Market Focus : Castro Plays a Capitalist Card, Seeking More Tourist Dollars : It’s a dangerous game because Cubans are barred from vacation facilities.

For most visitors, Cuba is the land of the Four S’s--Sun, Sand, Sea and Sex. For Cuba itself, that all rolls into a single S: “Survival.”

In a controversial effort to stem the disintegration of Cuba’s economy, the island’s Communist leaders have turned to tourism, a standard device elsewhere but one which Cuban ruler Fidel Castro once derided as the corrupt symbol of the capital order he overthrew 35 years ago.

Precisely, it was on April 21, 1959, that Castro banned private beaches and began opening former tourist facilities to Cubans, a practice that has been reversed again under the current approach.

“That is the most daring and dangerous part of all of this,” said a diplomat from a country with strong financial links to Cuba. “Because Cubans don’t have dollars they can’t get in (to tourist attractions) and because they see what is available to the foreigners, the Cubans naturally are going to be resentful, particularly since for 30 years they have been taught there should be no discrimination.”

That there is discrimination is obvious. Two Cubans, invited to drinks recently by a foreigner in the fancy Hotel Nacional, were refused entry not only to the hotel but to the grounds itself.

What the Cubans are gambling on, the diplomat said, “is that enough money can be generated in a short enough time” to ease the economic crisis and head off serious discontent stirred by discrimination.

Since the program began four years ago, there have been some successes in drawing in badly needed foreign currency, and the hotels and beaches are often full of pale Canadians and Europeans looking for sun.

But it isn’t yet the Cuba that dominated Caribbean tourism from the 1920s until the 1959 revolution closed the Mafia’s casinos and shut down the elaborate nightclubs that featured gorgeous strippers, both men and women, and explicit sex shows.

“Havana was Miami, Las Vegas and Sodom all rolled into one,” said Luis Mendez, a Cuban-American who lived in Havana before going into exile in 1961. “There were things wrong with it,” he said, “but it was fun.”

Havana and Cuba still aren’t that much fun, but the government is making changes from the post-1959 puritanical approach that left most tourist facilities, including grand hotels, tattered and moldering.

Financed by foreign capital, mostly Spanish and Canadian, Havana hotels have been restored and some new ones built. The island’s beaches have been cleaned up and dozens of seaside hotels and villas renovated or built from the sand up.

Restaurants reserved exclusively for foreigners are doing business around the capital. Some feature an international cuisine; one specializes in Spanish cooking, another Italian dishes. There is even a restaurant that pretends to be Chinese, serving rice and soy sauce on otherwise unidentifiable food.

Nightclubs are presenting floor shows in the Vegas mode, with tall, leggy chorines wearing towering feathers and tiny bikinis, moving to the beat of big bands.

Even culture is being exploited, at least to the degree that it attracts foreign dollars. Old copies of books by and about Ernest Hemingway are available, and tours are arranged to the bars where he drank, the marina where he kept his boat and the house where he lived off and on.

Hemingway and the restaurants and nightclubs aside, the tourist magnets that the Cubans are counting on are the four S’s, and here in Varadero they flourish.

With its 12 miles of sugar-fine, white sandy beaches only a two-hour drive east of Havana, Varadero rivals the best resorts of the Caribbean, the government boasts.

But just claiming that it’s so is not enough in the Caribbean, where every beach is ecstatic, so Cuba has undertaken a program to make sure that foreigners, at least a certain class of them, are tempted.

The prices are a major draw. Ads in Canadian newspapers promise round-trip charter air fare, a week in a Varadero hotel and local transportation for just over $500. Throw in three meals a day and the price goes up to just over $600 for the package.

With few exceptions, Americans are restricted from traveling to Cuba, but for those willing to violate U.S. laws, a three-night stay with air fare to and from the Bahamas can cost as little as $220.

