Cairo — Few spots on earth are as filled with simultaneous contrast. Unforgiving desert abuts the ever-fertile Nile Valley. Many of the magnificent marvels from the dawn of civilization are treated with indifference. Napoleonic palaces, suburban skyscrapers, sprawling slums; streets crammed with Mercedes sedans, donkey carts, and three-on-a-bicycle - all exist side by side in Egypt.
Overcrowding seems hopeless. Yet there is a calm dignity among Egyptians and unbelievable patience with the problems they endure. Violent crime is extremely rare. Prices are reasonable. There are quiet neighborhoods and noisy ones.There are mosques, cathedrals, and discos.
Day in and day out, despite the chaos at rush hour and in the ramshackle souks, or open-air markets, Egypt seems to work.
In the thin green line of life that stretches through the vast African desert - from Aswan to Alexandria - live 45 million Egyptians. This is the central economic and political problem of Egypt.
The present rate of population growth is 2.7 percent a year. There are more than 3,000 people on each square mile of land on which life can be sustained - one of the highest population densities in the world. Birth control is being encouraged by the government. But if the birthrate does not slow, by the year 2000 the population will reach 90 million. Urban sprawl will gobble up more and more of the precious farmland that Egyptians treasure as ''the gift of the Nile.''
Population enters every economic and political decision made in Egypt:
* Agriculture. The land is incredibly productive, and can be cropped year-round. But the burgeoning population crimps exports and actually makes Egypt an importer of wheat and other basic foodstuffs.
* Oil. Egypt is approaching a productive capacity of 1 million barrels a day. But the population projections indicate that, even if new finds are made, by the year 2003 Egypt will be an importer of oil.
* Revenues. The government's longtime policy of subsidizing basic foods squanders each year the entire earnings from the Suez Canal and tourism, as President Mubarak pointed out publicly last summer. Yet removing subsidies could cause riots similar to those experienced in 1977, when former President Sadat tried to raise the price of bread.
* Employment. About 85 percent of Egypt's work force is employed by the government - 2 million in the government bureaucracy alone. And 400,000 new workers are coming onto the job market each year. The political and economic pressures Egypt will feel in the years ahead will come primarily from trying to accommodate these new workers without allowing the public sector to get out of control.
Low-keyed and determined, the Mubarak government is trying to hold the line in every economic area.
''We cannot overlook the present rate of population growth,'' Mr. Mubarak told the parliament last year. ''It obstructs development efforts. It stands in the way of realizing our hope to improve the living conditions for all Egyptians. It makes our ambition confined to preventing further deterioration of present conditions.''
Rather than making exciting or popular moves to distract the public from its manifold problems (as his predecessor was wont to do), Mr. Mubarak plans to work on these problems systematically - encouraging productive foreign investment, not just the importation of consumer goods; improving the water and sewer services, mass transit, telephones, electricity; stimulating private enterprise; freezing the government's subsidies of food and other basics at current levels (
''The President is committed to economic problems in ways Sadat and (former President Gamal Abdel) Nasser never were,'' says Mustafa Kamal al-Saeed, economic and foreign trade minister. ''And never have the problems been so clearly identified and targeted. I believe that Egypt has a real chance now. All the prerequisites for serious, sincere work exist now.''
Egypt's costly military concerns with Israel have been decreased through Camp David. The Sinai Peninsula, with its oil and tourist potential, is back in Egyptian hands. Rapprochement with the Arab world is proceeding smoothly. Consequently, since coming into office, Mr. Mubarak has directed the country's attention to economic problems.
For the first time in recent history, Egypt has drawn up a serious five-year plan. The plan, basically, calls for keeping Egypt's rate of economic growth where it has been the past five years - at 8.5 percent a year - by investing 27 percent of the national income each year.
Diplomats believe that may be optimistic, since revenues from oil, Egyptian workers abroad, the Suez Canal, and tourism may not grow as fast during recessionary times as in the past.
The government intends to devote more resources to development of agriculture and industry, rather than to services - and is eager to attract foreign investors and technical expertise for productive industrial projects using Egyptian manpower. A system of incentives for foreign investment has been in place since the late 1970s. It includes guaranteed, prompt repatriation of profit and capital; tax holidays of five to 15 years; rights to purchase foreign exchange; guarantees against expropriation; tax-free and duty-free zones; and expedited customs clearances for certain goods and certain projects.
Moreover, the government will try to ''fine tune'' this open-door policy over the next five years by increasing exports 8.5 percent and holding import growth to 4 percent. That, again, may be overly optimistic, given the high expectations of Egyptian consumers and the as-yet-unsophisticated industrial output.
During the next five years, the foreign debt is projected to rise from $13.5 billion to $16.5 billion. But, Dr. Saeed says, debt servicing will become less burdensome in that time because of increased economic growth and increased exports.
''Planning in Egypt is getting more respect,'' the minister says. ''The government is keen to make sure that our objectives are implemented.''
A US-educated Egyptian economist who works for a private accounting firm sees formidable obstacles in the way of the five-year plan. But he adds: ''Usually I'm pessimistic about this kind of planning. I've seen the government from the inside. But, thank goodness, we now have an administration that is addressing these problems in the long run.That is a start.''
An American economist working here credits Mr. Mubarak with beginning to ''educate the people'' on the harm being done by the $2.7 billion in annual commodity subsidies. Though he praises Mr. Mubarak's unclouded view of Egypt's economic problems, he still worries that the Mubarak administration is likely to chart its path based more on the exigencies of politics and self-preservation than on the long-term good of Egypt.
Others argue that politics and economics are intricately entwined in this vast welfare state, that they have been since the days of the pharaohs, and that Egypt can never wean itself from socialism. They argue that the best that can be hoped for is growth of private enterprise alongside socialism. Some say too much free-market growth too fast can lead to resentment and social turmoil. Even President Mubarak, in a Monitor interview, said that under no circumstances would he expect the private sector to constitute more than 50 percent of the economy.
According to Dr. Saeed, Egypt's biggest economic problem is the high expectation level of its 45 million people: ''Nasser made promises. Sadat fed expectations. We are obliged to provide our people with more than what the present stage of economic development can allow.''
All change in Egypt, it seems, must be gradual and must not upset any of the major interest groups - the urban poor, the Muslim Community, farmers, the military, government employees, merchants. Nevertheless, gradually, an entrepreneurial class is rising. Primarily, they are traders who import into Egypt rather than export. But there are others. A well-trained American economist notes that since 1974, when the open-door policy was initiated, private industries were employing 50 to 100 persons - and are now employing 150 to 200. There are makers of pharmaceuticals, packaged food, chewing gum, furniture, bottled water.
The government is looking for growth in agriculture projects, food processing , dairies, land reclamation, and light industries making commodities for export. The United States government notes that sales prospects in Egypt for American businesses are good in areas such as agricultural commodities, agribusiness and food-processing equipment, oil services, electrical power and distribution equipment, transportation equipment, computers, and telecommunications equipment.
The Mubarak government may not be as flashy, endearing, or provocative as the Sadat government, but it seems to know what it wants and is willing to work to achieve it. The painstaking drafting and passage of the five-year plan during the past year has gone far toward lining up the country behind it. Dr. Saeed says he feels confident that he is working to carry out a plan everyone agrees on.