Six months of Arab reprisals, including an economic and political boycott, have failed so far to damage Egypt's ecomomic health or slow President Anwar Sadat's steady advance toward peace with Israel.
The minor impact of Arab retaliation thus far has, on the contrary, fostered a climate here in which the Egyptian people seem convinced that Sadat's policies somehow will translate into greater prosperity for the more than 40 million Egyptians crowded alongside the Nile.
In addition, it has encouraged Sadat in his resolution to meet Arab opponents head-on despite advice from the United States and within his own Foreign Ministry for a more conciliatory attitude designed to draw Arab support or at least soften Arab criticism.
Economic analysts here point out, however, that the full effects of the Arab economic boycott still have not been felt and that loss of Persian Gulf oil money during the next few years could still strain Egypt's foreign exchange reserves and its ability to finance needed imports.
Moreover, some Egyptian officials fear a new round of Arab outrage and more reprisals next March, when Egypt and Israel are scheduled to exchange ambassadors and open full relations -- including direct air links over the Sinai, telecommunications and mutual tourism.
Likely targets pointed out by foreign Ministry officials include restrictions on the approximately $2 billion a year sent back to Cairo by Egyptian workers in other Arab countries and withdrawal of the nearly $2 billion in Arab oil money deposited in Egyptian banks before the March 26 peace treaty and so far left untouched.
Other possibilities, they said, include full implementation of an Arab airline embargo, declared at Baghdad last spring but never really carried out, and selective terrorism in egypt designed to undermine Sadat's authority and discourage the increasingly lucrative tourist industry.
Finally, these officials said, the Arabs could wield their most potent weapon of all -- a cut in oil production -- to strike at Egyptian peacemaking by damaging the Western countries, particularly the United States, that have helped make it possible.
Egyptian Foreign Ministry sources indicated that this could be particularly damaging because Egypt depends on U.S. cooperation for its peace policies and on U.S. and other Western aid to help offset the halt in Arab oil largesse.
"And our friends could yield," said one official, underlining that U.S. interests in the Middle East include a variety of countries besides Egypt and Israel.
The other possible measures, those affecting Egypt directly, are considered unlikely by foreign analysts here because of the Arabs' repeated pledge not to do anything that would hurt the Egyptian people. In addition, these analysts say, the Arab countries need the services of Egyptian workers despite opposition to Egyptian peace policies.
"More contracts are being signed all the time," said a diplomat. "There are more doctors and teachers going all the time."
Cutting back air service -- flights are jammed daily with Egyptians heading for the Gulf boom states -- or restricting money transfers from workers to their families could inconvenience the Arab host states as well as Egypt.
Skilled Egyptians are valuable components of the fast-developing oil economies. Restaurants in Baghdad are staffed almost entirely by Egyptians, for example, and 120,000 Egyptians hold key positions in Kuwait's bureaucracy, schools and private businesses.
Whatever reprisals the Arabs may decide in the future, however, it has become clear here that the measures they decreed last March have had only a limited effect on Egypt's economy and hardly any on the way ordinary Egyptians live.
This is true chiefly because the loss in aid funds from the wealthy Arab countries has been offset by increased aid from the West and a remarkable increase in Egypt's own revenues from oil, tourism and the Suez Canal, analysts say.
The cutoff in Arab subsidies cost the country about $800 million a year in spend-as-you-like donations and another $350 million a year in aid for specific projects. In addition, Arab financing for two of seven joint projects with the World Bank has been jeopardized.
In all, Arab handouts to Egypt are expected to drop from the$800 million level of last year to about $100 million in 1979, chiefly in the form of ments for project aid contracted before the boycott.
At the same time, net income from Egyptian oil sales in expected to reach $1 billion this year, up from $700 million last year and from nothing only a few years ago.
The Suez Canal is scheduled to bring in another $600 million because of increased usage, say canal authorities. In the largest category of all, the workers abroad are contributing an estimated $2 billion to this year's hard currency influx.
"We used to export cotton; now we export Egyptians," remarked a Foreign Ministry official.
These levels mark significant jumps from previous years. Remittances from abroad in 1974, for example, amounted to only 20 percent of their current total. This year's $700 million in tourist revenues -- registered by exotica-seeking Europeans despite a snub by Arab tourists -- also is up from last year.
In addition, aid from Western countries is pouring in at increasing rate. U.S. assistance remains at about $1 billion a year. Commitments from other Western countries total about half that much. International institutions such as the World Bank provide another $300 million.
In the assessment of most observers here, the Arab trade boycott has changed Egypt's economic dealings little. Even before the reprisals, trade with Arab countries amounted to only 12 percent of exports and 3 percent of imports. Of the Arab airlines that announced a cutoff in service to Cairo, only the Iraqi, Syrian and Libyan National airlines actually have held back their planes. Saudi, Kuwaiti and Jordanian jets land and take off daily at Cairo's airport.
Aside from the Arab boycott, however, there are economic pressures that observers say could in the long run pose a greater danger to Sadat's policies. Government subsidies for basic commodities such as bread have helped build an annual budget deficit of $1.5 billion, contributing to an inflation rate estimated at about 25 percent a year.
Even for the majority of Egyptians whose diet revolves around subsidized bread and beans, price rises have hit hard and complaints are frequent in sidewalk conversations. In addition, shortages frequently occur, sending smokers into long lines at cigarette stalls or prompting housewives to comb the city for soap.
If these ills -- with or without the effects of Arab sanctions -- continue to build, the link between peace and prosperity could be broken, or even reversed, in the minds of Egypt's millions.