Libya-Algeria union now looks doubtful. Libya is trying to go to the altar again, this time with Algeria. But despite possible economic benefits, Algeria has had second thoughts.

Libya's latest plan to form a federation with a nearby nation - this time Algeria - has no more promising future than previous such experiments, analysts of North African affairs say. Algeria Sunday threw cold water on Libya's desire to announce the federation on Nov. 1. Ahmed Taleb Ibrahimi, Algeria's foreign minister, told the Arab Gulf newspaper Al Khalij that it was too early to conclude an agreement. He invited Libya's Col. Muammar Qaddafi to join the friendship treaty signed in 1983 by Algeria, Tunisia, and Mauritania as a first step toward unity of the Maghreb, or Arab North Africa.

Mr. Ibrahimi's statement eased concerns of Western and Arab diplomats, who were worried when Colonel Qaddafi referred to a ``union'' of the two countries in a speech Sept. 1 that Algeria might secretly have agreed to the plan. An Algerian-Libyan union would significantly shift the North African power balance. If Algeria and Libya ever became true political and military allies, they would form a new power bloc that could field the largest and best-equipped - mostly with Soviet weapons - African-armed force outside of South Africa.

After Qaddafi visited Algiers last June to promote the federation, Libya sent a draft constitution to Tunisia, Morocco, and Mauritania, and to the Arab League. Tunisia, Morocco, and Mauritania all declined invitations to join the proposed union. The text was leaked to the Kuwaiti newspaper Al-Qabas, which published stories about the project Sept. 18 and 21.

Last Friday, the Libyan news agency accused Western news media of trying to pressure Algeria into rejecting the union.

The projected federation does differ somewhat from previous Libyan attempts at unity. It appears to have some economic basis, and to have been discussed at length by both sides. The plan is also seen as a bid by Libya to recover from its recent military defeat in Chad.

Algeria and Libya have reportedly agreed on a series of joint energy and water projects. The two nations have formed some 15 joint companies since Qaddafi and Algerian President Benjedid Chadli first discussed cooperation in January 1986. Algeria may find a ready Libyan market for its high-priced natural gas. Libya's industrial zone west of Tripoli needs natural gas for energy and for chemical feedstock.

The advantages for Libya are clear: Algeria is more industrialized and less dependent on oil revenues. And Algeria enjoys much better relations with most other states than Libya.

Libya and Algeria made breakthroughs earlier this year toward reviving a number of joint projects, oil industry sources say. These include:

Doubling the existing La Skhira natural gas pipeline from Algeria across Tunisia to Sicily. A new spur line would connect Libya to Algeria through Tunisian territory, supplying western Libya. The existing joint company of the state oil firms of Libya, Algeria, and Tunisia would carry this out.

New pipelines and development projects in the disputed Algerian-Libyan frontier zone. Algiers and Tripoli hope this would blur the dispute.

In addition, Algeria wants to make better use of its water resources. It is anxious to borrow American technology from Libyan water experts.

Technology aside, what puzzled many North African and European observers about the federation plan was that Algeria was well aware of Qaddafi's record of failure in union attempts. Since 1982, Algeria has generally opposed Qaddafi's efforts to build a coalition of states around the Saharan fringes.

In May 1985, Qaddafi asked a group of Arab lawyers to draft proposals for step-by-step Arab unity. Although the proposals were never published, some were believed incorporated in the Algerian-Libyan project.

There have been other, more recent hints, of an attempt at Algerian-Libyan union. During Qaddafi's visit to Algiers last July, he mentioned hope of such a union as a first step toward North African unity. In July, Mr. Chadli told the ruling party's central committee that ``harmonization'' between Libya and Algeria would be fine in economic, social, cultural, and educational matters. He did not mention politics or political federation.

Tunisia's President Habib Bourguiba's son, Habib Bourguiba Jr., told editors in Washington recently that Tunisia knew about the Algerian-Libyan project. He said it probably would not succeed.

Diplomats in Paris say United States Vice-President George Bush discussed the idea with senior French officials during his recent Paris visit. Both French and US officials are said to have agreed the idea is inimical to Western interests. It would generate additional pressure against France, which is backing the Chad in its fight against Libyan-backed rebels.

The US would face pressure, too, since it also supplies Chad with arms. Another leader who would face pressure is Morocco's King Hassan II, who holds the Western Sahara against continued military pressure from Algerian-backed guerrillas fighting for an independent state.

Mr. Cooley, of ABC News, is a former Monitor correspondent.