By JUAN O. TAMAYO
Herald Staff Writer

Cuba has denied the U.S. Coast Guard permission to enter its waters in hot
pursuit of drug smugglers but is considering other proposals to improve
counter-narcotics coordination, State Department officials said Thursday.

The announcement came as a top congressional leader requested that Cuba be
put on a U.S. list of drug transit nations that would require President Clinton to
annually certify the island's good conduct in the war on drugs.

U.S.-Cuba cooperation in narcotics interdiction has become a sensitive issue for
Washington because of the implied shift in the policy of isolating Cuba and
charges of Cuban government involvement in the drug traffic.

A senior State Department official said a meeting Monday in Havana between four
U.S. Coast Guard and State Department drug interdiction experts and their Cuban
counterparts had ended with no real progress.

The Cuban side rejected the U.S. proposal for a ``hot pursuit'' agreement, and the
U.S. side rejected a Cuban request to expand the talks beyond the Coast Guard
to other U.S. drug agencies, the official said.

Still on the table are U.S. proposals to base a Coast Guard officer and
drug-testing equipment in Havana, and to upgrade and coordinate telephone and
radio communications between U.S. and Cuban drug interdiction units, he added.
Sharing intelligence ruled out

U.S. officials told the Cubans they sought only to improve cooperation on a
case-by-case basis and would not discuss sharing narcotics intelligence or
holding joint interdiction training exercises, the official added.

Drug smugglers have been increasingly taking advantage of Cuba's meager
counter-narcotics resources and the lack of U.S.-Havana coordination to use
Cuban sea and airspace to transship narcotics bound for South Florida.

But while U.S. drug czar Barry McCaffrey argues that Cuba is trying to stop the
transshipments, Rep. Ben Gilman, chairman of the House International Relations
Committee, this week asked the State Department to put Cuba on its list of major
drug-transit countries.

Driving Gilman's request is the seizure in Colombia last December of 7.2 tons of
cocaine hidden in shipping containers bound for Havana and a joint venture
between two Spaniards and a Cuban government plastics firm to manufacture
tourist souvenirs.

Havana officials claimed the containers were to have been re-shipped to Spain.
But the DEA recently reported it was investigating whether they were headed for
Mexico, gateway for most of the cocaine in the U.S. market.
GOP lawmaker skeptical

``Until there's solid evidence this shipment was not headed for the United States,
we ought to operate on the assumption it was,'' the New York Republican told The
Herald in a telephone interview.

The shipment's destination is critical because the U.S. list of major drug transit
nations applies only to narcotics headed for the American drug market.

Adding Cuba to the list of transit countries such as Mexico and Haiti would
require the president to make a politically sensitive decision each year on whether
to certify Havana's cooperation in the war on drugs.

Critics of Cuba allege that the Havana government is itself engaged in drug
trafficking and money laundering, and cite a string of U.S. indictments of top
officials, including a Navy vice admiral, dating back to 1982.

Clinton administration officials say they have no evidence of recent high-level
Cuban involvement in narcotics smuggling. Although they don't rule out links to
low- and middle-level officials, they point out that U.S. officials continue to deal
with corruption-riddled nations such as Mexico.

``We have a real gap in interdiction when it comes to Cuba,'' said one U.S. official.
``We'd like to close it, but anything that involves cooperating with Cuba is real
sensitive because of the politics involved.''

The case of the 7.2 tons of cocaine has sparked much controversy, and not just
about the drugs' final destination.

Cocaine shipment link suspected

Colombian prosecutors interviewed by The Herald last week said they had no
evidence of involvement by any Cuban and suspect two Spaniards whose firm in
Havana was to have received the cocaine shipment.

The drugs were hidden inside false walls of shipping containers whose legal cargo
of plastic resins was to have been shipped to Artesania Caribena Poliplast y
Royo.

The firm is a joint venture between the Cuban government's plastics manufacturing
firm and Spanish businessman Jose Royo Lorca, with additional capital provided
by another Spaniard, Jose Anastasio Herrera Campos.

Royo and Herrera, now free in Spain, deny any responsibility and claim Cuba is
framing them in order to seize their business, a souvenir factory that Cuba says
generated a mere $50,000 in profits over three years.

Colombian prosecutors said they had documented 11 previous shipments to
Poliplast y Royo in which the containers were shipped from Colombia to Cuba to
Spain and back to Colombia.

Cuban officials reported most of the containers never even left the port of Havana
because Royo and Herrera would unload their resin cargoes right in the port as
soon as they arrived from Colombia. They would then pack the containers with
boxes of souvenirs, and ship them immediately to Spain.

``The drugs were never taken out of the containers in Cuba. They went right on to
Spain,'' said one of the chief prosecutors in the case.

But an investigation by staffers on Gilman's committee reported neither they nor
Spanish police had found any solid evidence of a Spanish destination for the
drugs.