Uganda's President Idi Amin retains control of his country with the bought loyalty of a small percentage of his army, mostly foreign mercenaries, while economic chaos and fear have demoralized the overwhelming majority of Uganda's 10 million people, according to foreign diplomats and Ugandan refugees.

When he came to power in 1971, Amin began murdering soldiers from the Lango and Acholi tribes and replacing them, in many cases with illiterate members of his own Kakwa and related West Nile tribes. He subsequently began killing prominent members of the police and civil service and replacing them with men whose loyalty he trusted regardless of their qualifications.

Uganda's present police commissioner, named Obura, was a chauffeur before Amin came to power. The director of training and operations of Uganda's police force, Ali Toweli, swept the police barracks until 1971.

According to a high-ranking Ugandan army officer who fled to Kenya earlier this month, "These men make a point of suppressing their former superiors because they have inferiority complexes."

They now are reported to live like millionaires and are unswervingly loyal to Amin, who gives them presents of American dollars, which he is said to keep in his desk drawer by the millions. They know that if he falls, they will fall with him.

The most noticeable beneficiaries, however, are said to be Amin's Nubian mercenaries from Saudan, who are largely responsible for the country's widely publicized atrocities.

After purging the army of most of its trained Acholi and Lango soldiers, Amin was eager to rebuild his forces, which he eventually doubled.

Not trusting the loyalty of Ugandans outside his own small Kakwa tribe, Amin brought in thousands of Nubians with whom he has an ethnic affinity. Many Kakwas are in fact, Nubians from southern Sudan, whose tribe extends into Zaire as well.

In 1972 the giant Israeli construction firm, Solel Bonch, built a huge complex in Kampala called Bugolobi to house Amin's Nubian mercenaries, whom he calls "marines." Many speak neither a Ugandan language or English.

Bugolobi remains an exclusive Nubian community where mercenaries and their families live in tastefully designed four-story apartment buildings that must be among the most pleasant military barracks in the world.

Other soldiers are permanently housed in luxury hotels built for the foreign tourists and businessmen who no longer visit Uganda.

To keep the troops content, Amin opened Uganda army shops, similar to American PXs. They sell luxury imports such as watches, radios and beer as well as basic commodities such as sugar and flour, generally unavailable to civilian consumers.

Even the army shops are running out of supplies, however, so the soldiers have reportedly became bandits who regularly kill to steal whatever they want.

In 1972, Amin expelled Uganda's 30,000 to 40,000 Asians of Indian and Pakistani origin. Most of them were merchants, businessmen, professionals or skilled technicians. They were not permitted to take their belongings with them and Amin parceled out their businesses and property to his soldiers.

Being untrained, many of them illiterate, the soldiers failed miserably as businessmen, and Uganda's economy is now to complete disarray. "None of us liked the Asians very much," said a Ugandan in Nairobi, "but at least they kept things going."

Without Asian technicians, Ugandan manufacturing is virtually nonexistent and the country's transportation system has collapsed.

"What a joy to walk to the corner and catch a bus," said a refugee recently arrived in Nairobi from Kampala.

Without transporation, agricultural production has declined drastically.

"The farmers are demoralized," said a high ranking Ugandan army officer in Nairobi "because they can't transport their coffee, tea and cotton to their cooperatives and if they do manage, they don't get paid for many months and even then the prices are very low."

"They now leave their gardens overgrown and don't tend their coffee trees. Many farmers are just raising their own food and have virtually abandoned the money economy," he said.

Some in Lango and Acholi are reported to be leaving their houses at night and hiding for fear of being massacred by Amin's mercenary killers.

The situation in the towns is reportedly worse because the price of a large bunch of bananas, the staple food, is said to have risen from $1 to $6. Sugar and flour, when available reportedly cost about $3 a pound and a new shirt cannot be bought for less than $50. Shoes, if available, start at more than $100. Mike and butter have been unavailable for several years.

"The only way people in town survive is by black market dealings," said the officer. "Everybody must be involved or starve, but the army officers profit the most because they are the sole agents for selling beer and essential commodities. You must pay the price they ask or do without."

Smuggling is bing business.Smallscale operators carry sacks of coffee on their backs at night while army offices use trucks, sometimes belonging to the army, to buy coffee illegally from farmers who are unable or unwilling to sell to the cooperatives.

The crop ends up in Kenya, Tanzania or Rwanda where prices are much higher. No longer able to export the crop through normal Ugandan channels, Amin announced earlier this year that any foreign buyer who wanted Ugandan coffee had to come to the country with his own trucks or planes.

Development has ceased but Ugandan exiles, many foreign diplomats and Western businessmen believe that if the Amin regime is replaced by a friendlier one, the international community will be willing to offer massive aid and make large-scale investments to reconstruct the infrastructure and economy.