Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: FRIDAY, July 23, 1993                   TAG: 9307230077
SECTION: BUSINESS                    PAGE: A-7   EDITION: METRO 
SOURCE: Associated Press
DATELINE: HAVANA                                LENGTH: Medium

DOLLARS FROM THE ENEMY MAY SOON BE LEGAL HERE

Legally, Cubans can only peer into the windows of hard-currency stores that display bars of soap, tennis shoes and other such coveted items.

It takes dollars from the land of the enemy to buy these things, and most Cubans are barred from owning foreign currency.

That is about to change.

Because Cubans already use illegal dollars to get what is unavailable in state stores, the government said last week it will end the charade by making foreign currency legal.

That will help some people but cause even more problems for others.

The new measure is one of the more dramatic in a series of reforms forced upon Cuba by the loss of aid from former socialist nations and the 30-year-old U.S. trade embargo.

"The Cuban economy is in the process of permanent adaptation to the new realities," said Carlos Lage, architect of Cuba's economic policy. "We know the new measures will generate other measures and that something that seems unacceptable to us today we may have to consider tomorrow."

Despite an economy that has shrunk at least 50 percent since 1989, Cuban officials are trying hard to maintain an egalitarian system that guarantees jobs, free health care and education to all.

The Cuban peso, worthless elsewhere, trades officially at one to the dollar. But on the street, a dollar can buy 60 pesos, up from about 40 in December.

With rationed meat available only two or three times a month to most Cubans, they sometimes pay two weeks' salary for an under-the-counter chicken, 100 times the official rate.

Millions of dollars from tourism and relatives in the United States arrive each year. But the money spills over into some - only some - private hands.

The money is earned in a variety of ways - tips, free-lance plumbing, prostitution and bootleg cigars. Most of the illegal dollars stay in the underground economy and don't go to the government.

Lage told foreign businessmen it is almost impossible to control foreign currency in private hands.

Smith College economist Andrew Zimbalist, a specialist on the Cuban economy, said Lage ruled out paying Cubans who sell goods to foreign companies in dollars.

"It sounds like they're going to restrict the use of dollars to the distribution centers," he said. "It's going to create some issues about whether this . . . can be an influence in stimulating production."

Without countermeasures, he said, it can drive Cubans toward tourism and away from other important activities.

"What happens when a taxi driver earns two, three, four, five times as much as a doctor makes?"

He said officials haven't said how they'll maintain financial balance. "The chances of their being able to do that are very, very low."