SOUTH YEMEN.

Blood is not flowing in the streets of Aden.Abdul Fatah Ismail, the victor in the recent power struggle and undisputed strongman of South Yemen, has not - as certain Egyptian newspapers have reported - ordered his men to leave their victims' bidies in the streets.

That said, however, the former British colony is hardly a carefree place. For centuries Aden has been lurching between extremes of prosperity and indigence. It is traditionally known as the Eye of Yemen, that wild and mountainous country's window on the world. Aden is Yemen's port, its conduit for an intellectual ferment that ultimately percolates into the interior. It flourishes when it is free to fulfill its natural function. It declines when the turbulent politics of the hinterland disrupt it.

Its last great period of prospertiy occured when, as Aden colony, free zone, military base and favored bunkering station on one of the world's great shipping lanes, the hinterlands kept firmly under control by the combination of medieval despotism of undisputed strongman of South military intervention against unruly tribes and sultanates in the south.

But the disruptive politics of the hinterland are now on top again. Aden was never meant to be a capital, and although that role has been thrust upon it, it is quite unlike any other Arab metropolis. Whereas the others - from super-rich Riyadh to impoverished Cairo - are in their various ways booming, bustling and rapidly expanding Aden has actually shrunk since independence.

Its component parts, divided from one another by the crags of Mount Shamsham, retain an authentic character of their own. But the rich commercial heart of the place beats no more.

Supertankers, container ships, the growth of air transport doomed it to decline anyway, but the self-styled "scientific socialists" who succeeded the British have contributed their share. They have all but closed the Eye of the Yemen, both for the native looking out and the foreignerpeering in, leaving it the most isolated capital in Arab world.

ON THE SURFACE, it is still redolent of that not-so-distant past with which the new rulers, invaders from the hinterland, have so thoroughly broken. Unlike Libya's Muammar Qaddafi, they have not systematically sought to erase every trace of it. The names are still the same. It is still Steamer Point and Telegraph Bay. Along the waterfront it is still Big Ben Store, Sydney Store, Miss Arabia, Stop and Shop. In Maalla, where British soldiers and their families lived, it is still Harlow, Malvern or Bedford House.

But hardly anyone comes ashore at Steamer Point anymore. No passenger ships and since independence and the simultaneious closure for eight years of the Suez Canal, the cargo have not been coming in anything like their old prpfusion either.

A British Petroleum flag that still flies over a handsome waterfront building marks the only surviving British operation left in anti-imperialist Aden. It is survival at a price. The annual tonnage it services, with a staff of 280 it is forbidden to dismiss, has fallen from 2.5 million in 1967 to 100,000.

North Yemen on the warpath against the Communists of the south, has now sealed its frontiers, blocking trade channels that had long been used.

As for the free zone, it is nothing but a nostalgic memory. The water-front shops are shuttered and bolted. The signs are fading away. Inspirational slogans of a rather uninspiring kind - "No to war, fascism and imperialism, yes to peace, to liberation and democracy - are pasted all about them. The merchants along with a whole retinue of clerks, artisans and subsidiary businesses, have long since fled to the oil-rich parts of Arabia.

Yemen is one of the great emigre societies of the Arab world, but the exodus reached such proportions that the government stepped in to halt it - diear by extracting a large deposit from the would-be emigarnt and then by preventing him from taking his family with him.

All that is left is a handful of run-down stores in the immediate vicinity of the jetty, state-owned, ill-stocked and with little interest in the business they do.

ADEN'S FOREIGN community dream of their occasional upcountry picnics; but only when they are armed with a special permission from the Foreign Ministry, by no means easy to secure, can they venture forth.

By law, citizens are prohibited from talking to foreigners except in the strict line of business. Even other Arabs count as foreigners. Wall posters warn against the pitfalls of time-honored Arabian hospitality: "Flaunting secrets before others is a catastrophe.

Don't be embarrassed to refuse the gift which puts you in the enemy's hand."

The government has good reason for its paranoia: it is indeed hemmed in by enemies on all sides. It is afraid that they will aid the enemy within.

That is what happend in June when none other than the late president himself, Salim Rubaya Ali, turned traitor to the revolution according to the official version, and ordered his tribal followers to open fire from fortified positions in the grounds of the presidential palace against his ministers and party leaders assembled in the administrative secretariat just across a sandy cove.

For the side that supposedly started it, they inflicted remarkably little damage on the secretariat, while the other side's Mig 17s and Mig 21s did a thorough demolition job on the president's Round House - another British construction with an underground access to the sea through which Rubaya Ali was unable to make a getaway. If he had, the outcome might have been different.

It would not have been his portrait that came down from every public place, but those of his two comrades in the former ruling troika; the rectangular discoloration of the walls would have signified their disgrace and execution, not his.

Rubaya Ali is now considered a "deviationist individualist" who thought to rise above the "organizational legitimacy" of the party and its collective leadership. All sins are now attributed to him.

The consequences of one are not far from his residence - a depot of Japanese trucks. There is another out in the desert. Almost $100 million worth, his detractors say.

Rubaya Ali's idea of beating inflation was to import everything now, rather than when the need arose. But the state cannot use the trucks and there are no entrepreneurs to buy them. So they are left to rust. It is the kind of wastefulness that a Kuwait or Abu Dhabi would barely notice, but South Yemen does not have a drop of oil.

WITH THE OVERTHROW of Rubaya Ali, South Yemen is locked into a closer embrace with the Soviet Union. The Soviets, Cubans and East German are the new foreigners of Aden, the new "colonialists," neighboring enemies say.

Muscular, well-built Cubans, serving as advisers with the peoples militia, cut a fine figure at places once the preserve of British officers and highranking colonial officials.

These new foreigners are not popular with the apolitical masses. They spend little money, they develop little personal contact and they are associated with the new order of austerity and regimentation.

In state food markets, it is the Westerners who get favored treatment; for them ever-scarce comodities are discreetly set aside.

Ironically, it is the former colonial masters who benefit most from old ties and associations. The South Yemenis don't have much money, but British trade with them has grown faster - from about $15 million in 1975 to about $45.6 million in 1977 - than with any other Arab country.

One of Rubaya Ali's last and more contructive acts - occasioned by the poor performance of Soviet-made tractors - was to sign an emergency presidential order or a consignment of U.S. made Massey Fergusons.

It remains to be seen whether the old colonists will do as well after the triumph of Abdul Fatah Ismail "organization legitimacy" and the "new-model Vanguard Party" he plans to establish.and the "new-model Vanguard Party" he plans to establish.