It had been apparent for some time that Fidel Castro's failing health would not permit him to resume the presidency. Thus his midnight-hours letter of Tuesday saying he would neither seek nor accept the office came as no surprise. After the efforts of 10 American presidents to oust him by force or economic pressures, he goes out of his own volition and under the rules of the Cuban Constitution, not under any plan of the United States.

Elections for the 614-member National Assembly had just been held, and the 31-member Council of State chosen by them. The next step today, is for the National Assembly to decide who will be the new president of the Council of State —- and thus of the nation —- and who will be the vice presidents. The most likely choice for president, obviously, is Raul Castro, who has been acting in that capacity for the past year and a half and would now formally take over the post. There has been some speculation, however, that the powers that be will surprise everyone by naming a younger man, possibly Carlos Lage, the secretary of the Council of State and senior economic manager, or Perez Roque, the foreign minister. It would indeed be a surprise.

Observers in the U.S. who have predicted dramatic consequences should Castro ever have to step down —- such as the collapse of the Cuban political system, abandonment of Communism, etc. —- are doomed to disappointment. Rather, we will see a peaceful transition and the existing system remain largely intact.

Which is not to say there will not be movement toward reforms. Raul Castro has called for a nationwide debate on the country's economic future and for Cubans to propose reforms in group discussions.

He has also called for new proposals to raise productivity, including discussion of more private ownership of land. The Cuban people want change, want reforms that will bring about a better way of life.

Already, Raul's proposals have resulted in a greater openness, and open criticism of certain government programs. How far all this can take Cuba toward a new, more efficient system remains to be seen. And there is also the question of whether even from the shadows Fidel will try to discourage reforms. The prognosis, nonetheless, is hopeful.

How will the leadership changes in Cuba affect U.S. policy? For now, almost not at all. The Bush administration has all along insisted that it will not deal with any Cuban government that includes either Fidel or Raul Castro. Indeed, its announced objective over the past several years has been to bring down the Castro government. But it has no means of doing that. The embargo is a continuing failure. Even according to CIA estimates, the Cuban economy is growing at the healthy rate of 7 percent. Military force can be excluded: the United States is too tied down in Iraq to even think of it. The Bush policy, then, will simply continue inanely down a blind alley.

Nor would a policy based on conditionality work —- one that insists Cuba meet all our conditions before we will engage. First Cuba must become a democracy, hold free elections and free all political prisoners, and only then we will talk to them? That has not worked over the past almost half-century, and it won't work now.

We want to encourage Cubans to move toward a more open political system with greater respect for the rights of individuals, yes, but that isn't the way to do it. On the contrary, the more we pressure and threaten, the more they dig in their heels. We could accomplish far more by reducing tensions and beginning a meaningful dialogue. Raul Castro has several times suggested such a dialogue. Why not take him up on it? We have disagreements, yes, but how do we resolve them without talking?

> Wayne S. Smith is a senior fellow at the Center for International Policy in Washington and was chief of the U.S. Interests Section in Havana from 1979 to 1982.