. 'This is not living but a kind of living.'

The refugees - more than 170,000 in Belgrade alone - form only a segment of a looming humanitarian crisis that has passed almost unnoticed outside Serbia.

Overshadowed by the catastrophe in neighbouring Bosnia, the growing poverty of Serbia is ignored by an outside world that is indifferent or blames Serbs for starting the war. Some foreign aid workers call it 'the forgotten story' of former Yugoslavia.

'Serbia is in a worse state than any country in Eastern Europe outside Bosnia,' said Encho Gospodinov, the East European spokesman for the International Commmittee of the Red Cross (ICRC). 'Factories have closed, unemployment is high and inflation is rampant.'

'The refugees are in fact a privileged group because they get regular food parcels and clothing,' added Sven Lampell, the head of the ICRC delegation to rump Yugoslavia. 'This is not a natural disaster but a national disaster. Millions are affected.'

The daily diet of most urban Serbs, who earn less than 30 German marks (pounds 12.50) a month, is now so poor that the Red Cross plans to open 10 soup kitchens in Belgrade.

Red Cross workers criticise the red tape in the United Nations Sanctions Committee for holding up deliveries of medicines to Serbia's abysmally stocked hospitals. Each truck crossing in to Serbia must have permission from the committee for every item in order not to violate UN sanctions. Medicines are not banned under the UN embargo but bankrupt Serbia lacks the hard currency to import them.

One official from a US-based church charity said an extra hurdle was that many Americans insist that donations to former Yugoslavia do not go to unpopular Serbia.

Facing an unprecedented financial crunch and fearing an acute energy shortage, many Belgraders have filled their balconies, cellars and back gardens with wood.

Opposition leaders fear that President Slobodan Milosevic will trigger an even worse economic crisis to get himself out of a corner. They believe he will use up Serbia's last hard-currency reserves to fill supermarket shelves before elections take place on 19 December.