BY RON HOWELL
 Newsday

 SANTIAGO DE CUBA, Cuba -- As foreigners flock to this island to lounge on beaches, stroll through museums or look for romance, increasing numbers of Cubans are renting rooms to the visitors, earning Yankee dollars and testing the waters of capitalism.

 ``It's not going to make us rich, but we're certainly better off than we were before,'' said one experimental capitalist, Wiltse Escalona, 37. He and his business partner -- his mother, María -- are among the relatively few Cubans who earn a living as cuenta propistas, or, literally, ``people who work on their own account.''

 Seven years after Cuban leader Fidel Castro opened new opportunities for people to work on their own, the cuenta propistas  remain at the margin of Cuba's economy, and say they labor under pressure and harassment from the authorities.

 Even as Escalona and others go into the room-rental business, private restaurateurs say officials sometimes force them to close as the government tries to eliminate
 competition with state-operated restaurants.

 ECONOMIC ANTIDOTE

 Cuba is one of the last bastions of communism, and its government is not inclined to allow a wholesale expansion of private enterprise. But in the early 1990s -- after the breakup of Cuba's patron, the Soviet Union, plunged the country into an economic depression -- Castro's government scrambled to revive the economy, in part by letting more people work for themselves.

 It allowed people to work independently in many fields -- for example, as plumbers, chauffeurs, restaurateurs and by renting rooms.

 Two other changes led to the explosion of room rentals in Cuba: One was the official policy, in the past decade, of aggressively promoting tourism. The other was the 1993 decree that allowed Cubans to possess American dollars.

 This year, 2 million tourists are expected to visit Cuba -- notably, beach resorts such as Varadero and historic cities like Havana and Santiago, the birthplace of the Cuban revolution. That is twice the total of five years ago, and the tourism boom has Cubans looking at their homes and seeing U.S. greenbacks.

 For Escalona and his mother, the chance to rent rooms for dollars has changed their lives. At their spacious two-story home, in a quiet area called Vista Alegre, or Happy View, they charge $20 a night for each of the two bedrooms they rent out.

 After paying almost half their earnings in taxes, they keep a profit of about $3,000 a year -- roughly 20 times what Escalona used to earn as a geological engineer.

 Between 1998 and 1999 -- the last years for which official figures are available -- the number of cuenta propistas  increased by 4.1 percent, to about 150,000.

 GOVERNMENT PRESSURE

 The number of cuenta propistas  is staying limited partly because of pressures from the government, according to U.S. analysts. In its four decades, according to a report on Cuba last year in the U.S. quarterly Studies in Comparative International Development, ``[Castro's] revolution has vacillated between periods of toleration for small enterprise (generally, in periods of poor economic performance) and strict ideological repudiation of anything that smacks of capitalism.''

 In a television interview last month, Economy Minister Jose Luis Rodriguez reflected the government's mixed sentiments about the capitalists on the fringes of its
 economy.

 ``We believe there's no reason for the self-employed sector not to exist, if it follows certain regulations,'' he said. ``But we don't stimulate it because we don't think it's the solution to our economic problems.''

 In Santiago, a tourist destination on Cuba's southeastern coast, a government crackdown on private restaurants -- called paladares  -- forced many to close or to go
 underground, relying on street hustlers to steer tourists their way.

 ENTERPRISING FAMILIES

 The rush to open a family enterprise and earn dollars is evident everywhere in Santiago, as in Havana. But it is especially notable among those who were able to acquire their own homes or apartments in the years since the 1959 revolution.

 Nereyda, a 56-year-old former seamstress who asked that her family name not be used, is one of them. A year ago, helped by her working children, she put together $500 to install air conditioning, a hot-water fixture for the shower and a sofa. She moved in with relatives and began renting out her two-bedroom, ninth-floor apartment to foreigners.

 Nereyda charges her tenants $300 a month. Of that, $123, or about 41 percent, goes to the state, which also gets a tax surcharge of about $100 at the end of the year, she said.

 Still, she has been able to retire comfortably on the income. ``I'm not thinking at all about capitalism,'' Nereyda said. ``But this is better than my work as a seamstress, where I sat down at a machine all day. I saw my chance to earn some dollars and live more comfortably, and I decided to take that chance.''

                                    © 2001