HAVANA, Cuba March 6, 2006  -- Over a thousand wealthy Cohiba lovers descended on Havana last week for the annual cigar festival.

When it comes to building foreign friendships, Cuban President Fidel Castro has often used the stogie as a secret weapon.

Castro, according to government insiders, has handed out millions of his personal brand of hand-rolled Cohiba cigars since coming to power in 1959.

"Cuban cigars are one of the most delicious hand-crafted products you can find, like good wine, but even more so because good wines are produced in many places," said Spain's ambassador to Cuba, Carlos Alonso Zaldivar. "The Cohiba is a very good ambassador. A lot of very important people enjoy them."

Cuban Diplomacy: A Box of Cohibas

Cigars were always part of Castro's carefully crafted public persona, along with his olive green military garb and beard. The rebel icon gave up smoking in 1986, but still hands out Cohibas and ships them abroad to grateful world leaders and personalities.

"I give people cigars and tell them it is poison," Castro once said. "I say: 'Smoke them if you like, but the best thing you can do with that box of cigars is give it to your enemy.'"

Castro, 79, stayed away from Havana's social event of the year. The Cuban leader doesn't wish to condone conspicuous consumption so he let his sons represent him.

Castro's five sons put in a rare public appearance at a $500-a-plate dinner Friday night. Humidors signed by Castro and filled with Cohibas and other Cuban cigar brands were auctioned off for tens, and even hundreds, of thousands of dollars for the Caribbean island's health care system.

U.S. film stars, businessmen and entertainment executives were far and few between. They used to show up in droves at the annual festival but since the Bush administration's crackdown on travel restrictions, it's become harder to fly to the sunny island south of Florida.

One Hollywood heart throb did light up the place.

Joseph Fiennes, who co-starred with Gwyneth Paltrow in the 1998 film "Shakespeare in Love," helped launch a new Cuban cigar. The "Short Churchill" is named after Winston Churchill, one of the best-known fans of Cuban cigars, along with the likes of John F. Kennedy and Jack Nicholson.

No Smoking Here

"Last year was a good year despite the extremely restrictive and unfavorable environment we had to operate in," said Manuel Garcia, vice president for sales at Habanos S.A., the exclusive distributor of Cuban cigars, referring to the world's growing number of public smoking bans.

Garcia said 2005 revenues were around $350 million, up more than $50 million from the previous year, while sales accounted for 30 percent of the premium cigar market of around 400 million units including the United States, and 70 percent of world sales excluding the United States.

Industry sources said Cuban cigar prices were on the rise, due to the perception that Cuba has overcome the quality issues that surfaced in the 1990s as the country and its tobacco industry passed through the worst of the post-Soviet crisis.

Experts say both cigar production and quality have gradually improved since the Spanish-French tobacco group Altadis bought 50 percent of the state-run company's shares in 2000.

Some 4 million genuine Cuban cigars, and a few million fakes, are consumed in the United States each year despite the trade embargo that prohibits U.S. citizens from purchasing Cuban cigars inside or outside the country, said Garcia. A Cohiba can fetch up to $100 on Wall Street.

Casas de Habanos, Cuba's franchised flag-ship retail outlets, dot the U.S.-Canadian and U.S.-Mexican borders, and can be found throughout the Caribbean. As much as 50 percent of business comes from Americans, the operators say. Countless stores in such U.S. tourist-frequented places as Cancun, Tijuana, Montreal and Nassau boast signs advertising Cuban cigars.

"I know for a fact Americans smoke Cuban cigars and very much enjoy them," said Sarah Iles, who runs a cigar store just outside of Toronto.

She added, "I know because they come into my store all the time and tell me."