Juan Hernandez Ferrer, a Queens grocer, moved back to Puerto Rico after 17 years on the mainland. He settled in Levitown, a sprawling subdivision outside San Juan, where the Kennedy Elementary School, the Kentucky Fried Chicken outlet and the Little Leagues made his family feel at home. He opened a new store, and its sign read not "Mercado" but "Food Center" because, he said, "That sounds more American."

Yet ask him why he returned here and he says: "You love your country no matter where you are. When I arrived here, I would get up at 4 every morning to drive along the ocean and watch the sun rise. This country has so much beauty."

Puerto Rico: country, colony or something in between? It is the question that obsesses this Caribean island, conquered by the Spaniards in 1508, by the Americans in 1898 and, since 1952, designated by the U.S. Congress as a "commonwealth."

Puerto Ricans are American citizens. They use the U.S. mails, U.S. currency, U.S. Social Security and U.S. welfare. Yet residents don't vote in U.S. elections or pay federal taxes, and many Puerto Ricans here, like Hernandez Ferrer, think of themselves as a distant nationality living in their own country.

The result is a political and cultural identity crisis that has polarized this Spanish-speaking society perhaps more than at any time in its history.

The governor's press secretary, a Chicagoan named George McDougall, is incensed when journalists refer to Puerto Rico as a "country," and reminds them gruffly that "Puerto Ricans are Americans." Ruben Berrios, head of the Independence Party here, counters: "There may be Puerto Ricans who think of themselves as Americans. They need a psychiatrist."

The governor, Carlos Romero Barcelo, educated at New England's Phillips Exeter Academy and Yale University, and married to the former Kathleen Donnelly of Baldwin, N.Y., yearns for Puerto Rico to become the 51st state.

"We ourselves feel no ambiguity about being both Puerto Ricans and Americans," he says.

However, when Romero tried to insist that the U.S. flag be flown next to the Puerto Rican flag at the opening of the Puerto Rican flag at the opening of the Pan American games in 1979, an island-wide controversy erupted. The Stars and Stripes was not raised, and when the Star Spangled Banner was played before the Puerto Rican anthem, it was drowned out in an earsplitting chorus of air horns, police whistles and boos from the crowd of 35,000.

Although independence parties here have never won more than 6 percent at the polls, Puerto Rican nationalism thrives also in continuous protests against American military exercises here, especially on the island of Vieques, a target for U.S. Navy practice. Puerto Rico sent its own delegatrion to the Moscow Olympics in spite of the U.S. boycott.

The 1980 elections here further divided the island. Romero barely won, 47.2 percent to 47 percent, over Rafael Hernandez Colon, who favors a more autonomous commonwealth status. The legislative races were so close that the courts have yet to decide who controls the lower house.

Meanwhile, Hernandez Colon has received death threats and is protected by 12 bodyguards. "The situation is very tense," he said."People are very polarized."

Berrios warns: "There are thousands of Puerto Ricans determined to impede assimilation by any and all means . . . Any serious attempt at incorporating Puerto Rico as a state would unquestionably precipitate a wave of violence."

Hernandez Ferrer, the former Queens grocer, is now mayor of the city of Toa Baja, which includes Levittown, and has endorsed statehood.

"But is independene came tomarrow, under the democratic flag of the United States, I would accept that just as well," he said. Like most Puerto Ricans he is frustrated by the political limbo. "What I don't want is to remain at the edge of the river. Do I cross it or not? You must reach a decision."

Nowhere are the cultural ambiguities of being Puerto Rican more evident than in Levittown, where two thirds of the 25,000 residents are "New Yoricans" or "Neoricans" -- Puerto Ricans who migrated back here from Chicago, Baltimore and Miami, but mostly from Brooklyn, the Bronx and other New York boroughs. Some 2 million Puerto Ricans live on the mainland, as contrasted to 3.2 millioin on the island, and migration is continuous both ways.

Levitown reflects the sometimes schizophrenic lifestyle. Its schools give bilingual classes to Neoricans who can't speak Spanish, and fights have broken out in the high school between the "bilinguals" and the "regulars" who make fun of them. With its look-alike, flat-roofed houses on small patches of lawn, it resembles Levittowns everywhere, but its carpet outlet advertises "Wholesale Alfombras" and at Christmas the multicolored lights are strung on palm trees.

Despite the Americanization, Hernandez Ferrer said, "We're impatient to revive tradidtions -- especially the newcomers. We come back hungry for the things of the past.

