NEWS ANALYSIS : Economic Focus Key Shift in West’s Ties With Moscow : Diplomacy: Europe finds itself on an equal footing with the U.S., whose role as leader is diminishing.

It took only 15 minutes to reach final agreement on the Strategic Arms Reduction Treaty on Wednesday, but the handshake deal allowed President Bush and Soviet President Mikhail S. Gorbachev to talk about the subject that was really on their minds: remaking the Soviet economy.

The two leaders’ discussion during their hourlong lunch was typical of Gorbachev’s meetings with the leaders of the seven largest industrial democracies at their economic summit here--and marked a historic turn in the West’s long and troubled relationship with the Soviet Union in two ways.

First, nuclear arms control, the centerpiece of U.S.-Soviet talks during the long frosty decades of the Cold War, is now the leftover baggage of the past. Instead, the central focus is on finding ways the West can help the Soviet Union reform its failing economic and political systems.

Second, as the East-West military confrontation recedes into history, the special role of the United States as the leader of the West is diminishing, as well. When nuclear weapons were the central problem, the United States was key. But when economic aid is on the table, Germany, France and Japan can act as equal partners.

Thus, it was telling, at the end of the day, when British Prime Minister John Major announced that the key Western partner in helping the Soviet Union enact sweeping reforms would be the entire Group of Seven--the United States, Japan, Germany, France, Italy, Britain and Canada--the countries that hold the annual economic summit.

“This has been a day . . . that history may well see as a landmark,” Major told reporters. “It will, I believe, be seen as a first step toward helping the Soviet Union become a full member of the world economic community.”

President Bush, who has been more hesitant than some of the other G-7 leaders in pledging help to Gorbachev’s economic reform, was almost as ebullient.

“I keep saying to myself, ‘Think how things were five years ago.’ . . . Who would have dreamed we’d be talking about the kinds of things we are with the Soviet Union?” Bush said.

Bush and his aides were pleased that the Soviet Union had come forth with a compromise on the last, technical problem holding up the START treaty, which will cut the two old superpowers’ nuclear arsenals by about 30%.

“It’s a dramatic moment in arms control,” one senior U.S. official said with quiet satisfaction. “It culminates enormous efforts by both sides over almost a decade.”

It should have been a dramatic moment--but it wasn’t. Final agreement on START had been widely expected. And the rest of the world’s agenda had already moved on, like Bush and Gorbachev themselves, to concentrate on the baffling, Herculean task of remaking the Soviet Union.

Bush and Gorbachev also agreed to hold a superpower summit in Moscow at the end of July--but with the sea change in East-West relations, that meeting may be less dramatic, as well.

“This is symbolic of the shift from old, military issues to new, economic issues,” said Michael Mandelbaum of the Council on Foreign Relations in New York. “For the first time, the G-7 economic summit may be more important than a U.S.-Soviet summit meeting. . . . The U.S.-Soviet bilateral relationship has been significantly devalued.”

The shift in focus to Soviet internal reform “changes not only the game but the players,” Mandelbaum said. “The most important players are the Soviets themselves. In the West, it’s not just the United States that’s important, it’s the entire G-7. . . . The United States does not dominate international economic relations today in the way that it dominated international political and military relations during the Cold War.”

Helmut Sonnenfeldt, a senior State Department official during the Nixon and Ford administrations, agreed, saying: “The bilateral relationship is diminishing in importance. We remain the two largest nuclear powers, so there will always be a special quality to it. The United States will continue in some ways to be a preferred partner for the Soviets; when they deal with us, it’s evidence to them that they are in the very big leagues.

“But the big issue for the Soviets isn’t arms control--it’s how we and other countries interact with them in this transformation they’re attempting,” he said. “They already have a special relationship with Germany, based partly on economics; they would like to have one with Japan. They will be looking more and more to the European Community, even Brazil and the economic tigers of Southeast Asia.”

That trend isn’t likely to reverse soon, he added. After the grueling nine-year negotiations that produced the START treaty, there is little enthusiasm in either Washington or Moscow for another big arms control effort now.

“It will be some time before we get involved in a START II,” Sonnenfeldt predicted. “The sense of urgency has been reduced because the whole quality of the relationship has been changed. The Soviets are worried about themselves, not the outside world.”

And the focus on the Soviet Union’s internal problems--from its economic reforms to the secessionist movements in its 15 republics--is likely to continue.

“That’s going to be everyone’s major preoccupation for years,” Mandelbaum said. “Among other things, it looks as if the G-7 will eventually become the G-8 now that Gorbachev has shown up. From now on, no self-respecting Soviet president is going to stay away.”

In the short run, agreement on START should boost the political fortunes of both Gorbachev, who needs all the political help he can get, and Bush, who doesn’t.

Gorbachev will return to Moscow declaring that he has won an unequivocal, long-term promise from the wealthiest countries to support his economic reforms--even if they did not immediately put any hard money behind their kind words.

“That should help him at home,” a U.S. official said. “Most Soviets probably weren’t expecting direct financial aid anyway.”

For Bush, the upcoming summit trip to Moscow, the START treaty’s signing, and its expected ratification by the Senate are likely to help the President build on the support he gained from the Gulf War.

In the past two months, Bush’s postwar peaks in public opinion polls had begun to trail off, and he is facing skirmishes with Congress on domestic issues--most notably Senate debate over his nomination of Clarence Thomas to the Supreme Court and of Robert M. Gates as director of the CIA.

A Moscow summit, said one Republican politician in Washington, will give Bush “some clout, after the August (congressional) recess, to move Thomas through the process . . . an adrenaline shot to get the nomination through.

“If you go to the Soviet Union, have a positive meeting, a good agreement on START, it gives him a boost up,” he said. “If you can get a START treaty, get it ratified, it’s another signal of support and strength to move the agenda. It makes the foundation firmer.”

Although it will be difficult for Bush’s popularity to reach the level attained after the Gulf War began, the Republican figure said that a Moscow summit nevertheless will help portray Bush once again as a central player on the world stage, five months after the war ended.

McManus reported from Washington and Gerstenzang from London.