Former U.S. President Jimmy Carter gave a mixed message when he spoke directly to the Cuban people on May 14.

Speaking live and uncensored on Cuban state television, Carter urged Cuba to join "the community of democracies," explained human rights as defined by the United Nations Universal Declaration of Human Rights, and revealed the existence of a petition signed by more than 11,000 Cubans that calls for a national referendum on guarantees of human rights and civil liberties.

Yet Mr. Carter also suggested the United States lift its principled embargo on trade with the regime of dictator Fidel Castro as a goodwill gesture to restore relations.

He qualified the plea by saying the embargo has not caused Cuba's economic woes, but he stopped short of identifying the real culprit-communism. He also stopped short of condemning Cuba as a sponsor of terrorism that facilitates links between this hemisphere's subversive groups and international terror organizations such as the Irish Republican Army (IRA).

And he naively accepted Castro's assurances that the regime has not engaged in biological weapons research or transferred such technology, despite statements by a former Cuban biotechnology expert that it had sold its expertise to Iran.

Leaving those issues aside, the embargo remains one of the few instruments the United States has that can promote change on the island. Critics claim it has produced no results, but then, 43 years of commercial relations between the regime and other nations around the world hasn't produced much change either. That's because commerce is possible only with the state, since private enterprise is illegal in Cuba.

More to the point, now is not the time to lift sanctions. Castro's Cuba-low on cash-finally seems to be running out of lenders as well. Soviet subsidies to the island nation dried up in 1991 with the fall of the Soviet Union. Since then, Castro has survived by purchasing on credit wherever he could. But last September, France reportedly halted $175 million in trade when Cuba failed to pay for commodities purchased in 2000, and other governments and foreign companies have frozen accounts as well.

His economy, lacking a market and free enterprise to generate income, is unable to make good on the arrears. The government's main export is sugar, but inefficient cultivation and distribution policies keep it from competing in the world market. Last year, Cuba's central bank reported a balance of payments deficit of $687 million and an overall foreign debt of $11 billion.

The U.S. embargo limits commerce with Cuba's unelected leaders, who confiscated property owned by U.S. citizens now worth about $7 billion. Those limits should remain in place until the regime enacts democratic reforms, agrees to respect human rights and releases its political prisoners. If the United States eases the sanctions, such changes definitely won't take place.

If Castro wants money, he should do the right thing: Enact democratic reforms and agree to respect human rights. Meanwhile, the United States can encourage an eventual Cuban transformation by expanding contact with Castro's captives and offering a combination of carrots and sticks to nudge the regime toward freedom of choice. To that end, the Bush Administration should:

• Support legislation that will allow U.S. citizens to give money to Cuban victims of repression, self-employed Cubans and the island's independent non-governmental organizations.
• Authorize scholarships for Cuban students to attend universities in democracies throughout the hemisphere.
• Promote U.S. and multilateral microenterprise credits for independent, self-employed Cubans and independent Cuban businesses when they are allowed.
• Maintain "cash and carry" sales policies for food and medicine until the state permits independent enterprise and adopts free-market reforms, but expand the list of exportable goods to include farm machinery and soft goods, such as clothing and household products.
• Permit joint U.S.-Cuban ventures, and ease U.S. travel restrictions when Cuba provides market access, ends state monopolies and enacts labor reforms. U.S. companies should be able to employ whoever they wish, and Cubans should be able to work for anyone they please, receive fair market compensation, form their own unions and purchase the goods and services their employers provide.
  

Former President Carter was right to tell Cubans their country is isolated without true democracy and human rights. But lifting the trade embargo will remove the only incentive Castro has to reform. Instead, the United States should cultivate closer relations with ordinary Cubans, support those struggling for freedom and prod the dictatorship to loosen its grip.

Stephen Johnson is policy analyst for Latin America at The Heritage Foundation (www.heritage.org), a Washington-based public policy research institute.