ALGIERS -- "We are 23 million Algerians, and 6 million of us are in schools and universities," says President Chadli Bendjedid in the third hour of a conversation that has covered Middle East politics, relations with the superpowers, OPEC and the other usual suspects. "Forty percent of our national budget goes to education. This is what occupies us very much."

Algeria's 3.2 percent birth rate is not an issue that fills embassy cables home or rises from an interview to the daily headlines. The geostrategic or the exotic are usually seen as better candidates to explain what is supposedly going on in the Third World.

But for a realistic and determined leader like Bendjedid, the race to provide education and jobs for a rapidly expanding population has become the central challenge of this decade and of the future.

Galloping birth rates across North Africa make the region a ticking time bomb and absorb the energies and efforts of leaders along both flanks of the Mediterranean basin. While American diplomats spend their time checking Algeria's voting record at the United Nations, Bendjedid tries to figure out how to feed and educate his population.

Neither journalism nor diplomacy has yet developed adequate tools to convey the transformation that is occurring in the nature of politics in the Third World. Demographic and economic realities increasingly crowd out the abstract issues that continue to dominate the attention of the West, opening up a perception gap.

Algeria's population has doubled since it achieved independence in 1962 through a bloody, protracted revolution. It will double again in the next 20 years at the nation's present rate of increase, one of the highest in the world.

A severe housing shortage in urban areas is helping curb marriages and bring the birth rate down from its recent peak of 3.6 percent. But in this Islamic society the government has to move cautiously in pushing family planning.

"We seek to sensitize the Algerian people to building a developed society open to the world, where quality, not quantity, counts," Bendjedid says. "We cannot just make decisions that go against the spiritual values of our people."

Algeria has always seen itself as a trend setter in Third World politics, and the cautious, managerial style of Bendjedid's leadership has implications for other nations in this era of diminished expectations and limited possibilities.

Like China's Deng Xiaoping, Bendjedid seeks to move his country away from the xenophobic zeal and the grand ideological debates that followed independence.

"We had to choose between the slogan and the economy, and we chose the economy," this former guerrilla leader and army officer says in explaining how he saw his options upon succeeding the late Houari Boumedienne in 1979.

Bendjedid is seeking to break up the large independence-era state industries and collective farms that sank Algeria deep into debt. With refreshing candor, he acknowledges that Algeria set out to run before it could walk in the euphoria of independence and then OPEC's brief mastery of oil pricing.

The newly independent countries of Africa, Asia and Latin America often asserted nationhood by building capital-intensive industries that they were not prepared to operate and that ran afoul of the changing terms of trade of the 1980s.

"Among the errors we made was not starting with small or medium-sized enterprises . . . . We took on large projects that we were not ready to manage, and they became a burden instead of a resource. Foreign companies were not transferring technology, as the slogan went, but were selling goods," Bendjedid said.

Nearly 30 percent of the Algerian work force is employed by the state administration, he notes, in contrast to 7 or 8 percent in developed countries. He confronts a large and mostly hostile bureaucracy as he seeks to decentralize economic and, to a lesser extent, political authority.

These are the nooks and crannies through which a relaxed conversation flows during an afternoon in the presidential retreat near Zeralda. Bendjedid obviously enjoys telling his visitors that the official residence once housed the French generals who plotted an unsuccessful putsch against Charles de Gaulle's struggling regime.

De Gaulle, the Algerian notes in an aside, was a courageous leader willing to depart from his predecessor's policies when he saw they did not work. It is a lesson that does not appear to have been lost on Bendjedid.