Virgin Islands Still Recovering From Hurricane Marilyn : Disasters: Tourism is returning, but thousands of residents remain homeless or unemployed or both.

The cruise ships docked in the sparkling bay give the illusion of normalcy. Downtown, the streets are clean, the bargain diamond shops and liquor stores are open.

Tourism, the economic lifeblood of the U.S. Virgin Islands, is trickling back into this capital three months after Hurricane Marilyn. But outside the shopping district, thousands are homeless, unemployed or both, coping without power and telephones.

“It’s rough and tough right now,” said George Smith, a fisherman whose hillside home overlooking Red Hook Bay was destroyed by the Sept. 15 storm. “Sometimes I get a bit on the angry side, but I try to overcome it.”

Marilyn’s 110-mph winds caused about $2 billion in damage to the islands of St. Croix, St. John and St. Thomas. It severely damaged or destroyed 85% of the homes on St. Thomas, population 51,000.

The federal response was swift. An airlift delivered nearly 3 million pounds of drinking water, meals and supplies; military and police agencies cleared the streets of debris and enforced a dusk-to-dawn curfew.

But long-term recovery aid is still in the pipeline.

More than 26,000 people have applied for federal disaster housing aid, 17,000 for emergency grants and 29,000 for business loans. So far, the government has issued just 9,000 checks for housing, 2,000 for family grants and 3,000 for businesses.

Time after time, those checks do not cover actual damages, Gov. Roy L. Schneider complains. After Hurricane Hugo smashed the islands in 1989, property insurance rates soared, putting insurance out of reach of many home and business owners who now depend entirely on federal aid to rebuild.

“Now that the immediate disaster has gone, things are not moving along as they ought to. People here are really, really frustrated,” Schneider said. “I have asked the federal agencies to take a good look at what is happening and come up with some solutions.”

While the exact number of homeless is unavailable, hundreds of families on St. Thomas have been forced to move in with neighbors, friends and relatives. Others use temporary shelters.

The government plans to build temporary housing for 300 families on the east end of the island. Construction would take two months. For many, that is too long.

“In someone else’s home you have to tread softly,” said Smith’s wife, Iris, who with their two children moved into a neighbor’s house.

“We are a strong people and we are coping, but if it stays much longer like this then I don’t know how long this cable can hold,” she said.

Defending their response, federal officials say more than $12 million in housing aid and $52 million in business loans have been disbursed. Millions more are being processed.

“Overall we feel things are moving along on track,” said Denise Norman, spokeswoman for the Small Business Administration. “Initially, it was difficult getting to the properties to verify losses” because of the scale of destruction, she said.

Signs of that destruction are disappearing, although the full restoration of telephones and other services is months away.

Charlotte Amalie’s streets, once choked with snapped utility poles, smashed cars, corrugated steel roofs and even yachts blown in from the harbor, have been cleared. The hills stripped bare by Marilyn’s winds are green again. Come nightfall, calypso music and conversation fill streets once silenced by curfew.

Most heartening to merchants and government officials alike, the cruise ships are back. One recent day, two ocean liners unloaded about 3,000 tourists for a few hours of strolling and shopping downtown.

Getting the tourists to stay is another matter. No more than 60% of St. Thomas’ hotel rooms were to be ready by the mid-December start of the high season.

At stake is a $1-billion-a-year tourism industry that employs 85% of islanders. The hurricane could cost the government as much as $100 million in tax revenues, Schneider estimates.

Fearing that news of the storm damage is discouraging potential visitors, the Virgin Islands is promoting the quaint Dutch streets of St. Croix and St. John’s national park while St. Thomas recovers.

Officials also are studying ways to limit damage from future hurricanes, an inescapable fact of life in the Caribbean. With federal help, the Virgin Islands recently adopted a tougher building code.

“Everyone realizes we can’t continue to tap the federal treasury with the huge costs of returning time and time again to repair or replace the same structures,” said Phil Cogan, spokesman for the Federal Emergency Management Agency. “The repetitive losses have got to end.”