BY NANCY SAN MARTIN
 nsanmartin@herald.com

 Just as it was starting to pull out of a ``special period'' of austerity that has lasted some 10 years, Cuba is facing an economic setback that officials attribute to the Sept.
 11 terrorist attacks in the United States.

 The Cuban peso is at its lowest level in relation to the U.S. dollar in five years, the tourism industry is lagging and fewer Cuban Americans are visiting or sending money
 to relatives on the island.

 The net result: An already ailing economy is further at risk.

 President Fidel Castro, pointing specifically to the terrorist attacks, already is warning of hard times ahead. ``We must be prepared,'' Castro said during a speech this
 week in Santiago de Cuba. ``Logically, some sacrifices will come.''

 Tourism has taken a hit worldwide, but Cuba is particularly vulnerable because it has relied on the industry as an important source of foreign exchange, said Evaldo A.
 Cabarrouy, an economist at the University of Puerto Rico in Rio Piedras with an expertise in Cuba.

 ``There was already a slowdown in the world economy,'' Cabarrouy said. ``The terrorist attacks accelerated the slowdown.''

 For those on the island, the economic decline would most affect those with no access to U.S. dollars.

 Over the past five years, the exchange rate has remained relatively stable and Cubans have been able to trade pesos for dollars legally at government-operated currency
 houses. But this week the peso dropped from 23 to 26 to $1 and Cubans learned they could no longer buy dollars with their pesos at the exchange offices known by the
 acronym CADECA.

 ``It's not a big deal percentage-wise,'' said María Dolores Espino, an economist at St. Thomas University, referring to the decline of the peso. ``But there is a problem. It's
 an indication that there's already an economic impact being felt. There are fewer dollars coming in.''

 At least 20 of 225 hotels on the island have closed, according to Tourism Minister Ibrahim Ferradaz. Also, he has announced, a third of the 36,000 hotel rooms are
 vacant.

 Other signs of economic woes can be seen at stores that sell products for U.S. dollars, which have reported a decrease in sales. Fewer people also are treating
 themselves to relatively inexpensive meals at privately-owned restaurants known as paladares, according to reports by the Washington-based U.S.-Cuba Trade and
 Economic Council, Inc.

 The fact that Cubans are spending less money is the strongest indicator that less is available. An estimated 60 percent of the population relies on remittances from
 relatives in the United States.

 While the setback is painful, the economy is still far from having to contend with a crisis of the same magnitude as the one it faced following the collapse of the Soviet
 Union that brought an end to subsidized commodities. At the height of the era, known as the `special period,' the exchange rate was 60 pesos to $1.

 Nor is Cuba alone in facing economic decline. Elsewhere in the Caribbean, many islands also earn most of their foreign currency from tourism.

 Once tourists stopped traveling following the Sept. 11 attacks, hotels, restaurants and other businesses began laying off maids, bartenders and other workers. Taxi
 drivers saw their earnings plummet.

 In Jamaica, for example, the national carrier Air Jamaica reported losses of $4 million the week after air routes to the United States were cut off.

 One possible source of relief for Cuba was suddenly cut off Thursday when the U.S. Congress scuttled a plan by a small group of legislators to lift the federal
 government's travel ban to Cuba.

 Sidestepping a fight with the White House, negotiators from the House and the Senate agreed to omit language from a spending bill that would have blocked the Treasury
 Department from spending to enforce restrictions on U.S. citizens wanting to travel to Cuba.

 In July, the House voted 240-186 to stop enforcement of the travel restrictions.

 But the White House notified key legislators earlier this month that President Bush might veto the entire spending bill if the amendment on Cuba travel was not stricken
 from the final version.

 Continental Airlines, however, offered a glimmer of hope for a rebound with its announcement Thursday that it is dedicating an aircraft to provide 20 additional weekly
 charter flights to Cuba.

 The flights aboard the Boeing 737 that are to begin Nov. 1 will originate primarily from Miami. The flights are limited to those who can legally travel to Cuba, including
 journalists, academics and relatives of Cubans on the island.

 ``Right now the market is pretty flat because of the terrorist attacks but we're expecting it will come back,'' said said Thomas L. Cooper, president of Continental
 Connection, operated by Gulfstream International Airlines Inc.

 Staff writers Yves Colon and Tim Johnson contributed to this report, which was supplemented with information from the Associated Press.
 
 
 
 

                                    © 2001 The Miami Herald and wire service sources. All Rights Reserved.