If you set Independent forces as friend to no one or as friend to opfor civilian side somehow takes over these settings.
If IND are friendly to OPFOR civilians will flee when they see blufor units.
If IND are friendly to no one civilians will flee when they see blufor units.
Only if IND is friendly to BLUFOR civilians are friendly to BLUFOR.
This can't possibly be intended behavior. BLUFOR should always receive friendly reactions from civilians (at least that's how it has been in the past games of the arma series)