Serbs love myths. They compensate for desolation and disgrace. They poison the national psyche, too. But, like an alcoholic who must drink more just to keep going, Serbs grab myths to give them courage. In Belgrade, the people are manufacturing a whole new set. Ante, a western-educated banker and economist and one of the group of young Serbs who chaperoned me around the city, called them "the compendium of reassuring lies". But reassuring for whom?

Some myths are plain ridiculous. I listened in bemused silence as Vladan, suave, sophisticated and a fixer for western television companies, explained that Arkan, Serbia's legendary gangster and paramilitary psychopath, is not really dead. Arkan was shot in the lobby of the Intercontinental Hotel in January. His death was witnessed by dozens. But Vladan was adamant. "Why is his grave guarded night and day? They cannot allow DNA testing of the corpse. It would prove the body is not his. Everyone knows the eyes were removed from the corpse. The face was battered to prevent identification."

Djordje, a doctor, was contemptuous. "Of course his face was bruised. He'd been shot in the head. As for the eyes - why should his retina not be used for transplantation? He might as well make some contribution to the living. He did enough killing."

But Vladan was not to be persuaded. He knew Arkan was out there somewhere. And his fear proved how deeply he believed it. He sweated every time Arkan's name was mentioned. Eventually, he insisted on silence. We were eating in Frans, one of Belgrade's finest restaurants. Gangsters in black suits occupied neighbouring tables. Their eyes were on the leather-mini-skirted blondes who giggled and simpered for their delectation - but their ears, Vladan was sure, were tuned to us.

That lie is harmless. So is the bizarre assertion that ex-president Milosevic was in the pay of the CIA - briefed to bring about the collapse of Yugoslavia in precisely the same way that Arthur Scargill was hired by Margaret Thatcher. Believe me.

But the mad conspiracy theories are just icing - sugar on the Serbian cake. The big, all-encompassing distortions of history are the problem. Myth-making about the past is the Serbian disease. It justified Milosevic's wars and ethnic cleansing. It necessitated the rape of Kosovo. I have reported from Yugoslavia on several occasions since 1989. I have seen the Serb myth-machine in action. Now it is at work again - justifying and excusing Serbia's recent past. The new lie requires Orwellian amnesia about the old lies. But Serbs seem happy to practice double-think.

And the new big lie is so simple. Everyone always hated Milosevic. Everyone always knew he was evil. Everything about Serbia was good and kind. Milosevic exploited the people and they were powerless to resist.

Sveto stood beside the British Airways counter at Belgrade International Airport. He was overjoyed to see western aircraft back in Serbian airspace.

"We love the British," he told me, "the French - even the Americans. It was Milosevic who made them bomb us. He would not listen. He just wanted to be friends with the Chinese and the Russians. He can live on rice and vodka. We have more refined tastes."

Yet Sveto has sons in their mid-twenties. They must have served in the Yugoslav National Army, as conscription is compulsory. Vladan and Djordje both admit that they deferred service until after their degrees. Then their memories become vague.

Dvina and Dragana, both graduates in their early thirties, have brothers and boyfriends. Where were these men while Sarajevo was under siege, when the male population of Srebrenica was massacred, when Serbia poured men into Kosovo to resist the land invasion that never came?

Where are the men who volunteered to fight in Bosnia and voted for the principle of a Serbia on both banks of the River Drina? What has happened to the students and professionals who marched in their thousands to condemn "fascist aggression" by Nato and compared Bill Clinton to Hitler? Were they Albanian agents provocateurs? Who were the 30 per cent of Serbs who voted for Milosevic in the presidential elections? Have they left the country, and if so, how? Visas are not easy to obtain on a Yugoslav passport.

Belgrade in October 2000 reminds me of the descriptions I have read and heard of Paris in August 1944. Between the storming of the Federal Parliament and the swearing-in of President Vojislav Kostunica, the ranks of the resistance have swollen like a balloon attached to a high-pressure hose.

For every hero who, at the critical moment, supported Otpor, the student resistance movement, or the coalition that organised this month's protests, Zajedno, there are now 40. The Petainists have disappeared; long live de Gaulle! As Sveto put it, "We were all supporters of the opposition. Every one of us. Milosevic exploited and impoverished us. We knew what was going on - but what could we do? He was too powerful."

I wondered aloud how Sveto had obtained his Mercedes, his watch and the CD player on which he was listening to the music of Djordje Barasevic.

