Japan's spirited premier takes quiet look back. In wide-ranging interview, Nakasone is positive about foreign policy and economic record, but has some regrets on home front. END OF NAKASONE ERA

The most fundamental aspect of the relationship between the United States and Japan is not trade, but the security link, says outgoing Prime Minister Yasuhiro Nakasone. In an exclusive Monitor interview last week, the ebullient, activist leader who has been at Japan's helm for the past five years likened US-Japanese ties to a plant. The economic relationship ``is the flower that you see blooming above ground. But deep down, at a level most eyes cannot reach, is the security link. That is what forms the roots of the US-Japan relationship.''

The prime minister also took up the following topics:

US-Japan trade problems: ``Both sides know what the problems are and what track to pursue in solving them. The question is how to speed up the process.''

Japan-Soviet relations: ``No Japanese prime minister can afford to give way on the territorial issue [Japan's claim to four Soviet-occupied islands off Hokkaido]. If he did, he will have to resign forthwith.''

Japan-China relations: ``We must keep China as a good friend of the free world. China opposes hegemonism. So do we.'' (Hegemonism is shorthand for Soviet expansionism.)

Successor Noboru Takeshita: ``He has great abilities in handling domestic policies. But being a consensus-seeker, he tends to take a long time. Once he becomes prime minister, he will see the need for tempo.''

These days, the media focuses on trade and economic problems between Japan and the US, and Mr. Nakasone does not deny the importance of these issues. But for many years, his own interest has been geopolitics and global strategy. He positions Japan firmly within the Western camp and acknowledges that Japan's tremendous economic growth during the postwar decades owes much to US help.

Today, when the US is struggling with its ``twin deficits'' - the federal budget and foreign trade - ``Japan should take appropriate action in the defense field,'' Nakasone says, ``reflecting changes in the relative positions of both sides. Such actions should be satisfactory to both sides.''

He also cautions that his country's defense efforts must never get to the point where its Asian neighbors consider themselves threatened.

He decided against sending Japanese minesweepers to the Gulf, he said, because minesweepers made no sense except as part of a convoy operation. But to involve Japanaese naval vessels in this way, in an area so far from Japan's home islands, and in a real war zone, raised grave constitutional problems. The legitimacy of Japan's defense forces rests on the premise that they would be used only for the defense of the home islands, if they had been or were about to be invaded. The conclusion: Japan's contribution had to be nonmilitary.

On Japan-Soviet relations, Nakasone said that since Japan had little military power and inadequate intelligence information on the Soviet Union, his policy was to dig a trench and wait within it until the Soviets ``come within firing range.'' Then the Japanese side could emerge and see what the Soviets wanted. If talks ended in agreement, the two sides could shake hands. Otherwise, the Japanese would go back into their trenches and wait.

For a while, it looked as though Soviet leader Mikhail Gorbachev was interested in improving relations with Japan. Later, his interest seemed to wane. ``I think he is giving priority to superpower relations with the US,'' Nakasone said. Only if next month's Gorbachev-Reagan summit is successful and the superpowers reach a satisfactory compromise will the Soviet leader be ready to tackle Japanese relations, he said. This is why Nakasone has frequently said that Japan and other Western countries should support the US in its negotiations with Moscow, for a satisfactory conclusion is bound to have a good effect on Moscow's other Western relations, including relations with Japan.

As for China, Nakasone said, relations with Peking had improved recently after a downslide caused by a legal dispute over a Chinese student dormitory in Kyoto. He was optimistic for the future.

Turning to domestic politics, Nakasone said he had chosen Mr. Takeshita to succeed him because of the latter's demonstrated ability in domestic affairs. Takeshita is an expert on the process called nemawashi - loosely translated as ``binding up the roots.'' When a gardener wishes to transplant a tree, he must be very careful to dig around the roots and bind them up in such a way that the tree will flourish in its new location. The tedious process of making sure that, on any given policy, one has touched base with all the people who really count is known here is nemawashi.

Takeshita is often perceived as a man who has little experience or interest in international affairs. In Nakasone's view, however, international and domestic affairs are so interrelated today that it is impossible to say where one ends and the other begins. ``Wherever you turn, you soon find that our external problems can only be solved on the basis of domestic reforms. It is to the extent that we carry out reforms at home that we gain the right to speak up in international affairs. This is the area where I felt Takeshita was more adept than the other candidates.''

Nakasone has often said that his greatest regret in the domestic area was his inability to carry out tax reform. But did he have any regrets in the foreign affairs field? ``Maybe,'' Nakasone said, ``I should have taken up the question of Japan's trade surplus and the US's twin deficits much earlier with Washington.''

In any case, these are problems Nakasone must bequeath to his successor.

Ever since Nakasone's decision, announced in the early hours of Oct. 20, Mr. Takeshita has been the prime-minister-in-waiting. Tomorrow he will be formally elected prime minister by the Diet (parliament) and form a new cabinet. Takeshita is likely to rely heavily on his predecessor's advice.

Last question: When would the Japanese learn to behave as an affluent people, ready to contribute to the well-being of the world community?

``Don't forget,'' Nakasone said, ``that Japan was a developing country at least until 1955, and an NIC [newly industrialized country] until 1964.'' (That year, the International Monetary Fund recognized Japan as a fully developed country.)

``You can't expect us to feel an affluence of the heart in such a short space of time,'' he said. ``It's only from now on that we are having to accustom ourselves to the feeling. Japan is going to change a lot.''