PALE, Bosnia -- A defiant Bosnian Serb parliament met Thursday to elect a new prime minister and government for their self-declared republic as they tried to cope with total isolation they hope will be short-lived.


"Simply put, the quintessence of the Serb people and its survival in these regions is in jeopardy. This region has been hermetically sealed, shut," said Dusan Kozic, the prime minister-designate.


Outlining a program of future action by his government, Kozic painted a bleak picture of what his cabinet was up against two weeks after Serbian-led Yugoslavia imposed sanctions against the Bosnian Serbs hoping to force them to accept an international peace plan.


"The defense of the country and the economy are in greatest jeopardy with incalculable political, military and economic consequences," he said.


Kozic warned the military defense of Serb-held territory was at stake.


The self-declared parliament, meeting in the Serb stronghold of Pale just outside Sarajevo, was expected to vote on the proposed cabinet later Thursday. Kozic said the leadership has drawn up an interim program of measures to cope with the crisis but did not elaborate.


"The program is fundamentally a transitional solution. Should political and economic sanctions last more than one month, we will launch a plan to operate the economy under war conditions," he said.


Serbia's President Slobodan Milosevic, racing to preempt further isolation of his own country, imposed stiff sanctions against Pale on Aug. 4.


But Bosnian Serbs remained defiant and their leader Radovan Karadzic said they would trade even with their enemies to get the necessary supplies.


However, for all the bravado, they seem to be counting on a belief that Milosevic's decision will be short-lived.


The Serbian president tried to seal the border last year when the Bosnian Serb parliament ignored his pleas to accept an earlier peace plan drawn up by mediators Lord Owen and Cyrus Vance. But that embargo faded quickly. Kozic said his government had two scenarios on the table for further action.


"According to the first scenario, the complete isolation of Republika Srpska ... will last for only a short time.


"According to the second, less favorable, the total isolation will continue along with intensified hostile operations and an escalation of the war, in addition to intensified political and military pressure by the international community on the Serb side."