A friend in the security police had helped him import goods from Hungary, he said. It was a good deal. You had to live like that under the sanctions regime. "But the policeman was a Milosevic man," I observed - more a statement than an observation. "No, no," said Sveto. He was just a decent man looking after his wife and children.

Serbian state television told the same story. On Saturday night, pictures of Serb atrocities in Bosnia and Croatia were broadcast to the nation. It was a direct challenge to those who, just weeks earlier, had insisted that Nato's tales from Srebrenica, Tuzla, and Pristina were wild exaggerations invented to justify cruise missiles and bombs.

Milutin, a student of architecture at Belgrade University, watched in awe: "So, these things really happened," I said, "there were rapes, murders, genuine war crimes." Milutin took a long slow draw on his cigarette: "We heard rumours. But Milosevic said they were lies."

I decided to scratch a festering wound. "Do you understand why there are British soldiers in Kosovo? Do you see why the province is under United Nations control?"

Milutin thought hard. "We will never surrender Kosovo," he said. "The Albanians have tried to defeat us with their dicks - they breed faster than any other people anywhere in the world. Serbian women will not agree to that. What choice did we have? Should we surrender the home of our church? Are we to lose the coal reserves and the aluminium smelter at Trepca? Understand - if Nato tries to make Kosovo independent we will fight again. Kostunica cannot hand it over. He would be lynched."

The Serbian relationship with myth is intimate. Milutin, who has travelled extensively to the United States, Britain, France, and Sweden, was happy to acknowledge it. His explanation was both honest and depressing. "There are such things as national characteristics," he said. "Ours is that we think with our hearts. We know it is crazy but it protects our pride. That is why we tolerated Milosevic for so long. We believed he could protect the national interest. We only sacked him when we realised he couldn't. We should have done it before. When he finally went without firing a bullet, we felt foolish. If he surrendered that easily maybe we could have got rid of him before he lost us Bosnia and Kosovo. We could never have kept Croatia. They were almost as strong as we are."

Serbia's revolution has nothing to do with contrition. It is a new way of pursuing the myth of national greatness. Slobodan Milosevic promised a powerful and united Serbia for all the Serbs. He tried to accomplish it with wars and left his people with a land half the size of the one they wanted. Now it is Vojislav Kostunica's turn. His brief is to build a modern, prosperous Serbia via negotiation. It is essentially the same dream but this time it is to be brought about through membership of the European Union, access to the World Bank and credit facilities at the IMF.

Belgrade's impoverished middle class have unrealistic dreams. Milutin talked of restoring Belgrade's status as "the capital of capitals". He meant a new Yugoslav Federation. It is part of another revisionist myth. In addition to the "Serbs good/Milosevic bad" dichotomy which so oversimplifies the history of the last decade, there is the new "Tito hero" fable.

Serbs who enthusiastically tore apart the federation that had buried their jingoism for half a century now speak of it with heartfelt affection. They even seem to imagine that new partnership with Zagreb, Ljubljana, Sarajevo, and Skopje can come about overnight.

Kostunica faces many urgent challenges. The single step that could do most to help him overcome them would be a new and rigorous history syllabus for the Serbian people. The new era cannot be built upon myth. Serbs must accept blame. They must acknowledge responsibility. They must admit that the men with guns were not phantoms from another dimension.

That is why the handover of Milosevic for trial in the Hague would be good for Serbia. It would be even better if he were joined in the dock by Radovan Karadzic, Ratko Mladic, and the high command of his army and state police forces. They could not mount their defence without calling attention to the nationalist sentiment and bloodlust that supported their escapades. Serbs need to come to terms with it. They need to abandon their romance with myths before they build their future on new lies as preposterous as the old. Assertive nationalism based upon wealth, prestige, and diplomacy may not take lives - but it is as warped and deluded as the old tales of Kosovo Polje, where the Serbs were defeated by the Turks in 1389, and Christian martyrdom in the face of the Islamic threat.

The sadness is that handing over Milosevic would surrender the dream. And Kostunica lacks the power base to risk that. It is beginning to look as if the "popular revolution" that swept him to power had at least a few of the characteristics of a coup d'etat. Or perhaps that is another myth, created by the security police who, as every policeman knows, never really liked Milosevic.

* Some of the names in this article have been changed to protect identities.

Tim Luckhurst is a former editor of the Scotsman. He traveled to Belgrade to cover the Serbian revolution for the Sunday Herald and Herald. He has previously reported from Romania, Serbia, Kosovo and Macedonia for the BBC and the Scotsman.