Yes, but why would the government of Serbia give its citizenship to some random person with no ties to the country and no intention to establish them? No one does that and it makes no sense. Like it's been mentioned in this thread, there are provisions in the law that enable the naturalization of persons who could "benefit and promote the country of Serbia" (the latest example being in women's basketball just recently), but Vargas playing in Fenerbahce or wherever and NOT on the Serbian NT does not meet that requirement.
It's possible she simply changed her mind for whatever reason. If so, I wonder how that will affect her relationship and cooperation with Terzić.