Which most of the world focused its attention on the Israeli-Egyptian peace agreements or the civil war in Nicaragua, Chile this week was consumed with its own brand of war jitters.

Celebratins marking Chile's annual "Day of the Glories of the Army," which included a military parade in Santiago, took on added significance.

Although they are far from panicstricken, people here seem clearly concerned about the possibility - however remote - of war.

The prospect of a major war in Latin America seems unlikely and American analysts of the region doubt the current disputes will degenerate into fighting unless by some accident or miscalcution.

"There's a litter more saber-rattling now than there has been," said one informed U.S. diplomat. "But over-all, it's smoke and no fire. There's really nothing anybody could gain that would be worth one fraction of what it would cost to have any fighting."

The concern here however, stems from the fact that all three of Chile's neighbors - Argntina, Bolivia and Peru - want a piece of Chilean territory and none has foreclosed the possibility of fighting to get if.

Although Peru, troubled by severe economic problems, has been by far the least belligerent of the three., Bolivian President Juan Pereda Asbun said recently that "the clouds of war have descened" over the southern part of South America.

Advisers to Argentine Presient Jorge Videla have said in recent interviews that, while they hope their country's territorial dispute with Chile can be settled peacefully, "war is an altenative that we have not ruled out."

Chilean President Augusto Pinochet recently called Bolivia's actions toward Chile "provocative" while Catolic church leaders in Argentina and Chile issued a joint statement two weeks ago saying they were "worried about the climate of distrrust and aggressiveness" between the two countries. "War, however absurd, would be suicidal," they warned.

What worries diplomatic observers most is that the territorial disputes have become highly emotional issues, especially in Argentian and Bolivia. Furthermore, some observers worry that the military governments of Argentian and Bolivia could decide that a war with Chile might help distract attention from internal problems in both countries.

For its part, Chile has been trying to avoid war by negotiating with Argentina and offering to negotiate with Bolivia. But Chile is not about to give up any territory without, at leastM adequate compensation - which tends each time to place the issues back at square one.

So it was not surprising that more Chileans than usual turned out last Tuesday for the Army Day festivities. Nor was it surprising that Chile's military government put on a good show.

Ten thousand army, navy and air force regulars, accompanied by goose-stepping cadets, paraded for more than two hours past President Augusto Pinochet.

Moreover, the Pinochet government has few friends in the world due to concern in the United States and Western Europe over human rights abuses said to have occurred here. The Soviet Union and its allies also scorn the officers who overthrew Allende.

Although the territorial disputes that pose such problems for Chile have nothing to do with this country's other international problems, more than a few people here believe that Argentina and Bolivia, especially, have been emboldened in pressing their claims because they believe that neither the United States nor Western Europe would come to Chile's rescue should war threaten to break out.

Clearly, the most serious threat to Chile would come from Argentina, which has refused to accept a ruling by a panel of distinguished international law judges that defined the passage of the long disputed Beagle Channel in Tierra del Fuego in Chile's favor.

Although the channel itself is not of great significance, Argentina has said that the ruling is unacceptable.

Argentina and Chilean diplomats have been trying to settle the Beagle Channel issue before; a Nov. 2 deadline set by Pinochet and Argentina has been none too subtle in recent months in hinting to Chile that it would consider military action if a settlement is not reached.

Emotions are running so high in Buenos Aires that when power failed recently in some sections of the Argentine capital, newspapers reported that some residents panicked, thinking the war had started.

Next year also marks the 100th anniversary of the War of the Pacific and both Bolivia and Peru have at one time or another said they intend to regain territory lost to Chile during that war, which began in 1879 and lasted until 1883.

Although Chile and Peru have maintained cordial relations in recent years, Bolivia recalled its ambassador from Santiago and broke diplomatic ties earlier this year. It has vowed to obtain an "exit to the sea" across Chilean territory during 1979.

The issue has special significance for land-locked Bolivia because the war 100 years ago left that country without a port on the Pacific, a fact which many Bolivians believe has contributed to their country's lack of economic development.

While most military observers believe Chile could defend itself against any one of its neighbors, the nightmare in Santiago is that all three - Argentina, Bolivia and Peru - could attack at once in a coordinated military campaign. Chile would then be forced to defend itself on three fronts thousands of miles apart.

Chile's 85,000 army, navy and air force regulars are well equipped and trained. But the combined weight of Argentina's 129,000 servicemen, Bolivia's 22,500 and Peru's 70,000, if used together, would change the balance in any conflict.