CAMP NOTHING HILL, Serbia - Suddenly, they are almost everywhere: NATO peacekeepers patrolling Kosovo in trucks and humvees. The increased presence is intended to reassure, but it's rattling nerves as the breakaway province gears up for independence.

"There's tension in the air - especially at night," said Dragan Jovanovic, 41, who lives in Sainovica, a Serb village in western Kosovo that is surrounded by ethnic Albanian settlements.

With some Serbian officials threatening violence if Kosovo declares statehood early next year, there are fears that things could go badly again in the Balkans. And if there is trouble, it is likely to happen here first, along northern Kosovo's desolate border with the rest of Serbia.

"I don't expect any major outbursts," said NATO's commander in Kosovo, French Lt. Gen. Xavier Bout de Marnhac. But he added: "I can't be behind every bush in Kosovo."

The birth of Europe's newest nation, international observers warn, could touch off the continent's next crisis. "There will be protests. There could be riots," said Charles A. Kupchan, a senior fellow at the Council on Foreign Relations in New York.

"Kosovo is to the Serbs in some ways as Jerusalem is to Israelis or Palestinians," he said. "Lives are on the line, and we may see renewed bloodshed in the Balkans sometime early next year."

Serbia has offered broad autonomy, but insists that Kosovo remain part of its territory. Russia agrees, contending Kosovo's independence would encourage other separatist movements in Georgia, Chechnya and worldwide, and has vowed to block it at the U.N. Security Council.

The province's ethnic Albanian majority demands nothing short of full independence and an end to the limbo that began in 1999, when NATO air strikes ended a brutal Serbian crackdown on separatist rebels and Kosovo came under U.N. administration.

With the rival sides hopelessly deadlocked - and the Security Council unlikely to reach agreement on a way forward when it takes up the issue Dec. 19 - Kosovo's leaders are now expected in January to formally set the province on the road to achieving statehood by spring.

"Compromise is impossible," Kosovo's new prime minister, former guerrilla leader Hashim Thaci, said yesterday. "Kosovo will be independent. The negotiating process is finished. Now it's time for a decision."

Thaci pledges to closely coordinate a declaration of independence with the United States and the European Union, and insists the time for war and violence is over.

But ethnic Albanians, who account for 90 percent of the province's two million people, are mindful of the havoc and death wrought during the 1998-99 war, which killed an estimated 10,000 people. And Kosovo's minority Serbs, targeted in the past by reprisal attacks, fear they may be pressured to leave if the province gains statehood.

"People are worried about their safety and their lives," said Rados Vulic, mayor of Osojane, where several houses were torched a few years ago.

If Kosovo does gain independence, it faces daunting economic obstacles. Unemployment tops 40 percent. There are power blackouts on most days. And although the late pacifist leader Ibrahim Rugova liked to give visitors gems offered as proof of the province's untapped mineral wealth, Kosovo is not South Africa, and experts say all it really has to exploit is its coal.

The European Union, which would take over from the United Nations during the transition to independence, says it would swiftly organize a donor's conference to help the new nation get on its feet.

As Kosovo's moment draws near, the presence of NATO's 16,000 peacekeepers adds to the nerve-wracking sense of an impending confrontation. But most people seem to trust that NATO and U.N. officials can pull off a peaceful transition.

"I'm not afraid at all," said Emine Bushi, 58, shopping yesterday along Pristina's main street. Serbs, she said, "kicked us out once - but they won't do it again."