Central to just about everything having to do with the Reagan administration's foreign policy is the Soviet Union. The key to U.S.-Soviet relations, in turn, is the issue of arms control, of which the most urgent ingredient is the negotiation under way in Geneva over deployments of medium-range nuclear weapons in Western Europe and the Soviet Union.

All of which is to say that success or failure for the Reagan foreign policy in the president's first term may be decided in the election in West Germany this Sunday--an election whose outcome will be determined in large measure by issues as narrowly focused as, say, government aid to students.

What this says about the vulnerability of alliance strategy to the free play of democracy is a worthy subject for a doctoral dissertation. Suffice it here to say that rarely has so much that is crucial to U.S. and allied interests hung on the votes of so few--on minute shifts impelled by considerations far removed from arms control or foreign policy.

Measured in decibels from a distance, the big issue on Sunday might appear to be whether or not West Germany should make good on the allies' famous "two-track" decision in 1979. The deal was to begin deployment of U.S. medium-range Pershing II and cruise missiles by the end of this year while simultaneously pursuing an agreement with the Soviets to control the numbers of these weapons on both sides of the line. But to conclude that the vote for a new Bundestag is a referendum on American missile deployment is to confuse cause with effect-- and to suggest as well that the German electorate is somehow less susceptible to pocketbook issues than our own.

For the consensus among most observers here is that the sorry state of the great West German postwar economic miracle will be uppermost in voters' minds. All the wrong things are falling off: exports, the gross national product, private consumption, social welfare spending. Inflation remains unacceptably high. German unemployment is nearly as severe as ours.

According to Norbert Walter, an economist from the University of Kiel, Chancellor Helmut Kohl, who leads the governing Christian Democrat- Free Democrat coalition, could hardly have picked a less propitious time for an election. By Sunday, Walter wrote recently in The Wall Street Journal, "the economic situation will look worse to the average German citizen than it ever has in postwar history."

Those bold enough to hazard a prediction are betting on a victory by the incumbent coalition. That's the best outcome, from the Reagan administration's point of view. It is the one most inclined to reinforce the U.S. negotiating position in Geneva by holding open the option of an agreement with the Soviets. More prudent analysts insist that it is too close to call. You have only to consider the vagaries of West German democratic process to see why.

The West Germans have two major parties, the Christian Democratic Union (CDU) in partnership with the Christian Social Union (CSU) and the Social Democratic Party (SPD). But only once in postwar history has either of the major parties been able to win a clear majority in the Bundestag. The relatively tiny Free Democratic Party (FDP) has almost always been the key to constructing a governing coalition. It was the FDP's switch from the SPD to the CDU-CSU last year that brought down the government of Chancellor Helmut Schmidt and ushered Kohl into power.

Now there is another small minority called the Greens, which more closely resembles a cross between a protest movement and a commune than a conventional political party. Its members are mostly young, angry, environmentalist, and dead set against everything nuclear, whether it's a power plant or a warhead.

So the interesting question is not the race between the Social Democrats and the Christian Democrats. Although Kohl's party would seem to have an edge, it is not given a much better chance than in the past of winning an absolute majority of Bundestag seats.

The interesting question derives from a requirement that for a party to earn any seats at all in the Bundestag, it must receive at least 5 percent of the vote. The polls now show both minority parties hovering either just above or just below the 5 percent figure. That's why fractions of a percentage point could make a monumental difference.

To make the worst case--the one that haunts U.S. policy-makers--suppose the FDP doesn't make the cut and the Greens do. An SPD government, in coalition with the Greens, could scuttle the whole two-track approach merely by delaying its approval of the December deployments. The Soviet hand at Geneva would be strengthened; the United States would have almost no cards to play.