The snow-capped Sar Mountains loom just behind them, forming a dramatic divide between Macedonia and Kosovo.

For the past two weeks, the guerrillas have spilled down mountain passes and ski roads and occupied Albanian villages just above Tetovo, held back from the city only by fearsome barrages of cannon and fifty-millimeter machine-gun fire that reverberate across the valley day and night.

Monday afternoon marked another day of terror on the streets of Tetovo. An armored personnel carrier parked just across the street from a football stadium on the city’s outskirts aimed its large guns toward the hills and let loose with deafening volleys. Licks of flame shot from the cannon; the shells exploded near a white farmhouse no more than half a mile away. Bales of hay piled in front of the deserted structure went up in flames, and thick clouds of smoke drifted into the clear blue sky. The cannon fire was followed by the rat-tat-tat of heavy machine guns, and the excited discussion of Macedonian policemen who had spotted a small group of insurgents dashing up the hill. “Move a little bit up and to the right,“said one. Then, after another burst of gunfire: “Oh, good-super!”

It was a fearsome display of firepower, but nobody could say precisely what it was accomplishing. Indeed, the heavy shooting that has kept Tetovo residents cowering indoors for five days seems to be doing little to damage the rebels’ morale. True, the police action has kept insurgents pinned down on the hillside directly facing Tetovo, and has driven back units who have attempted to cross over the ridge and join their confreres. But, according to journalists in the hills, the rebels have taken only a handful of casualties, and suffered no deaths. “Everyone is in good spirits,” a Newsweek correspondent who is traveling with the rebels reported. “They’re laughing at the Macedonians, because they’re firing and firing without hitting much.”

That may be about to change. This afternoon the Macedonian government announced that it was preparing to launch a military offensive against the guerrillas in a matter of days-or even hours. Armed forces spokesman Antonio Milosevski described the imminent assault as a “final action” that will “eliminate the terrorists” and said that “our commanders are evaluating military capacities in order to minimize risks for our troops.” Late this afternoon a huge military convoy rumbled down the main highway from Skopje, the Macedonian capital, to Tetovo, its second-largest city. Five tanks, a dozen armored personnel carriers, artillery pieces and hundreds of troops moved into the city to await orders to attack. Word of the troops’ movements spread through the guerrillas’ ranks, and by late this evening the mood among them had changed, according to a Newsweek photographer encamped in a village behind the first ridge line. “The anxiety level is very high,” he reported by mobile telephone. “They realize that the assault could come at any time.”

The atmosphere inside Tetovo this afternoon was tense. Most shops in the city–where the majority of the population is Albanian–were closed throughout the day, and there was little movement in the streets. Thousands of people have already fled in buses, trucks and private cars to Albania, Serbia and Kosovo. A few dozen locals gathered in the town’s main square–where three rebel shells landed last week in the middle of the afternoon, causing no casualties–to listen to the pounding of artillery and the crackle of machine gun fire and observe the plumes of smoke that broke out across the nearby hills. Outside the soccer stadium a few hundred meters away, ethnic Macedonian men gathered around the policemen manning the APC, patting them on the back in encouragement and pointing out movement in the hills. The troops smiled good-naturedly in return.

Behind a cement wall across the street, where a half-dozen reporters and some locals observed the firing, tempers were flaring. “This is all NATO’s fault,” an elderly man screamed at an American journalist. “The British and the Americans protected these terrorists across the border in Kosovo, and now they’ve come down to make trouble here.” He gestured to a cluster of red-roofed homes at the base of the hillside. “See that village?” he asked. “All those people came here from Kosovo. They’re the ones stirring up trouble. They want to separate-to create an all-Albanian state. They say they have no jobs, no rights. But they’re lying. They’re just using that false argument to back their crazy demands.”

The mood was just as ugly in an ethnic Albanian village a few hundred yards up the road, where the population has rallied around the guerrillas. At an outdoor cafe in the shadow of the village mosque, a half dozen idle men sipped machiattos and espressos and vented their frustrations. Ethnic Albanians in Macedonia enjoy far more rights than their counterparts did in Kosovo under Serb rule: Albanian police chiefs serve in almost all Albanian towns, an Albanian party shares power with ethnic Macedonians in the coalition government, and there are Albanian curriculums in most primary and secondary schools. But the locals insisted that until Albanians shared equal status with Macedonians under the constitution, they could never be satisfied. And despite the reforms, they still considered themselves second-class citizens. “The unemployment here is 80 percent,” a pensioner named Azez told me. “The police treat us like cattle. Our children have to attend university in Tirana to get an Albanian language education.” Added Agim, who recently returned from 12 years working in construction in Switzerland: “We don’t want to separate from Macedonia. We don’t believe in a ‘Greater Albania’ or a ‘Greater Kosovo.’ That’s all nonsense. But we want equal rights under the law. These fighters in the hills have our moral support.”

As Macedonian society becomes increasingly polarized, fears are growing that the fragile coalition government in Skopje could break apart, driving both sides into the extremist camp and making a political settlement impossible.

For the first time, there is real concern that inter-ethnic fighting could soon break out in the capital, where many people are armed. If that happens, observers warn, Skopje could very well divide into two warring enclaves, separated by the Vardar River, which forms an unofficial divide between the predominantly Albanian neighborhoods to the east, and the Slavic neighborhoods to the west. The rhetoric on Skopje’s streets has taken on an inflammatory cast. “I can’t wait for this to explode,” said a Slavic waiter in an Italian restaurant in central Skopje. “We’ll get the Bulgarians and the Serbs on our side, and we’ll send every last Albanian in this country over the mountains and get rid of them once and for all. I’m hoping for all-out war.”

At this point, the Macedonian conflict remains a brush fire. But most of the bloody Balkan Wars during the past decade began the same way.