HAVANA, Cuba (Reuters) -- The euro began circulating at Cuba's leading
                 tourist resort this week, the first step toward a more extensive use of
                 Europe's common currency on the Caribbean island, official media said on
                 Friday.

                 "Stores ... three hotels and restaurants inaugurated the use of a third exchange
                 currency that will live in our country with the U.S. dollar and Cuban peso," the
                 state-run daily, Juventud Rebelde, said in a report from the Varadero resort, less
                 than 100 miles (160 km) east of Havana.

                 The euro was expected to be in full circulation by June in Varadero, which has
                 16,000 rooms.

                 The country is the target of a 40-year-old U.S. economic embargo.

                 "Introduction of the euro will make it easier and cheaper for Europeans, who are 55
                 percent of our visitors, to travel here. We hope by 2003 that the euro can be used
                 as a money of exchange at all areas in Cuba frequented by tourists," Cuban
                 Tourism Minister Ibrahim Ferradaz said last week.

                 The manager of the Melia Habana Hotel in the capital, Eric Payre, said, "except for
                 some French-Caribbean colonies like Guadeloupe and Martinique, I think Cuba is
                 the first place in the Americas where you can use euros and that should stimulate
                 European tourism."

                 Cuba -- desperate for foreign exchange after the demise of its former benefact or,
                 the Soviet Union, left it with little money to import fuel, food and other essentials --
                 authorized dollar possession and use in 1993, parallel to the country's peso
                 currency, as it set out to develop international tourism and attract dollars from
                 Cubans living abroad.

                 Dollar loved, hated

                 Inside Cuba the dollar is now the currency of choice of the population and
                 businesses, an embarrassment for Castro, who has repeatedly criticized increased
                 use of the U.S. currency in Latin America as a sign of Washington's predominance
                 in the region.

                 The euro became the money of exchange throughout most of the 15-member
                 European Union this year. The common currency was introduced as a money of
                 reserve, payment, and international trade in 1999 and has been adopted by 12 EU
                 nations.

                 In July 1999, Cuba was the first Latin American nation to make use of the euro
                 obligatory for all of the island's contract and payment transactions with EU states
                 using the currency.

                 "The euro will help to free us from the privileges and tyranny of the dollar," Castro
                 said in May 1999, addressing Latin American and European leaders at a summit in
                 Brazil.

                 Cuba's plan to allow the euro to circulate at tourist resorts, and perhaps in cities,
                 such as Havana, has sparked speculation the euro may some day replace the U.S.
                 dollar here.

                 "I am sure the government would love to get rid of the dollar," said a Cuban
                 economist who asked not to be identified.

                 "But it will not happen any time soon. The economy is very dependent on dollars
                 sent by Cubans living in the United States, around $700 million last year. Besides,
                 we want more and more Americans to visit despite the embargo's ban on most
                 travel here," he said.

                  Copyright 2002 Reuters.