SAN SALVADOR, FEB. 11 -- Top military and political leaders say the U.S. Congress' decision to slash military aid to El Salvador endangers the nation's fragile democratic process and will hamper the war against leftist rebels.

The fear is aggravated among the military by Congress' decision to cut off aid to the Nicaraguan rebels, known as contras. Officers said that will allow Nicaragua's leftist Sandinista government to step up aid to the Salvadoran guerrillas, strengthening the rebels at the same time that the Army is forced to scale down operations.

El Salvador is a key U.S. ally in Central America, and its democratic process has been touted by the United States as an alternative to Nicaragua's leftist revolution.

In the past eight years the United States has poured about $3 billion into the Massachussets-sized country to sustain the government in its war against the Marxist-led Farabundo Marti National Liberation Front (FMLN).

No one is predicting a quick guerrilla victory, but many said the aid cuts could give the rebels a chance to regain some of the political and military initiative they have lost in recent years, especially if the economy deteriorates and the perception grows that the government is not capable of meeting people's needs.

Military aid was cut back from $117 million in fiscal 1987 to $85 million in fiscal 1988, according to U.S. Embassy figures.

Economic aid for 1988 is $306 million as compared to $365 last year, but embassy sources pointed out that last year's aid was augmented by supplemental appropriations and the amount originally granted last year was about the same as this year. They said supplemental appropriations are unlikely this year.

The nation will lose $18.5 million in economic aid to the judiciary if the suspected killers of four U.S. marines and two American computer technicians are freed under the country's amnesty.

The general cutbacks are part of a broad reduction in aid to Latin America. El Salvador will still be the fifth largest recipient of U.S. aid in the world, according to Caleb Rossiter of the Arms Control and Foreign Policy Caucus of the U.S. Congress.

In interviews during the last week, the leaders said the aid cuts were especially dangerous because the country is holding key legislative elections in March, which the guerrillas have vowed to sabotage.

The insurgents have also threatened to launch a major offensive this year and are calling 1988 a crucial year in their armed struggle, now in its eighth year.

"We will have a problem replacing vital equipment," President Jose Napoleon Duarte said.

"What if Nicaragua gives the rebels surface-to-air missiles and they down our helicopters, how will we replace them? We will only have enough to maintain minimal operations, so the danger is the escalation of the war. It will hurt."

El Salvador's economy grew by more than 2 percent in 1987, and inflation dropped from 33 percent to 26 percent, but unemployment stayed at about 50 percent.

Even these small gains may be reversed if the government is forced to take austerity measures to compensate for the drop in aid, officials say. The result would be damaging to Duarte and his party, whose popularity is slipping.

"The Americans think our problems are solved, and they are not," said one top adviser to Duarte. "If we have to take austerity measures, or inflation takes off, our delicate equilibirum will be destroyed. It is a mistake for the administration to think our problems have been solved."

"Personally, I think the cutback is an error," said Gen. Adolfo Blandon, chief of staff of the armed forces. "They are not paying enough attention to El Salvador, where we are fighting the battle for democracy. Aid for the rebels from Nicaragua has declined because of pressure from the contras," Blandon added. "Without that it will be greater."

Blandon said the main impact would be on the maintenance and replacement of equipment, especially in the Air Force, a key element in preventing the rebels from massing in large numbers and carrying out large-scale attacks.

The military's fleet of more than 50 helicopters is made up mostly of Vietnam War-era Huey UH1Hs and Huey 500s, and it has allowed the military to mount operations in guerrilla strongholds and keep troops supplied for longer periods. But maintenance of the old helicopters is costly, and they will have to fly fewer hours, reducing the Army's mobility, Blandon said.

Because the guerrillas have announced they will attempt to sabotage the elections, the military will have to tie up more troops in guarding stationary objectives.

Without the resources to expand their forces, sources in the military said, it will have to reduce its operations, which keep the rebels moving, limiting their effectiveness.

"The cutbacks are a threat, undoubtedly, to the democratic process and pluralism," said Col. Mauricio Ernesto Vargas, head of military operations. "We need greater economic, political and social efforts, coupled with the military gains, we need more resources. If people's needs are not met, they become frustrated and disillusioned with the system and say it does not work."

Duarte and the military's options for raising money inside the country are limited. Earlier efforts to impose a temporary war tax on businesses and the wealthy were declared unconstitutonal.

Guerrilla commanders, meanwhile, said they are working toward launching an offensive. "We will block elections wherever we can, although it will not be everywhere," said Commander Douglas Santamaria in a recent interview. "The elections are a farce and in 1988 you will see us reach new levels of struggle because the conditions exist for a large offensive by the FMLN."