The tide has turned in the struggle for control of Chad between the government forces of Hissein Habre and the Libyan-backed insurgents of former President Goukhouni Woddei.
Recently it appeared as if the rebels were on their way to victory. Since June 24, when Woddei's rebel National Liberation Army (ANL) overran the strategic northern town of Faya-Largeau, the insurgents have put together a string of victories - culminating in the brief occupation of the important western town of Abeche July 10.
Since mid-July, however, government troops led by Habre himself have launched a successful counteroffensive. Beginning with the recapture of Abeche, Habre's forces have driven Woddei's troops back to the north and have retaken the strategic towns of Biltine, Fada, and Oum Chalouba.
The key to this dramatic reversal, according to Western diplomatic sources, rests both with the mistakes made by the ANL field commander Negue Djogo, who overextended his supply lines, and with the increased strength of Habre's government troops, aided by massive amounts of French military assistance and military and technical advisers.
Despite Habre's recent victories, perhaps the war's most important - and difficult - battle is yet to come, diplomatic sources say. The setting for that battle is the same place where Woddei launched his offensive and where his troops have recently regrouped - the town of Faya-Largeau.
If Habre's troops manage to take Faya-Largeau, sources say it would virtually wipe out the rebels' military capacity, destroying any chance for Woddei to challenge Habre in the near future.
If, however, Woddei's rebels are able to defeat Habre's troops, analysts say it would swing the initiative of the war back to the rebels and place Habre's government in an increasingly tenuous position.
Habre's assault on Faya-Largeau, which according to one highly placed Chadian official could take place as early as this week, will not be easy.
The town is heavily fortified and is located in a depression surrounded on all sides by steep cliffs. In addition to ANL troops dug in at the base of those cliffs, sources say, Woddei's forces have installed Libyan-made long-range artillery equipment on highlands above the town.
Habre's difficulties are further compounded by the isolation of Faya-Largeau, which is some 200 miles over difficult desert terrain from Habre's forward base at Oum Chalouba.
Since Habre's forces do not have the military capability to destroy those guns from long range, the battle, says one military analyst, will have to be fought at close range.
With the two sides apparently evenly matched, what some Western diplomats here fear is that the battle for Faya-Largeau might escalate into a struggle between Habre's and Woddei's main supporters, France and Libya.
Until now, France and Libya have given massive amounts of military assistance to both Habre and Woddei. There have been conflicting reports about whether Libya provided air support for early Woddei raids. France reportedly has not supplied regular troops or air support.
While France has reiterated its desire not to escalate the contest, Libyan leader Muammar Qaddafi has not clarified his position. Few Western diplomats here will predict what position he might adopt.
Whatever position Qaddafi takes will undoubtly carry risks. If he provides Woddei's rebels with significant military assistance but does not send in Libyan air support or troops, he risks a Woddei defeat at Faya-Largeau. This would be a stunning defeat for Qaddafi, too, because Libya has staked a great deal on the Chad conflict. If, however, Qaddafi increases his support for Woddei's forces at Faya-Largeau, possibly introducing Libyan aircraft or troops, he risks confrontation with France.
Although it seems inconceivable at this point that the French would introduce combat troops into the war, a French analyst here does not rule out the possibility of France using Jaguar fighters now stationed in nearby Central African Republic.
In addition to any possible French response to a Libyan escalation, Zaire has at least 700 paratroopers stationed in N'Djamena as well as three Mirage fighters and a Hercules transport aircraft.
President Reagan's decision to send $10 million in military equipment to Chad must also be read as a signal to Qaddafi that any escalation could carry a high price tag.
Qaddafi seems to be keeping his options open. State Department reports from Washington, confirmed here, indicate that Libya has moved ''a significant number'' of ground-support aircraft and MIG fighters from their bases in southern Libya into the Aozou Strip, within range of Faya-Largeau.