MARTA VOJNOVIC surveyed the remains of her home on a shell-savaged lane as Serbian soldiers sat on the debris-strewn porch, wolfing down a hurried lunch."It's terrible. I don't know what to think. The car was wrecked. We have no money. You look inside and there is nothing," said the grim Serbian housewife. Like other Serbs in Vukovar, Mrs. Vojnovic could find little solace in the Serb-dominated Yugoslav Army's capture of this provincial town of 45,000 on the Danube River border between independence-seeking Croatia and the rival republic of Serbia. Almost three months of the most savage fighting in the Yugoslav civil war has left Vukovar in ruins, its houses and apartments uninhabitable, its streets a morass of rubble and flame-gutted vehicles, its shops, offices, schools, and factories devastated. Though the military high command justified the destruction as protecting the town's Serbian community from Croatian "genocide," the Serbs now share with their Croatian neighbors a bleak future of poverty, joblessness, despair and uncertainty. For the communist Serbian Army generals and the regime of Serbia, the largest of Yugoslavia's republics, control of Vukovar represents another stride toward unifying the Serbian enclaves of Croatia's ethnically mixed, agriculture-rich eastern Slavonia region. More importantly, the loss of the town will further destabilize the government of Croatian President Franjo Tudjman, which declared independence June 25. Growing numbers of Croats are enraged over what they perceive as Mr. Tudjman's inability to stem the losses of Croatian territory, more than 30 percent of which is now controlled by Serbian forces. They are also angered by what they perceive as his dependence on ineffective European Community (EC) mediation. With the siege of Vukovar, the Army and its Serbian guerrilla allies control the entire west bank of the Danube River in Slavonia, giving them a bridgehead for new advances. "I think that it opens up all of this area to the Serbian Army," said a Western European diplomat in Belgrade. Ultimately, Serbian leaders hope to join Serbian areas of Slavonia, and other Serb-dominated enclaves inside Croatia and the central Republic of Bosnia-Herzegovina with Serbia, Macedonia, and Montenegro in a new "Greater Serbia." It is becoming clear that the famed southern Adriatic resort of Dubrovnik and its environs would also be included. Federal troops besieged the city Oct. 1, then advanced to the outskirts where they destroyed and looted what was Croatia's wealthiest region. On Nov. 18, the Politika Express newspaper, a nationalist mouthpiece of Serbia's communist regime, published a declaration by an unfamiliar "temporary government of Dubrovnik" that promised self-rule within Yugoslavia to the 95 percent Croatian city. "This town should remain an oasis of peace and love," it said, echoing a call by the federal Army for Dubrovnik to surrender and become a demilitarized enclave, a demand vehemently rejected by the 50,000 Croats trapped in the city amid worsening conditions. As with Vukovar, the operation to sever Dubrovnik from Croatia was aimed at exploiting Tudjman's growing internal political weakness. Ultra-nationalist, right-wing opposition groups, which disparage any scenario but all-out war against Serbs, are gaining support in Croatia. In the forefront is the Croatian Party of Rights, whose paramilitary arm, HOS, is gaining members among Croatia's military units and has attained an aura of martyrdom for bearing the brunt of the defense of Vukovar. Tudjman "has lost a lot of power because he did not worry about the defense of Croatia," said HOS leader Dobraslav Paraga, who has also won support by reminding Croats of the communist pasts of the president and other officials in his administration. Mr. Paraga accuses the regime of having his vice president assassinated last month. "I think very soon Tudjman will fall," said Paraga, a former anticommunist political prisoner at his fortified headquarters in Zagreb. "I think he has lost his future in Croatia." Declarations of support for Paraga by Vukovar's Croatian defenders and his rising popularity prompted Tudjman to outlaw HOS last month by banning political organizations from Croatia's armed forces. The degree of Tudjman's instability remains unclear, with impartial observers pointing to the absence of an opposition figure sufficiently popular to unite the republic's divergent right-wing elements. Croatian leaders acknowledge rising dissatisfaction over their conduct of the war, but contend they were forced to pursue a defensive policy to enhance Western recognition of their declaration of independence. So far, however, foreign involvement in the Yugoslav conflict has failed to produce tangible results, with the 13th EC-brokered cease-fire continuously breached like others before it. Serbia and Croatia support a proposal for the deployment of United Nations peace-keeping forces, though differences over how they would be deployed present an obstacle. But the combatants perceive benefits from taking the crisis outside the limited forum of the EC-sponsored peace conference in The Hague. For Croatia, UN involvement offers a greater opportunity for gaining international recognition of its independence declaration. And acceptance of its proposal for peace-keeper deployment along its borders with Serbia and Bosnia-Herzegovina would bring a federal Army withdrawal from its territory. The advantages for Serbian President Slobodan Milosevic are even greater: Having failed to gain EC support for his claim that Serbs face persecution in an independent Croatia, Mr. Milosevic could find sympathy within the broader UN arena from governments, such as the Soviet Union, that are also facing ethnic crises. And approval of Milosevic's proposal to station UN peace-keeping troops on the boundaries of Croatia's Serbian enclaves would end de facto Croatian control of those areas.