LITTLE CHANGE SEEN IN CUBA DESPITE INVESTMENT LAW

LITTLE CHANGE SEEN IN CUBA DESPITE INVESTMENT LAW

Cuba's move to broaden its foreign-investment law is unlikely to result in significant policy changes from the island's communist government, analysts said.

Cuba is preparing a law that would in some cases allow for complete foreign ownership of businesses. The measure is generally designed to provide legal assurances for investors.Cuban Vice President Carlos Lage Davila, in Mexico City for a state visit this week, touted the new law as creating a "space" for foreign investors but cautioned that it was not a first step toward capitalism.

Analysts who follow events in Cuba said the law appears designed to open the state-run economy just enough to attract hard currency. President Fidel Castro lost most of his socialist allies with the disappearance of the Soviet bloc and continues to face a tough U.S. trade embargo.

"I think basically the Cuban government is taking small steps," said Peter Hakim, president of Inter-American Dialogue, a Washington-based think-tank on Latin American affairs.

There has been little indication that Mr. Castro has his sights set on a broader liberalization should the U.S. trade embargo be lifted, Mr. Hakim said.

"I'm not sure they are looking to maximize the economic benefits of their reform. There's not any indication yet that Cuba is going to an open economy," he said, adding that the Castro regime is looking "at least to survive and hoping for some economic growth."

Other analysts, like Jack Sweeney of the Heritage Foundation, a conservative think-tank, say there is little chance of structural changes in Cuba.

"I don't see the current so-called market-opening process in Cuba as a sign that Castro is changing his stripes," said Mr. Sweeney, a policy analyst on Latin American affairs.

If Cuba were serious about adopting market mechanisms it would amend the constitution to allow Cubans to employ other Cubans and own property, he said.

During debate over the foreign-investment law, Mr. Hakim said, Cuba considered letting foreign companies hire their workers directly, but it decided to continue with employment agencies that act as intermediaries. "I think what we're seeing is a process of very slow movement forward," he said.

A movement is under way in the U.S. Congress to tighten the embargo, and policy-makers in the Clinton administration and in foreign capitals must decide whether the economic openings provide a window of opportunity for change in Cuba.

On one hand, lifting the trade embargo or boosting trade with Cuba could

allow the communist regime to keep its head above water indefinitely without serious political and economic change. However, as was the case in Eastern Europe, greater economic ties with the outside world could hasten the end of the state-run economy.