Fidel's growing apptite: as the U.S. embargo erodes, Cuba imports growing amounts of U.S. food. Can the island nation afford it? (Trade Lanes).

If a smoker in Boston logs onto a Web site in Bermuda and uses PayPal software licensed to a server in Panama to buy cigars made in Cuba, is that a crime?

According to the U.S. Treasury Department, the answer is yes. The bigger question is: In an age of fake Internet names and anonymous connections, can it be enforced? Cyberspace has solved many of the logistical problems by offering "stateless transactions" which, while probably illegal, are nearly impossible to prosecute.

The e-merchants are on the front lines of the fraying 40-year-old U.S. embargo on trade with Cuba. Alongside them are Minnesota Gov. Jesse Ventura, two Jersey dairy cows from Illinois and a few big pigs from North Carolina that were among the entourage of 180 U.S. companies expected to land in Havana at the end of September to sell food and medicine on a cash basis. Commodities giant Archer Midland Daniels, sponsor of the agricultural fair, and food producers like it salivate, too, over the promise of fat deals, especially if the ban on U.S. financing of Cuban purchases is lifted.

Cuba's total food imports of approximately US$1 billion a year are relatively modest, but growing. Alimport, the state-run buyer of foodstuffs, has purchased $106 million in agricultural and food products from U.S. companies since December 2001. It expects to exceed $165 million in purchases by the end of 2002 and projects that purchases could be $250 million or more in 2003.

The port of Havana is hopping with cargo. It handled 123,000 twenty-foot equivalent units in 1999 when U.S. government lifted its ban on the sale of food and medicines, a figure that more than doubled to 270,000 in 2001. Crowley Maritime was the first carrier to resume direct service between the island and the United States.

Not all of this cargo is in-bound. The U.S. ban on buying Cuban goods, especially its much-coveted cigars, is also eroding. U.S. President Kennedy--an avid fan of Habanos himself--put that law in place in 1963 when he classified Cuba as an official enemy of the United States. Today, Cuba is still the enemy, its cigars contraband, yet anyone with an Internet connection can order them by the case.

Cigarboxbermuda.com based in Hamilton, Bermuda, specializes in Cuban cigars purchased "under license from the Cuban authorities." While the site states that it makes no guarantees that the cigars will arrive to the United States, it does emphasize that "all information you provide will be processed and maintained in our Web server and internal systems located within Bermuda." The company has a variety of shipping options, including "Don't Ship Original Box."

"I am just somebody setting up an e-commerce site. I can't get involved in politics," says David Thompson. co-owner of cigarboxbermuda.com. He says he has customers from dozens of countries, all of which permit Cuban cigars except the United States. "I don't see myself as an embargo breaker and the rest of the world shares that feeling as well," he says. "Everybody is convinced that the embargo will be lifted. The question is when."

Cash hungry. The Bush administration has vowed to maintain the embargo until Fidel Castro leaves power and democracy is restored. Assistant Secretary of State for the Western Hemisphere Otto Reich has warned U.S. companies that the Cuban government may stiff them on payment.

Reich may have a point. The Cuban economy contracted 3% in 2001. according to the U.N. Economic Commission on Latin America and the Caribbean (Eclac). In July, the government closed half of the island's aging sugar mills. Tourism, the main hard-currency earner, has plummeted since the Sept. 11, 2001 terrorist attacks. One third of the island's 36.000 hotel rooms are now closed for "remodeling."

A burgeoning current account deficit is however, the main concern. The gap has increased from $462 million in 1999 to $758 million in 2001. according to Eclac. The official exchange remains fixed at one Cuban peso to the U.S. greenback, even as the unofficial rate has soared to 26 pesos to the dollar.

The government's reserves are propped up by remittances from the United States, which have never been easier to send, thanks to the Internet. In addition to legal transactions between Cuban relatives in the United States who are permitted to send cash, several Canadian financial services companies allow for online wire transfers using credit cards, which are routed out of the United States and then to Cuba.

The easing of Internet connections to the island has many people wondering how long the embargo can last. "Even the people in the [United] States that support the embargo are sending money and goods to their family," says Havana lawyer Sebastian Berger. "It is a totally absurd situation."