This small nation has had a sharp fall from the euphoric days of 1974 when, after 11 years of hard-fought combat, it gained its independence from Portugal.

No longer do the Guineans and their Cape Verdian compatriots have the sharp, bloack-and-white choices of an anticolonial war. Today the country's leftist leadership, newly reshuffled after a military coup last November 14, is groping for new directions after years of ethnic conflict, political power struggles and disastrous financial mismanagement.

The coup resulted in three deaths, the continued house detention here of deposed president Luis Cabral and the end of the dominant, paternalistic role of mestico (mixed African and white) officials, many of whom were dismissed and began a small exodus back to the Cape Verde Island nation 400 miles offshore.

The new "provisional" government is led by pure African Guineans for the first time, headed by a nondoctrinaire former guerrilla commander Joao Bernardo (Nino) Vieira. Aside from continuing the requisite socialist rhetoric, the new leaders must decide pragmatically how to resuscitate a badly damaged economy, heal any festering wounds between the blacks and their remaining Cape Verdian colleagues and provide direly needed political stability.

"In the economic sector, we are trying to find out" where the country stands, said Vieira in an interview. "Before the end of the year there will be a [party] congress and we will try at that time to define a political orientation," Vieira said.

Guinea-Bissau's sole political party was the same movement that brought the country to independence, widely known under as PAIGC, it Portuguese acronym, which stands for the African Independence Party of Guinea and Cape Verde. The movement was founded clandestinely in 1956 here in this former 16th century Portuguese slave port by Amilcar Cabral, his younger brother, the quarantined Luis, the present-day president of Cape Verde, Aristides Pereira, and three others.

Amilcar Cabral was born in the Guinean town of Bafata in 1924 of a Cape Verdian school teacher father and Guinean mother. After peaceful demonstrations for independence ended in a Portuguese massacre of Africans here in 1959, the elder Cabral turned to war and received military assistance from the Soviet Union. He was assassinated inGuinea-Conakry, just under two years before independence.

Luis Cabral took over the movement and became the country's first president, but the seeds of the most recently acted out conflict had been sown centuries before when the two countries were tied, first by Portugal's African slave trade, and then by the colonial administration.

Under the Portuguese, a pervasive creole African-Portuguese culture evolved on the Cape Verde Islands, while the Guinea mainland remained African with the exception of Bissau and a few inland settlements.

Education was more readily available in Cape Verde, and a number of the islanders were influenced by the official Portuguese colonial policy of denigrating Africans and their culture.

Cape Verdians, many of whom had migrated to Bissau to work, fought and died and played leading roles in the struggle on the mainland for Guinean independence, yet the seeds of division between the two groups have continued.

The ethnic division was "at the heart of the party," Vieira said, and had been fought against since the beginning. "[Amilcar] Cabral fought against it," he added.

Vieira, Guineans of both groups and neutral observers charged that with independence Luis Cabral began to gather increasing amounts of power to himself, purposely built up a Cape Verdian-controlled government and distributed managerial positions for state enterprises to Cape Verdian relatives regardless of qualifications.

Cabral, Vieira added, also ignored collective party decisions to make agricultural self-sufficiency the government's priority and brought in expensive prestige projects, which will not realize profitable returns for years and have saddled this poor country with debts and mounting interest.

One such project, the Cumere agroindustrial complex, scheduled to be completed in november, has cost $120 million -- three times Guinea's estimated annual budget -- and will be capable, among other things, of processing 70,000 tons of tobacco, a product only 15,00 tons of which was produced in the country last year. A Citroen of France small car factory, with a planned annual production of 500 vehicles for a country whose 700,000 residents are 90 percent peasant, is closing after its first year, during which it assembled 285 cars. There is no foreign exchange to buy any more of Citroen's assembly packages.

Luis Cabral's popularity also began to wane repidly as the country's rice supplies, a major staple that has not returned to self-sufficient production levels since the war, became increasingly scarce, at times disappearing from the market altogether.

Guinea-Bissau and Cape Verde, whose separate governments have the same party leadership, were discussing merging, a possibility that increased the anxieties of the indigenous Guineans about being dominated. As their fears mounted, Luis Cabral presented a revised constitution in the first week of November that stripped Vieira, who was then prime minister and the highest-ranking pure African in the government, of all functional power. The constitution also provided that nonindigenous citizens were eligible to become president in Guinea- -- something the Cape Verdian constitution specifically forbade in that country -- and capital punishment was introduced here, while it is not allowed in Cape Verde.

A week later, Luis Cabral had been placed under arrest.

"We are not against Cape Verdians," said Vieira, pointing out that most of the 10,000 Cape Verdians in this country have stayed, still form the majority of the 15,000 civil service work force and hold policy-making positions in his government. "We only want one thing, and that is equality of right," he added.

"Our first goal now," said Rural Development Minister Avito da Silva, "is to feed ourselves" and end the country's dependency on expensive foreign food imports and donations. During the war, Portuguese and guerrilla forces destroyed thousands of rice paddy dams in an effort to keep food from each other.

Twice the size of New Jersey, the country has only 250,000 acres of land under cultivation, about a fourth of the acreage farmed before the war began in 1963.

In early May, Vieira made a surprise announcement that Guinea's small merchants would once again be allowed to sell and distribute rice throughout the country, ending the government's monopoly system, that had been successful as a PAIGC-run bush barter system during the war but not been ineffective since entering the money economy at independence.

Vieira's breakup of the badly run rice monopoly may be a signal for more pragmatic decisions in the future, several foreign observers noted