On Good Friday this year, Levittown resurrected the island's ancient custom of parading through the streets to reenact the stations of the cross. An electric-blue Mazda led the way as a white-robed num in the front seat sang "Cristo Rompe Las Cadenas" -- Christ Broke the Chains -- through huge loudspeakers on its roof. The crowd of informally dressed adults and children walked down Levittown Boulevard, past Coca-Cola signs and beauty suply shops, holding a large crucifix and reciting, "Lord Have Mercy Upon Us."

Andres Serrano, one of 13 children of a factory worker, left Puerto Rico to find work in New York when he was 20. He returned 20 years later, after a career in the Air Force. The transition was painful.

"The kids who come back are in nobody's land," he said."They are looked down upon because they're not American and they're not Puerto Rican. The teachers make fun of their accent in Spanish. My oldest son was 12 when we came. He never did adapt. He got into drugs. After high school he went back to the States for good."

Andres' wife Ana, Puerto Ricanborn and Brooklyn-bred, feels estranged from her Puerto Rican neighbors.

"I can't get used to their customs," she said. "I feel funny around them. If you don't wear certain shoes you're out of it. They think 'm an oddball because I walk around the house in tennis shoes. They can't believe I don't watch the soap operas.

"When I go to a PTA meeting, the wives say, 'What? You came alone? You drive by yourself? Isn't your husband coming to pick you up?' The women do nothing without their husband's permission. I say, 'Can't I take your daughter to the movies?' My neighbor says, 'I've got to ask my husband.' I say, 'Can't you think for yourself?'"

The Serranos miss "Yankee efficiency," complaining that one can't adjust a utility bill here without going down to the company in person and waiting in line for hours. When the gubernatorial election was in dispute, no one went to work at city hall and the garbage in Levittown wasn't collected for a week. Signs in local bars often say: "In this establishment, one does not talk politics." But when you go, Andres said, "all people talk is politics and they end up fighting."

Nonetheless, he added, he's happy to be here. "I never felt like I belonged in the States. It's very hard to get ahead as a Puerto Rican. Even with their faults, I prefer to be with my people."

Annie Bello, born in New York of Puerto Rican parents, came here a few years ago "to get in tune with my culture" and married a Puerto Rican. As a child of the 1960s, she said, "I was very rebellious. My mother would say, 'You're an American.' I'd say, 'No, I'm Puerto Rican.' But now that I'm in Puerto Rico, I've decided, 'No, I'm a New Yorker.'"

In contrast, Bello's husband, Samuel Vera, 26, although he has a master's degree from New York University and is salesman for a company called American Home Products, says, "I feel Latin American. I like the United States, but I think of anything from the U.S. as foreign."

The couple lives in a Levittown condominium where, Bello said, "They think I'm a hippie because I wear Indian blouses and braid my hair." Bello is expecting a baby. "I want to call it Michael or Courtney," she said. "My husband wants Alejandro."

The cultural clashes of Levittown are the clashes of all Puerto Ricans. During 83 years under the American flag, and despite a draconian Anglicization of the schools which lasted more than a generation, this island has held onto its language, its culture, its religion and its pride with remarkable tenacity. Puerto Rican poets, musicians, playwrights and painters continue to blossom. Of 84 radio stations, only one has programs in English. The Levittown high school is named after Pedro Albizu Campos, a Puerto Rican revolutionary of the 1980s -- who went to Harvard.

Nonetheless, these islanders, living 1,000 miles southeast of Miami on the far side of Cuba, shop at Grand Union, work for Bendix in Ponce or General Electric in Caguas, collect Vietnam veterans' benefits, and watch the World Series on television dubbed in Spanish. The governor vacations in Disneyworld. His principal opponent, Hernandez Colon, is a graduate of Valley Forge military academy and John Hopkins University. Even Berrios, head of the Independent Party, went to Georgetown University.

Puerto Rico celebrates Thanksgiving and Mother's Day, along with its own historical holidays. It is almost impossible to find a Puerto Rican, whether in the poor countryside or in wealthy San Juan condominums, who has not worked or studied in the United States, or does not have close relatives living there.

In a sense, not much has changed since Stephen Sondheim wrote these lyrics for Leonard Bernstein's music in "West Side Story":

Rosalia: I like the city of San Juan .

Anita: I know a boat you can get on .

Rosalia: Hundreds of flowers in full bloom --

Anita: Hundres of people in each room .

Rosalia: I'll drive a Buick through San Juan --

Anita: If there's a road you can drive on .

Rosalia: I'll give my cousins a free ride .

Anita: How you get all of them inside ?

Chorus: Immigrant goes to America ,

Many hellos in America ,

Nobody knows in America ,

Puerto Rico's in America .