"For me, punk is dead. Once it becomes fashion it is no longer punk."

Designer Karl Lagerfeld

It was planned as a "nice party for all Karl Lagerfeld's friends," explained Count Xavier de Cadtella, who was dressed in a fluorescent orange-and-silver Star Wars getup. He was leaning over the catwalk above the black-walled, barren warehouse lit only by criss-crossing green laser beams. Below, more than 3,000 of the "friends," all dressed in black as required on the invitations, gyrated to blasting electronic music.

The scene was La Main Bleue, Europe's biggest disco located in Montreuil on the edge of Paris, an area where many African workers live. Started by Jean Michel Mouhac as a club for blacks, it soon became the chic place for fashion stars and swingy socialites on certain week-nights, much the way harlem once was the "in" place in New York.

Castella, a wealthy architecture student from Belgium, and Jacques de Bascher de Beaumarchais, a film-maker and close friend of Lagerfeld, had sent 3,200 engraved invitations to fashion designers, models and groupies, the leather crowd and the punks. "I know the leaders of all groups," insisted Bascher, in a Star Wars suit to match that of his co-host. "They are all my friends and all so intelligent and nice, so why shouldn't they get along?

"Fashion is in the streets, so why give a private party? We invited every kind of person we know. They all admire Karl.

Lagerfeld was there. So were Paloma Picasso, Phillippe Niarchos and a batch of the nouvelle vague (not yet established) designers. The rest were a costumed mix heavy on black leather jackets and leather hats. There were a handful of black-robed "monks" a man in a black cape and black jockey shorts, a girl in black fishnet tights and stiletto heels.

Leaning against a wall near the door watching the show was a film production assistant in a leather head covering with slits for the eyes and a zipper for the mouth. His friend, a flower vendor, wore black leather shorts and a bare chest. They were neither punks nor Fascists, said the masked one. "Leather is for sex, not politics."

Meanwhile, Bernard Ozer, vice-president of a hugh American fashion buying service, also surveyed the scene. "I didn't come to judge, only to view," he said adding that from such extremes a designer might find an idea for a new collar or a color. "It may well affect the New York designers," he said thoughtfully. "But I hope not."

If anyone thinks the term "punk chic" contradicts itself, he's underestimating this fashion capital's genius for importing a trend, using it to amuse itself, then selling it back to the world at a higher price.

The garbage-can liners, ripped T-shirts and swastika appliques that surfaced a year ago among disgruntled London youths have been taken over here by social and fashion groupies who have made punks their heroes as well as their fashion inspiration and favorite dinner guests.

Chic is the last word you would have used to describe the London punks. In Paris this year, "punc chic" is the last word, its appeal inherent in the contradiction. It is the fashion establishment twitting itself while it quietly co-opts any potential threat.

This week, during the fashion marathon in Paris, punks were guests at the Kenzo spring fashion presentation for JAP and his party on a "pirate ship" on the Seine afterward. They were in the black-garbed mob at La Main Bleue. And the following night, punks, including Paris "punk queen" Edwige, were among the social mix at a party Michel Klein gave for his pals after his fashion collection.

This week, too, a real estate auction of a small piece of property in the Savoie was turned into a media event with the help of punks who interrupted the staged affair with minor explosives and hurled red paint at Paris personality Fred Forrest, who had alerted the press beforehand.The result was a total sale and a brouhaha in the lobby of the Hotel Crillon where Henry Kissinger was staying upstairs.

One estimates that there are as few as 1,000 real punks in Paris, though thousands more are said to read the punk paper "Facade," now in its fifth issue. A punk shop called Survival is about to open.

But for the French, the real anti-establishment punks are lumped with what the French call "Rockers," petty thugs who wear black leather jackets, and the 400,000 motorcycle owners and their companions who wear such jackets as simply the most practical garb for such endeavors.

Appearing more publically, by small degrees are the leather crowd of homosexuals, who till recently have stayed totally underground.

Once harassed by the French police, the "Leathers" have recently opened their own bar called "Le Bronx."

On the fashion runway, punk is as diverse as it is on the streets. At Claude Montana, the show began with 12 models marching on stage to loud band music in black leather jackets and leather caps and pants. Silvery chains looped through epaulets caused some viewers to assign a Nazi inspiration to the look.

"To me those ideas are crazy," said Montana, the 29-year-old nouvelie vogue designer who has been designing in leather for 2 1/2 years as well as designing very soft clothes for Ferrer y Sentis. "These clothes have nothing to do with politics and the music wasn't German, as some were saying. I didn't want to make dresses in leather but rather jackets that one could wear for 10 years. The hat and the chains were just another way of showing this strong look, but not a political statement." (Neiman Marcus has bought Montana's leather collection for Ideal Cuir.)

At Thierry Mugler, black leather and safety-pin jewelry showed up on the runway worn by the cool, blonde Edwige.

Mugler says he is not a punk but finds the punks very romantic. "They are looking for another way. They refuse what exists and therefore they dream of an escape. For me they are sweet, young and nice. So that gave me the idea to design those things."

(Sweet or not, the look draw attention from some jumpy authorities. One London fashion stylist who flew to the Paris shows wearing a blood-red hospital shirt and a "Biko Lived, Biko Died" T-shirt, said she was hassled by the airlines. "I told them if I was a terrorist I certainly wouldn't dress like this," she said. "Terrorists dress in a classic way."

The French are not the first to exploit punk fashion. British fashion designer Zandra Rhodes incorporated rips and tears and safety pins into $600 silk crepe dresses a season back. Stores like Sakowitz in Houston sold them "rather well," according to Robert Sakowitz, the stoer owner.

What's next for punk?

On the night after the Laferfeld bash at La Main Bleue, Edwige Gruss, 20, the tall, lithe blonde, leaned against the hood of her friend Michel Klein's Cadillac outside the disco, Nashville, where Klein had invited his friends to celebrate his new collection.

"She was punk 10 years ago," Klein said admiringly. "She was the first with short hair, the first to wear ties, the first to lead a lot of fashion."

But now that punk has become so "in" and so elegant, she is getting turned off by it. "Last night's party for Karl Lagerfeld was like a movie. It was all fake. I hated it," she said.

She's beginning to move away from punk. "Punk is demode . It has violence and I don't like violence."

Klein agreed. "It has a trashiness about it and I can't create in trash."

Edwige wants to go to New York and think about a new philosophy. "I'm now at the point that I like things that are elegant," she said.

"Yes, it is true. I like diamonds better than safety pins."