Cypriot President Spyros Kyprianou faces the voters Sunday and generally is expected to be reelected, but his new alliance with the Communist Party has sparked some concern that Washington might start viewing this island as a "Cuba of the Mediterranean."

Challenging Kyprianou are Glafkos Clerides, the leader of the right wing National Rally Party (Dysy), and Vassos Lyssarides, head of the minority opposition socialist party, the Unified Democratic Union of the Center (Edek).

Political observers here have raised the fears that the political divisions manifested in the bitter contest could further fragment this country already divided between Greek and Turkish Cypriot communities.

They point to the example of Lebanon, where years of factional fighting have left the central government without much real power. Despite these fears, the three candidates have rejected calls for them to work together in a government of national unity. Independent observers and preelection polls indicate a clear-cut victory for Kyprianou, who could avoid a run-off election by scoring more than 50 percent of the vote.

The predictions are based largely on the results of parliamentary elections in the spring of 1981 in which Kyprianou's center-right Democratic Party gained 19.5 percent of the vote and the supporting communist Akel Party came away with 33 percent. Clerides' party scored 32 percent and Lyssarides' followers gained 8 percent at the time.

Kyprianou relies heavily for support on his image as the political heir of the highly popular Archbishop Makarios, who ruled this eastern Mediterranean island republic from independence in 1960 until his death in 1977. Kyprianou, who served as Makarios' foreign minister, was named acting president when the archbishop died and was elected in 1978 to fill the balance of Makarios' term.

Kyprianou's ties to Makarios were important in forging the 10-month-old alliance between his center-right party and the Moscow-oriented Akel because the communists traditionally supported Makarios, who rewarded them by legalizing their party.

Despite their election successes, the communists have remained in the background of the current government, and western diplomatic observers here said they believe that Akel will not abandon this policy. According to these observers, the communists apparently have not sought to make a deal with Kyprianou for their support and have not secured promises for ministerial posts in a reshuffled cabinet.

Kyprianou has insisted that his alliance with Akel does not bind him to communist policies and that Akel has made no radical demands in either foreign or domestic affairs.

He also has pledged to continue Cyprus' nonaligned policies. Although he advocates the dismantling of two British military bases considered vital to North Atlantic Treaty Organization strategic interests in the region, he has said it is a long-term aim rather than a priority objective.

But the somewhat paradoxical alliance has damaged Kyprianou's relations with Greek Prime Minister Andreas Papandreou, who opposes the communist influence. Greece plays an important role in negotiations here to end the Turkish partition of the northern third of the country, but some Cypriots dislike its influence, especially after the Greek military government launched a coup that temporarily ousted the Makarios government in 1974.

Observers here also are watching for reaction from the West, and especially from the United States, to a communist-backed Kyprianou victory. Many of the Greek Cypriots fear that Turkish Cypriot leaders in the north will seek to drum up support for the Turkish presence in Cyprus as the only guarantee against the spread of communist influence in this strategic region, and the current partition of the island thus might be perpetuated.

The division of the island, separating the 18 percent Turkish Cypriot community from the 78 percent Greek Cypriot population, is a constant political factor here and the pursuit of a settlement of the island has been a key campaign issue. But it is the Greek Cypriots, along with the minority community of Armenians, Maronites and Latins, who vote Sunday. Turkey, invoking its status as the guarantor of the agreement ending British colonial rule and claiming the necessity of protecting the Turkish Cypriot minority, dispatched its troops to the island in 1974 at the time of the coup.

Kyprianou and his Akel allies, in their "minimum program" on the issue, lay primary emphasis on the continuation of the U.N.-backed, two-year-old talks between the Greek and Turkish Cypriot communities.

That platform has brought the alliance into disagreement with Greek Socialist leader Papandreou, who favors a more dynamic policy to encourage international pressure on the Turks to withdraw their troops as a prerequisite for negotiations on the island.

National Rally Party leader Clerides, however, is running on a platform of close cooperation with the Greek government to solve the Cyprus problem. Socialist leader Lyssarides--a close friend of Papandreou--has also publicly supported the Greek position. But Lyssarides, in an indication of the election's rivalries, has drawn the line in this unlikely match by saying he will not support Clerides in any possible runoff election.

The campaign also has been marked by a mud-slinging, no-holds-barred media barrage. The pro-Clerides press, for example, invented an imaginary radio broadcast by the British Broadcasting Corp.--denied by the BBC--predicting a low voter support for Kyprianou, thus mandating a humiliating runoff election for him.

In retaliation, the Kyprianou-allied press alleged that it had documents proving that Clerides, an outspoken supporter of the United States and NATO, was an agent of the U.S. Central Intelligence Agency and the Nazis during World War II. The CIA is widely viewed by Greek Cypriots as having helped the Greek foment its 1974 plans against Makarios. Clerides has denied the charges.