Having launched Angola on the road toward broader diplomatic and economic ties with the West, President Jose Eduardo dos Santos now must demonstrate at home that his policies have reaped some benefits for this war-torn and economically shattered nation.

That task, according to western diplomats here, has been made substantially more difficult by the breakdown this summer of U.S.-orchestrated regional peace talks involving Angola and South Africa, amid charges by the Marxist Angolan government that neither Washington nor Pretoria has acted in good faith.

Angola entered the talks to achieve the end of South African support for antigovernment guerrillas here and independence for South African-ruled Namibia. A principal goal of the United States and South Africa was the withdrawal of an estimated 25,000 Cuban troops stationed in Angola.

Dos Santos suspended direct contact with Pretoria in May, however, when a South African military commando unit was intercepted during a sabotage mission against Angolan oil installations. In July, he broke off contact with Washington after Congress, with the approval of the Reagan administration, repealed a 1976 prohibition against U.S. aid to the antigovernment guerrillas.

Although continuing to denounce the talks, dos Santos and his ministers in recent statements carefully have left the door open for resumption, providing the Americans and South Africans accept blame for the breakdown.

Events of the summer "opened dos Santos to criticism inside the party from those who didn't want the talks in the first place," said a diplomat whose government maintained close contact with Washington during the negotiations.

Another western ambassador said that dos Santos "needs space, and the only one who can give him space is the United States . . . . The Americans have to do something to give him a hand" in internal debates within the ruling Popular Movement for the Liberation of Angola (MPLA).

Barring the unlikely resumption of negotiations in the next two months, some indication of the extent to which dos Santos intends to continue his policies may come in December, when the MPLA holds its second party congress.

In recent weeks, posters and banners on city streets have appeared calling attention to the upcoming gathering of party members, who held their first such meeting five years ago. As the MPLA propaganda apparatus moves into high gear, daily articles on the congress are published in the party-run newspaper, alongside frequent articles calling on young Angolan men to report for their mandatory two-year military service.

Outside observers from East and West will be watching for any changes voted in the Central Committee, as well as major policy pronouncements by dos Santos and his planning minister, Lopo do Nascimento.

The economy, internal Angolan politics and the ongoing war against South African-backed guerrillas of the Union for the Total Independence of Angola (UNITA) are in an intricate balance that does not allow action in one sphere without a corresponding reaction in another.

Although rich in natural resources and agricultural potential, Angola was economically devastated at independence from Portugal in 1975. Ten subsequent years of war against UNITA have only exacerbated that situation, and economic expansion and improvements in the civilian standard of living have taken a back seat to defense demands.

Yet without an improvement in the economy and its ability to provide basic goods and services, the government risks losing popular support that is vital to the war effort. The Angolan armed forces depend upon the Soviet Union for military equipment to fight UNITA, and on the Cubans to forestall South African invasions. At the same time, dos Santos' government clearly sees its economic future with western partners, who are leery of the Soviet-Cuban connection.

Diplomats from several Western European nations that maintain cordial relations here say dos Santos has taken some steps to distance Angola politically from dependence on Moscow and Havana.

They note wide-ranging recent trips by dos Santos that for the first time during his six-year presidency have taken the Soviet-trained petroleum engineer to western capitals. Last year, he traveled to Rome, Madrid and Paris. This year, he has visited Gabon and the Ivory Coast, and made moves toward normalizing relations with Morocco.

"It is the first time after 10 years of being closed off by themselves, and being obsessed with the front line" against South Africa, said a diplomat. "For the first time, they opened themselves to Africa."

More important was the recently concluded ministerial conference of the Nonaligned Movement, which brought senior officials from about 100 Third World and developing nations to Luanda. The Angolans gained widespread approval within the movement for their balanced chairmanship of a group often riven with divisions between pro- and anti-Soviet members.

Last spring, after several months' delay and internal party debate, Angola became a signatory to the Lome Convention, through which the European Community distributes foreign aid. The agreement, which goes into effect in January, could double the amount of western assistance Angola now receives. In exchange, it commits the government to certain western trade terms, and allows the EC to open an office in Luanda.

"In the medium term," said a diplomat from an EC country, "it will have quite an effect." He interpreted the signing as "a gesture of independence from Angola's socialist allies. The Eastern Europeans were somewhat put out . . . it commits them to long-term economic interdependence with the West."

But increased economic integration with the West could entail economic and political changes here. In the upcoming party congress, western diplomats will be watching for further progress by Nascimento, including alterations in the exchange rate of the kwanza, the Angolan currency, now officially about 30 kwanzas to one dollar.

On the thriving black market, however, one dollar fetches up to 1,500 kwanzas. The currency market extends into a vast black market for consumer goods, and the the government appears to make only cursory efforts to stop it. While the government supplies coupons to each family for foodstuffs, extra supplies can be found at thriving enterprises such as the Kanfunfo Market, a rambling free-enterprise shantytown of wooden stalls on the outskirts of the capital that also stocks western blue jeans and auto parts.

According to local accounts, the population enters the parallel economy with goods for barter. State-set wages of employes are supplemented by a portion of the production, be it bread or beer.

Thus, when a worker at the local plastics factory was married recently, he was given a bonus of 10,000 plastic bags, a commodity easily converted into kwanzas or goods through facilities like the Kafunfo Market.

Such practices are both the salvation and the ruin of the economy. A serious government attempt to crack down on them would likely mean widespread popular indignation. At the same time, UNITA sabotage -- including frequent rail and road attacks -- has wreaked havoc on attempts at more organized distribution of goods.

Yet without revision of the currency, revenue and distribution systems, the government faces difficulties in trading with western economies and absorbing western aid.