Doing Business : Disco Venture Has Havana Dancing to the Capitalist Beat : The hottest club in town is a result of the Castro regime’s thirst for cash and a willingness to exploit tourism to get it.

From a corner table of his glitzy seaside emporium, the Disco King of Havana surveyed the action-packed dance floor with the eyes of an Old World aristocrat admiring an exotic culture.

“Cubans have rhythm in their blood,” proclaimed Jordi Escarra in his Barcelona accent, straining to be heard over the deafening throb of salsa. “You just put on music here and everyone dances. It’s difficult in my country to get people to dance like this.”

It was nearly midnight and the Havana Club was just coming alive with nonstop music, dancing and strobe lights. Water cascaded down the pink marble walls at 300,000 gallons per hour, and imported liquor flowed from the bar. Soon the floor would be jammed with about 800 Cubans and foreign tourists, partying until dawn.

The club, opened last May by Escarra and a consortium of fellow Spaniards, is the ultimate symbol of the capitalist hedonism that thrives in austere, socialist Cuba as the government hustles foreign investment and tourist dollars to survive its economic crisis.

For Escarra, 43, a self-styled “tourist pioneer,” the joint venture with President Fidel Castro’s struggling revolution could not be a better bargain. Havana Club is the only world-class disco in town. If you’re looking for the best all-night party that $10 can buy, there’s no other choice.

Until a few years ago, Castro rejected this kind of tourist haven as a tawdry throwback to the pre-revolutionary 1940s and ‘50s, when American Mafiosi controlled the gambling and prostitution that lured thousands of U.S. visitors here. As hotels fell into disrepair, the revolution promoted “social tourism” featuring visits to model socialist communes and factories for sympathetic but frugal foreigners.

Hungry for foreign exchange, the government took another look at Cuba’s powder-white beaches in the mid-1980s and decided to rebuild a mass tourism industry for the sun-and-fun crowd. It began courting foreign capitalists to build new resort hotels and dollar-spending tourists to fill them.

The campaign, endorsed in October by a congress of Cuba’s Communist Party, is picking up steam as the collapse of communism in the former Soviet Bloc forces Cuba to spend more dollars on goods it once gained by bartering for its sugar.

Thanks to record numbers of Canadians, Europeans and Mexicans flocking in, tourism is now Cuba’s No. 2 dollar earner after sugar. The government has joint ventures with hotel companies in Spain, Italy, Austria, France and Finland.

Havana Club, the first such venture in the discotheque field, bears the name of Cuba’s best-known rum. The idea started after the Spaniard who distributes the rum in Spain invited his friend Escarra to visit Cuba three years ago. Escarra, who owns a hotel and a disco on Spain’s Catalan coast, planned to spend a week here but fell in love with a Cuban law student, married her and stayed.

“I fell in love with the country too,” he says. “Cuba, touristically, is a marvelous country.”

Soon he and the rum distributor, joined by other partners, put down $1 million for a 40% share of the discotheque, which they built on the west side of Havana Bay. The government kept the other 60% but left management to Escarra, whose contract gives him a two-story home in the exclusive Hemingway Marina.

The disco is so close to the bay that bulletproof glass had to be installed to protect it from storm-driven waves. Nearly everything but the building materials were imported from Spain: the lights, the sound system, the furniture, even the young couple who work as disc jockey and ticket seller.

Still, Escarra says, the investment was just one-third the cost of a similar enterprise back home, and he hopes to start turning profits within three years. Meanwhile, he is planning an expansion--an upstairs dance floor with slower music and cozier ambience, a seafood restaurant overlooking the water and yacht that will cruise up and down Havana’s waterfront and drop customers back at the disco as the dancing starts.

Havana Club was rushed to completion before the Pan American Games, which brought thousands of additional tourists here in August. Athletes from many of the 39 competing countries worked out at night on the dance floor, along with such celebrities as Gabriel Garcia Marquez, Colombia’s Nobel Prize-winning novelist.

The rise of posh clubs and hotels against the backdrop of decaying barrios and acute consumer shortages is one of the contradictions in Cuba today. Built to attract precious tourist dollars, the clubs and hotels are apparently off limits to Cubans because they do not accept pesos and Cubans are not allowed to have more than $5 in foreign currency--half the price of admission to Havana Club.

But there’s a way around this, as anyone approaching the club’s palm-lined entrance soon learns. Small knots of well-dressed young Cubans hang out in the parking lot, asking dollar-paying guests: “Do you want to be with us tonight?” It’s a tactful way of saying, Please pay our way in so we can party too.

The blend of foreign customers and their Cuban guests is a challenge to Raul Martinez, the club’s Spanish disc jockey, who mixes cassette tapes under a bank of four silent TV screens showing co-ed wrestling, car crashes and rock videos.

“The Cubans ask me to play the Rolling Stones, the Beatles and the Twist,” he said. “Foreigners request salsa, merengue and other Cuban music. My job is to keep everyone happy. But I must be careful to slow things down now and then, or people will tire themselves out and go home early.”

Escarra, clad in an Yves Saint-Laurent double-breasted blazer as he makes his rounds, looks right at home in this milieu where everyone dances. Dire predictions of violent anti-Communist unrest and Castro’s imminent demise do not concern him, he insists.

But he does worry that a change of government or an end of hostilities between Washington and Havana could bring American business competition back to Cuba after a 30-year U.S. trade embargo. Escarra remembers the Maine and the Spanish-American War that ended Spain’s colonial rule here in 1898.

“You’ve already kicked the Spanish out of Cuba once,” he said. “I don’t want to see it happen again.”