And then there is sex. There is nothing out of the ordinary in the ads placed in newspapers in Canada and Europe showing scantily clad young women gamboling in the waves or strutting down the beach, and as a tour of various beaches proves, it certainly isn’t false advertising.

But there is another, less palatable part of that S.

To one degree or another all those new nightclubs and fancy hotels are centers of prostitution, mostly on the part of very young girls, the majority of them black, the poorest sector of Cuban society.

“The decline and fall of Cuba’s economy and the turn to attracting foreigners has made it inevitable,” said a diplomat here. “The only way for most of these kids to survive is to sell themselves.”

Another supposed attraction is Cuba’s self-proclaimed freedom from AIDs, a claim reinforced until recently by Castro’s policy of rounding up HIV carriers and AIDs sufferers and quarantining them. International health organizations say AIDs is as much a problem here as anywhere, but the illusion dies hard, and Cuba is a regional leader in sex tourism.

Driving down 5th Avenue, a major road through the once-opulent Havana neighborhood of Miramar where many of the capital’s tourist restaurants and hotels are located, is to run a gauntlet of hitchhiking girls. An American woman reporter was waved off when she stopped for a teen-age girl she thought actually needed a ride.

On the surface, the tourism campaign is working. Cuban officials say about 600,000 foreigners came here last year, up from nearly none only four years ago when Fidel Castro reluctantly approved the program. They project about an 8% increase for 1994.

That still leaves Cuba far short of the top Caribbean tourist destinations. Jamaica had nearly 475,000 tourists in the first three months of this year alone, while the Bahamas report nearly 400,000 visitors for the first quarter.

But for a country where for more than 25 years tourism was largely limited to ideological-driven Castro admirers with more holes in their jeans than money in their pockets, or groups of Eastern European workers who carried nearly worthless currency, Cuba and tourism seems a mix again. Maybe, maybe not.

Those prices are bargains for the tourists, but questionable for Cuba since the government is forced to subsidize the entire program. “There is no way the government can make a profit,” one foreign economic expert said. “The (Canadian and Spanish) hotel operators take their share off the top and before the rooms are discounted. The foreign airlines and charters all get their money up front.”

A diplomat from a country involved in the tourist trade agreed and noted that the strategy can be counterproductive.

“The theory is that the subsidies act as loss leaders, that is the cost is made up by the spending the tourist will do once they are here,” he said. But the type of tourist drawn by cheap fares and sexual adventures are not the big spenders that have created real wealth in St. Lucia and Antigua, two Caribbean destinations for big spenders, he added.

“It’s the old joke of the French Canadian tourist,” the diplomat pointed out. “He comes with a Bible and a 10-dollar bill. After a week he hasn’t cracked either one.”

In fact, except for cigars and rum there is little to spend money on here. Even the famous dollar stores do little to attract buyers since what they sell is usually available at home for equal or lower prices.

But the larger problem results from the gamble that tourism will pay large enough dividends soon enough to head off social discontent. There are signs that the government is losing the gamble.

The outsiders, here with government approval, are beginning to feel the heat. Drivers of rental cars are shouted at, and sometimes their vehicles are vandalized. Male tourists walking the beach with young Cuban women receive glares of open resentment from Cuban men.

“This is bad business,” said Ronaldo Cruz, a bartender at the Hotel Varadero Internacional. “The foreigners come here with dollars and buy what we can’t get. The women go out with them because it’s the only way they can earn money or get a decent meal.

“I work here so I should be happy. But I don’t get paid in dollars, and if you write a tip in dollars on the bill, I get it in pesos so I can’t even buy in the dollar stores.”

“No,” Cruz said, “this isn’t fair.”

Tourism in Cuba Visitors 1989: 326,000 1990: 340,000 1991: 424,000 1992: 492,000 1993: 595,320 * Expenditures (in millions of U.S. dollars) 1989: $250 1990: $250 1991: $287 1992: $382 1993: $466 * Source: Cubanews, Cuba’s Instituto Nacional del Turismo