Local businessmen tell a story said to illustrate their view of the pluses and minuses of the Grenadian revolutionary government. It concerns a recently erected propaganda billboard denouncing Western "imperialism" as the country's worst enemy.

This billboard happened to be located next to the Holiday Inn, the story goes, in full view of the tourists whose dollars provide the bulk of Grenada's foreign exchange. The tourism officials complained and the billboard came down.

The sentiment briefly advertised was no surprise. Grenada's young leaders regularly lambast the United States in international forums. But, as the anxious tourism officials pointed out, propaganda at the United Nations was one thing and local self-interest was another.

Seventeen months after staging the English-speaking Caribbean's first coup, ousting the dictatorial and paternalistic postindependence prime minister Eric Gairy, Maurice Bishop's government has managed to convince U.S. officials that this tiny island poses a threat to American security interests in the region.

Close links have been forged with Cuba, support funds have been collected from radical Arab states. There have been official visits to the Soviet Union, and a growing western fear of Soviet-Cuban domination, through Grenada, of vital eastern Carribbean shipping lanes through which U.S.-bound oil passes.

Then there are the radical speeches -blaming the West for the world's ills and condemning the CIA and U.S. policies from Puerto Rico to Afghanistan.

However, here on this isolated island, the size of Martha's Vineyard, with steep jungled mountains, crackerbox houses and nutmeg and banana trees, the revolution's image is less clear.

Few of the usual signposts of leftist transformation are in evidence. There has been no expropriation of private businesses or land by the state. Government-run Radio Free Grenada counterpoints its own version of the news with the daily rebroadcast of the BBC's World Service, interspersed with U.S. gospel programs and disco music.

The anti-imperialist billboard was an exception to the normal pastel signs exhorting Grenadians to work and study harder. No one seems to be able to think of a single Grenadian businessman who has pulled out investments and left the country, although a number have cut back expanion plans and expressed a wait-and-see attitude.

There is a pervasive feeling here that another shoe is about to drop. Those holding the view include the business community, which wants a "clear and irrefutable statement" of where it stands vis-a-vis the revolution; the poverty-stricken majority, which is waiting for the government to improve services and provide jobs, and the minority on the extreme left, which wants a sharp turn to communism.

As for the leftist militancy of the government, "there is a definite contradiction" between what Grenada's leaders say to the world and what they do at home, acknowledged Bishop, 36, the prime minister. "It would be childish to deny."

Most Grenadians seem to give the government high marks for feeding, housing and attending to medical needs of the 110,000 population. There is little doubt that this government, after the rule of the eccentric Gairy, has at least managed to catch the attention of its people.

"It's made 90 percent of Grenadians feel a greater national interest," admitted one local observer who professes grave doubts about the future. "I've never felt more nationalistic. In January, the government issued a call for schools' to be repaired and 4,000 people turned out voluntarily. Merchants contributed the materials for free. That would have been unheard of with Gairy."

The seizure of power, unorthodox for the former British Caribbean, does not seem to bother many Grenadians.

"Frankly, I think that Grenada has been and still is accustomed to a fairly authoritarian government," said Jeoffrey Thompson, recent past president of the Grenada Chamber of Commerce and owner of the island's fertilizer business."

"First we were a colony," until 1974, "then we had Gairy," who had ruled under the British from the early 1950s and then took over as postindependence prime minister, "and now Bishop. It doesn't really frighten me that much." Thompson said.

What worries Thompson and other Grenadians are the somewhat nebulous government structure, the perceived inability to solve economic and social problems, and the backlash of Western tourist and export markets against Bishop's professed radicalism.

"We don't fear the government itself," Thompson said. "We don't fear they're going to take over our businesses. We fear that they're going to wreck the tourist industry" by frightening it away. "I've never seen a wealthy Russian tourist, or a wealthy Cuban either, for that matter."

By the same token, "we don't fear that they're going to push more workers on us then we can employ," he said, "but that they're going to influence the workers to demand more than business can afford to pay."

In other words, some Grenadians say the government, by entering the international big league of political rhetoric, may be getting in over its head.

Bishop admits to no such concern, and explains the uncertainty by saying that both the structure and the future of his government -- primarily 23 foreign-educated activists -- is "evolving."

The government has ruled through decree-like "people's laws" that appear whenever the administration feels a new one is necessary. Most areas of daily life, however, are left to the regulations of the old constitution.

There are no local administrative bodies in any of Grenada's 160 or so towns and villages. Grenadians attribute this central control to Gairy, who abolished local government in 1968.

The absence of any organized political opposition, by all accounts, is also a holdover from Gairy's heavy-handed rule.

Of continuing concern, both to U.S. diplomats and at least to middle-class Grenadians, are the closure last October of the Torchlight, the conservative daily that was the country's only newspaper, and the detention without trial of nearly 100 political prisoners. The number shot up following two local bombings earlier this year that the government blamed in part on what it has called a CIA destabilization plot.

The government offers little explanation in the case of the Torchlight, saying only that a number of articles and photographs were considered provocative and "counterrevolutionary."

Although the government promised early elections at the time of the coup, there have been no moves in that direction. While many Grenadians say the government has majority public support, there is a discomfort over this departure from tradition.

"For us, the question of elections remains a firm commitment," said Bishop. "The question has not been if we are going to call elections, but the time. Under normal circumstances, a new government under our system has five years."

Still, Bishop did not commit himself to that time frame. "We want a new constitution and we make no bones about it. The Westminister system" under which most of the former colonies operate "is a farce. We want to establish a constitutional commission of distinquished Caribbean people who will look at different models" and make recommendation to a national assembly, which will then rewrite the document and submit it to a national referendum."

Even this, however, was not definite."That is our preference," Bishop said. "But is doesn't have to be that way."