By DOUG BANDOW

                   HAVANA -- Roberto Alarcon, well-dressed but of unexceptional
                   appearance, is thought to be the No. 3 man in Cuba, after only
                   Fidel and Raul Castro. He lazily sprawled in his chair before eight
                   American journalists, fondling his cigar.

                   Asked about Havana's willingness to negotiate with the United
                   States over its embargo against his country, Alarcon said there's
                   "no reason to consider negotiating a failing policy."

                   And failing it is. For more than four decades the U.S. has
                   unsuccessfully attempted to isolate Cuba's communist regime. Fidel
                   Castro burst onto the international stage in 1959 by deposing the
                   corrupt Fulgencio Batista and turning Cuba into a Soviet outpost.
                   The U.S. responded with a botched invasion by Cuban emigres
                   and an economic embargo.

                   But the Cuban economy was buoyed by Soviet subsidies. When
                   the Soviet Union collapsed a decade ago, American supporters of
                   the embargo promised that Castro's time had come.

                   For instance, in February 1992, Jorge Mas Canosa of the Cuban
                   American National Foundation declared, "The economy is going to
                   collapse by the summertime."

                   Two years later Heritage Foundation analyst John P. Sweeney
                   announced that Castro's "final collapse may be closer than ever
                   before."

                   Alas, Castro is still in power. So the embargo's advocates now say
                   they hope to limit Havana's resources.

                   Yet tens of thousands of Cuban-Americans visit Cuba annually and
                   even more send an estimated $700 million in remittances to
                   relatives in Cuba every year. The Cuban-American community
                   violates the rules imposed on everyone else.

                   While the embargo may deny the Castro regime some dollars,
                   Elizardo Sanchez, head of the Cuban Commission on Human
                   Rights and National Reconciliation, complains that it "gives the
                   government a good alibi to justify the failure of the totalitarian
                   model in Cuba." Ambassador Vicki Huddleston, head of the U.S.
                   Interests Section (America's quasi-embassy) in Havana, agrees:
                   "Castro has found the embargo to be convenient to him," since he
                   "uses it very effectively all the time, making us the Goliath and Cuba
                   the David."

                   Of course, as Sanchez, who has spent more than eight years in
                   Castro's prisons, explains, the nation's economic problems are due
                   not to the embargo, but to "the impact of totalitarian measures" by a
                   regime that is "repressive and inefficient."

                   Brutal collectivism has frozen this entrepreneurial people in the
                   1950s. Unfortunately, the embargo, supported by no one else,
                   does limit the potentially destabilizing impact of U.S. visitors and
                   investors.

                   Although American business is not in Cuba, American dollars are.
                   Around Havana's tourist hotels Cubans sidle up to foreigners
                   promoting "paladares," or private restaurants, offering purloined
                   cigars and begging for a handout.

                   Cubans can shop at stores where everything from food to stoves is
                   priced in dollars. When asked about such blatant inequality,
                   Alarcon responded that the situation is fairer than a decade ago,
                   when it was illegal for anyone to hold dollars -- though some did so
                   anyway. But the growing pervasiveness of the dollar, to which up
                   to 60 percent of Cubans have some access, has created a
                   widespread awareness that the Cuban economy combines poverty
                   with inequality.

                   With human rights activists and independent journalists spreading
                   across the island, American trade, investment and travel would
                   pose an even greater challenge to Castro's government. For this
                   reason Sanchez and most other dissidents advocate lifting
                   sanctions.

                   Of course, he admits, in the short term money brought to Cuba that
                   ends up in Castro's hands "will be used for repression."
                   Nevertheless, "it would be more fruitful over the long term if people
                   from democratic states came to Cuba."

                   In fact, because of the inevitably destabilizing influence of American
                   engagement, Sanchez suggests "that the Cuban government really
                   doesn't want the embargo to be lifted." Some U.S. officials
                   privately share Sanchez's view.

                   One speculates that the Castro government believes it "can risk the
                   lifting of the travel ban," but doesn't want the end of "the whole
                   thing." In this way, it can "prop up the economy with little risk."

                   Making the political scene even more volatile is the nervous wait for
                   75-year-old Castro to pass from the scene. None of his potential
                   successors possesses his outsize reputation and admitted charisma.

                   Communism is no longer a serious intellectual or geopolitical force.
                   Even its practitioners seem dissatisfied: Alarcon terms unlikely "a
                   return to the type of socialism represented by the Soviet Union."

                   Still, he doesn't offer the alternative of freedom, which is what the
                   people of Cuba desperately need. And it is something which the
                   U.S. cannot impose on Cuba.

                   But Washington would better encourage liberty by lifting its
                   counterproductive embargo. Sanctions have failed. It is time to see
                   if Havana can cope with the demands of its own people as they
                   increasingly taste the fruit of participating in the global marketplace.

                   Doug Bandow is a senior fellow at the Cato Institute and the
                   author of "Tripwire: Korea and U.S. Foreign Policy in a
                   Changed World."