PANCEVO, Serbia, June 20 (Reuters) - Twelve square metres (130 sq ft) of cracked linoleum, peeling paint and worn woodchip furniture have been home to Milka Djelalija, her husband and two sons for more than 15 years.
An ethnic Serb born in Croatia, she fled her town on the frontline of the war between newly-independent Croatia and its Belgrade-backed rebel Serb minority in 1991.
She has lived in limbo since in a refugee centre in Pancevo, 40 km (25 miles) north of Belgrade, one of a half million people in what used to be Yugoslavia who still count as refugees and displaced.
"I had planned to return, but it wouldn't work," Djelalija said. "There, I'd sleep in fear."
Serbia is host to 300,000 mostly ethnic Serb refugees from Croatia, Bosnia and Kosovo, Europe's largest refugee population.
There used to be twice as many, but numbers have fallen slowly as some took Serbian citizenship and some went home.
Others simply melted into a bureaucracy that makes refugee status both a blessing and curse, a guarantee of aid and a sentence to life in transit.
Djelalija, 44, boasts with a smile that she's an old-timer compared to others in her building, a yellow-brick schoolhouse converted to tiny one-family rooms.
Worn laundry is put out to dry in corridors that reek of ammonia. Bathrooms and kitchens are shared, and people do their chores in shorts or housecoats with tired familiarity.
She considers herself lucky. She has a job and a place in the queue for an apartment built with aid money. Like many, she dismisses talk of return. There are no prospects, she says, a lot of red tape, and -- worst of all -- there is lingering bad blood.
Hundreds of Croats, Muslims and other non-Serbs were murdered in the parts of Croatia controlled by Serb rebels.
When the area was retaken in a Croat offensive in 1995, some 200,000 ethnic Serbs fled in a convoy of tractors and old cars.
"We are not guilty as a nation, and definitely my kids are not guilty of anything," Djelalija said.
"But I'd never take them back there. I don't know how people would react if I as much as said 'Good Morning'."
Lennart Kotsalainen, Serbia representative of the United Nations refugee agency UNHCR, said falling numbers showed there was an improvement in the situation from the mid-1990s.
But the West needed to keep up pressure on Balkan states to cut the red tape, work out pension rights for refugees and improve their prospects for returning to their homes.
"Sometimes refugees and displaced are used as political pawns, to score points between countries," Kotsalainen said.
As long as some 200,000 people from Kosovo were still among the displaced, he said, "it's a sign that the conflict hasn't been resolved".
A 1998-99 war between Serb forces and separatist ethnic Albanian guerrillas in Kosovo ended when NATO bombed Serbia to expel its forces and stop the mass killing of civilians.
Independent tallies say anything between 7,500 to 12,000 people were killed, mostly civilians from Kosovo's 90-percent Albanian majority. Serbs and other minorities then fled the province to escape revenge attacks that followed.
Unlike Bosnian and Croatian Serbs who visit their hometowns Kosovo Serbs are wary about returning.
Those who stayed and the few who returned live in ghettoes protected by U.N. troops, keenly following U.N.-led negotiations likely to result in supervised independence for the province.
"Returns (to Kosovo) are obviously hampered because there's no political solution in sight," Kotsalainen said.
"Many of the displaced would like to know what will be the outcome of the Kosovo negotiations before they make a decision on whether to return or not."
In Kosovo, as in Croatia, the West is putting pressure on authorities to rebuild minority homes to encourage refugees to return. But few plan to use them.
"We planned a big house, so the family could live together," Djelalija says, showing a picture of her rebuilt, unplastered, empty house. "But that was a plan from another life. Now we'll sell it, or keep it to show to our kids, like a souvenir: this is where we used to live."
- Reuters - Thomson Reuters Foundation
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