American Notes SAN FRANCISCO

On his visit to Washington, Soviet Leader Mikhail Gorbachev extolled his reforms, known as perestroika, or restructuring. Leave it to a pair of American capitalists to take his words to heart. San Francisco Businessman John Lee Hudson and his wife Shana, who lost $30,000 trying to market an Ollie North doll after the Iran-contra hearings, plan to convert their leftover inventory into the likeness of the Soviet leader.

The foot-tall doll will retail for $19.95, Hudson says, but the make-over cannot be finished in time for Christmas. In the South Korean factory where the unsold Ollies languish, workers will refit the doll with a new Gorbachev head, complete with the famous wine-stain birthmark on the scalp. The Marine uniform will be replaced by a stylish Italian suit. The clothes will be be padded to mimic the Soviet leader's bulky physique. From the neck down, the plastic Gorbachev is actually a knockoff of Ken, the Barbie doll's popular boyfriend.