By Jeff Franks

HAVANA (Reuters) - Fidel Castro said Friday hisrecent comment that communist-led Cuba's economic model doesnot work was badly understood and that what he really meant wasthat capitalism does not work.

Castro, speaking at the University of Havana, said hiswords had been misinterpreted by his interviewer, U.S.journalist Jeffrey Goldberg of the Atlantic Monthly magazine,who quoted a U.S. analyst saying they indicated Castro nowsupports a smaller state role in the island's Soviet-styleeconomy.

Goldberg wrote in a blog on Wednesday that he asked Castro,84, if Cuba's model was still worth exporting to othercountries.

"The Cuban model doesn't even work for us anymore," Castrotold him.

Castro confirmed that he said those words "withoutbitterness or concern."

But, he said, "the reality is that my response meansexactly the opposite."

"My idea, as the whole world knows, is that the capitalistsystem now doesn't work either for the United States or theworld, driving it from crisis to crisis, which are each timemore serious."

Castro's words to Goldberg had been interpreted by some asa rejection of communism, by others as an indication that hesupports economic reforms being implemented by his youngerbrother, President Raul Castro.

President Castro, who took office in early 2008, hasintroduced modest changes aimed at increasing productivitywhile preserving the communist system installed by Fidel Castroafter he took power in a 1959 revolution.

MISSILE CRISIS

Goldberg, who interviewed Castro two weeks ago in Havana,wrote in a Tuesday blog that Castro had criticized Iran foranti-Semitism and renounced his own actions during the 1962Cuban Missile Crisis when he urged the Soviet Union to launchnuclear weapons on the United States.

"After I've seen what I've seen, and knowing what I knownow, it wasn't worth it at all," Castro told Goldberg of hisrecommendation to the Soviets.

Castro said Goldberg did not understand the irony in hiscomments and that had the U.S. threatened to invade Cuba, hewould have recommended a nuclear strike to prevent it.

The irony referred to what he described as a betrayal bySoviet leader Nikita Khrushchev, who he said gave militarysecrets to the United States while "saturated by intoxicatingsubstances."

Castro summoned Goldberg to Havana to discuss his recentarticle about the danger of conflict between Israel and Iran,with possible U.S. involvement, over Iran's growing nuclearcapabilities.

Since emerging in July from four years of seclusionfollowing intestinal surgery, Castro has repeatedly warned thatnuclear war could break out if the United States and Israel tryto enforce international sanctions against Iran for its nuclearactivities.

Despite his clarifications, Castro said he still thinksGoldberg is a "great journalist."

"He does not invent quotes. He transfers and interpretsthem," he said.

(Editing by Stacey Joyce)