Sail through the streets of Havana in a 1950s Buick, chrome fins gleaming, gaudy bodywork rattling along the gutter, waves crashing across the broad boulevard of the Malecon and you could almost believe you were a bit part in a Graham Greene novel, with all the seedy glamour blended with corruption that this sun-drenched city had to offer.

Fifty years on, Havana still retains a wonderful sense of adventure. Its shaded alleyways teem with street life, music drifts across the squares in exotic rhythms, the bars are lazily decadent with the swirl of cigar smoke and the shake of rum cocktails, and all this against a backdrop of faded 18th century Spanish mansions whose crumbling facades echo with colonial grandeur. But there's something else as well. What makes the place particularly exciting is the total absence of the usual trappings of international capitalism - no adverts, no neon signs, no McDonalds, no blast of video messages at every corner - just people and scavenging dogs and laughter and music.

Cuba is, after all, one of the last socialist countries in the world. More than that, it has managed to survive in a world which has steadily turned its back on the communist ideal. And survived successfully without resorting to the repressive restrictions which have made life unbearable in what elsewhere have become rigid totalitarian states. What other socialist country would be best known for a film, “Buena Vista Social Club”, about traditional musicians playing sultry, seductive music .

Cuba's achievement has been to steadily adapt its socialist principles to an era which has clearly moved on since Lenin proclaimed the Russian Revolution. When the Soviet Union collapsed in 1990, Cuba didn't just throw its hands in the air and look for another benefactor. It turned to tourism to help shore up the lost income, carefully tailoring its development to make certain that the country benefited, not just the Spanish and other foreign entrepreneurs whose expertise was needed to make the project work.

Over two million people a year now visit Cuba for a holiday. It's easy to get caught up in the propaganda. The forever youthful image of Che Guevara, complete with jaunty beret, gleaming eyes and neat moustache, looks down from every billboard. The guerrilla fighter and “father of the revolution”, whose intellectual skills helped create a new Cuban society, is still revered in public above Fidel Castro. This is a country which claims to be in perpetual revolution, constantly looking for new ways in which to put its egalitarian ideals into practice. There are problems, of course: it's not easy for Cubans to travel outside the country, there is still a lot of poverty, and there is an obvious conflict between those who do or don't have access to the US dollars which flow in through every tourist's pocket.

But then other facts speak for themselves. The enormous investment in education means that Cuba has a literacy rate (96%) which is the envy of virtually any other country in the world. Despite the shortages of equipment and medicines, its free and comprehensive health service has helped raise life expectancy from 55 to 75 over the past forty years. Cuba's infant mortality rate is better than in Washington DC. In all the time we were on the island we heard nobody articulate any serious criticisms of the system. Passing strangers call each other "comrade" without any evidence of cowed resignation. Which of course is why the Castro regime is so hated by the superpower whose coast lies just 120 miles away across the Caribbean. The last thing the United States wants is to have an example of a socialist country on its doorsteps that actually works. And there are plenty of ex-Cubans living in the US happy to chorus that it doesn't.

If even half the anecdotes are accurate, the US has done more than simply ban all trade with its close neighbour ever since the revolution of the 1960s. Stories abound of planes being sent over to spray crops with diseases, of bug-ridden seeds smuggled into the country to wreck the vital Cuban harvest. The things which Cuba most wants to import, but can't, are medicines, clothes and a wide range of food products it doesn't manufacture itself. The embargo doesn't just affect America, but US-owned companies operating anywhere in the world. Cuba also can't export its valuable sugar and tobacco crops, the latter mainly in the form of cigars. If a ship unloads at a Cuban port, it is banned from docking at a US destination for a further 180 days.

After 35 years, the Cubans feel justified in arguing that it's time the blockade was lifted. For a time it looked as though President Clinton might be moving in that direction, but then the "Elian" case erupted, and nothing happened. The US is meanwhile obdurately isolated on the issue. At the last United Nations vote, only three countries supported the continuing blockade - the US, Israel and the Marshall Islands, the last effectively a US protectorate in the Pacific.

Cynics assume that when Castro goes, either by retirement or death, Cuba will disintegrate and tumble into the Western fold. On Cuban national television he certainly now looks frail and old, although his rhetorical skills appear as strong as ever. Well into his 70s, he still makes public speeches of several hours in length.

I went to Cuba because I deliberately wanted to see the country before the Castro era had ended. But at an international solidarity congress, coincidentally being held in Havana, we heard his likely successor, the present foreign minister, Felipe Perez Roque, deliver a speech with none of the tired rhetoric of a communist hack. This was the confident voice of a new generation which has learned the lessons of the revolution, but also realises that the country will have to live with a world economy dominated by capitalist values. Perez Roque, who looks to be in his forties, is not alone. The average age of deputies in the national parliament is now 43.

My gut feeling is that the Cuban system has enough resilience to withstand the loss of Castro. It has already shown that it can incorporate a dose of Western capitalism through the tourist trade and not lose its way. But one thing is certain - it won't be able to work as long as its big brother to the north refuses to allow it the breathing space to show that there are new, more liberal ways to make socialism happen in the 21st century.