On the rugged floor of Ethiopia's Fafen River valley, a few miles from the front lines of Africa's latest war, there is a stand of palm trees and stately cactus that forms a kind of natural frontier.

On the west, toward the heartland of Ethiopia, are the circular huts of permanent settlements where as twilight falls the men and boys return with their goats and cows to meals prepared by their women over charcoal fires.

On the east, where the land stretches out toward the scrubby flatlands of Somalia, the livestock are camels and the herdsmen are nomads, wandering with the season and the water in an age-old style, indifferent to man-made national borders.

Those are the western Somali people, camel-herding. Somali-speaking Moslems whose lands, known as the Ogaden, appear on every world map as part of Ethiopia but who are linked by tribe, custom, language and religion to the nomadic people of Somalia. Forces that few of them can understand have cast them as principal actors in a struggle in which much more is at stake than governmental control over their 100,000 square miles of marginal semi-desert.

Ethiopian military control over the Ogaden was broken last summer when western Somali guerrillas, armed by Somalia and aided by Somali regulars, seized the opportunity presented by the internal chaos of the Ethiopian revolution to drive out the demoralized Ethiopian Army.

Now the Ogaden is under Somali control and the people, have become committed to the Somali side in the struggle with Ethiopia.

Somalia is demanding "self-determination" for the western Somalis, knowing that the result would be merger into Somalia proper, and has reportedly begun moving civilian administrators into the Ogaden in anticipation of a declaration of Somali sovereignty.

But Ethiopia, whatever the merits of its legal claim to the Ogaden, appears bent on a military counteroffensive to win it back. There is more involved in this developing contest than control of a desolate stretch of the Horn of Africa because most observers here believe that if the Ethiopian campaign succeeds, it will bring down the Somali government of President Mohammed Siad Barre.

Siad, having ignored the warnings of friendly Arab countries and moved boldly into the Ogaden at the same time he was breaking histies to the Soviet Union, now faces the prospect that the Soviet-backed Ethiopians can force his downfall without ever having to cross the border into Somalia.

If the Ethiopian counteroffensive succeeds, many experts here say, the outcome could be either a bloody purge of ethnic Somalis in the Ogaden that would so humiliate Somalia as to force Siad Barre to quit, or flow of perhaps a million ethnic Somali refugees into a Somalia which could neither support them nor contain them politically.

At a recent press conference, the Ethiopian leader, Lt. Col. Mengistu Haile Mariam, was asked what would happen to the western Somali people if Ethiopia regained the Ogaden. He replied that they would "continue to live peacefully among other Ethiopian ethnic groups." It would be difficult to find anyone here who believes that.

By Somali accounts, largely verified by independent observers, the western Somali people were never integrated into Ethiopian society but were kept in line by a military occupation that sought to curtail their ties to Mogadishu.

According to Mohammed Rashid Adan, information officer for one of the western Somali liberation groups that operate out of the Somali capital, the people "have nothing in common with the Abyssinian colonizers other than being Africans." He and other Somalis say Ethiopia, also known as Abyssinia, maintained order in the Ogaden by systematic cruelty and violence -- both under Emperor Haile Salassie and under the revolutionary government that overthrew him in 1974.

During the 15 years after Somali independence in 1960, the Mogadishu government did little to encourage active rebellion against Ethiopia among the people of the Ogaden. As a small, weak and impoverished country, Somalia could ill afford a direct struggle against Ethiopia and went so far as to cut off arms supplies to the Ogaden guerrillas to avoid the wrath of Addis Ababa.

But now Siad Barre has committed himself, his people and his army to keeping the Ogaden free of Ethiopian control. The Ogaden liberation groups, which the Ethiopians condemn as agents of Somali expansionism, function openly in Mogadishu, and the Somalis have armed the young men of the Ogaden for a prolonged resistance to Ethiopian reconquest. If the Ethiopians do come back, they are unlikely to deal gently with those who took up arms against them.

In the view of Western, Arab and African observers here who are basically sympathetic to Siad Barre, the totality of his commitment to this cause is matched by the gravity of the risk --there appears to be no graceful way out for the Somali president who provoked the confrontation.

Siad Barre says the Soviet Union and the Ethiopians are planning to sweep across the Ogaden and then invade Somalia to bring him down and install a Soviet puppet government here. In the view of observers who have watched this conflict develop from the beginning, it may not be necessary for the Ethiopians to march on Mogadishu to get rid of Siad Barre -- the reconquest of the Ogaden may be enough.

A diplomat who is close to Siad and sees him frequently said that the Somali president, who was born in the Ogaden, "can never give up his claim. He has committed himself and his country." In the opinion of that observer, which is shared by many others, Siad could not survive the loss of the Ogaden to the more populous and now probably militarily superior Ethiopians.