By Douglas Hamilton

BELGRADE, April 5 (Reuters) - Almost three months after an election produced a hung parliament, Serbia is no nearer to having a government as a struggle to prevent the loss of Kosovo paralyses its politics.

Leaders appear transfixed by an approaching United Nations decision on the independence demand of Kosovo's 90 percent Albanian majority.

Caretaker Prime Minister Vojislav Kostunica assures Serbs that their powerful friend Russia will veto any U.N. resolution that aims to take Kosovo away from Serbia. While some Serbs are sceptical, his promise is going largely unchallenged.

If he is wrong, the internal repercussions may be serious.

"If Russia doesn't cast its veto, it will provoke something of a crisis in Serbia. I think there will be radicalisation in Serbia and it won't be good," former Southern Serbia security chief General Ninoslav Krstic told the magazine Evropa.

Some analysts say Serb party leaders do not want to form a government until Kosovo is taken out of Serbia's hands, so that none of them will bear the political blame for losing it.

If no coalition is formed by mid-May -- earliest likely time for a U.N. decision -- the law requires fresh elections.

Along with General Krstic, some Serb analysts believe the ultranationalist Radical Party -- which came out on top in the last election -- could coast to victory in a protest vote against the enforced amputation of Kosovo.

A Radical government, hostile to capitalism and still harbouring the dreams of a Greater Serbia that fuelled war in the 1990s, would confound the West and alarm foreign investors as well as many Serbs banking on a future as members of the European Union.

DUCKING REALITIES

Forces of the late Slobodan Milosevic killed 10,000 Kosovo Albanians in 1998-99 in ruthless operations to smash a guerrilla uprising. NATO bombed Serbia to drive Belgrade's army out and the United Nations has run the province ever since.

If Kostunica is right and Moscow vetoes independence, heavy consequences are almost guaranteed, say diplomats and analysts.

Kosovo would immediately declare independence unilaterally and defy Serbia or anyone else to block its path. Kosovo's 100,000 Serb minority might decide to flee from isolated enclaves, retreating to a partitioned northern stronghold.

"One way or another the status quo will end, and it will either end through a controlled, organised process... or it will be uncontrolled and much more violent. That is the choice," says U.S. Assistant Secretary of State Daniel Fried.

U.N. special envoy Martti Ahtisaari, who proposes independence supervised by the European Union as the only viable solution for Kosovo, has also warned of violence.

"A return of Serbian rule over Kosovo would not be acceptable to the overwhelming majority of the people of Kosovo. Belgrade could not regain its authority without provoking violent opposition," he says.

Kostunica insists Serbia's sovereignty must be paramount, whatever the aspirations of the 2 million Kosovo Albanians. But he and other Serb leaders are silent on the probable consequences of Russia vetoing an independence resolution.

Serbia's Beta agency on Thursday published a Russian editorial saying Kostunica was overplaying the veto card, trying to force a confrontation with the West that Moscow did not want.

"This propaganda campaign is deliberately circumventing the reality, which is that in essence Kosovo has long been lost to Serbia," Beta quoted the daily Kommersant as saying.

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