Center for International Policy

Friday, July 27, 2007; A14

Cuba's Call for Economic Detente
Raúl Castro Hits Capitalist Notes While Placating Hard-Line Party Loyalists

By Manuel Roig-Franzia
Washington Post Foreign Service

CAMAGUEY, Cuba, July 26 -- As one of history's longest-serving political understudies, Raúl Castro often struggled to persuade his all-powerful brother Fidel Castro to open Cuba's moribund economy to more foreign investment.

But Thursday, with Fidel Castro still hidden from public view after intestinal surgery last July and his prospects of returning to power uncertain, the younger brother asserted his desire to push Cuba in a new direction. Speaking at a ceremony commemorating the start of the 54th anniversary of the Cuban revolution, Raúl Castro declared that Cuba is considering opening itself further to foreign investment, allowing business partners to provide this financially strapped nation with "capital, technology or markets."

The younger Castro's remarks, coupled with his unusual admission that the Cuban government needs to pay its vast cadres of state-employed workers more to cover basic needs, amounted to the clearest indication yet of how he might lead this island nation. Castro, who was named interim president last July 31, vowed to partner only with "serious entrepreneurs, upon well-defined legal bases."

Wearing his trademark tinted eyeglasses and military uniform, Castro, 76, struck distinctly capitalist notes before tens of thousands of flag-waving Communist Party loyalists in this central Cuban city, set amid cattle ranches 350 miles east of Havana. But he also was careful to appeal to hard-line party leaders, saying that any new business deals must "preserve the role of the state and the predominance of socialist property" and that the government would be "careful not to repeat the mistakes of the past, [which] owed to naivete or our ignorance about these partnerships."

"These statements seem to be innovative, to be carrying them toward new initiatives," Wayne Smith, an analyst at the Center for International Policy and a former chief of the U.S. Interests Section in Havana, said in an interview from his Washington office. "The Cuban people, who have been waiting for some indication that there is going to be a change, will really welcome this."

Fidel Castro's absence from the commemoration, an annual event honoring the quixotic attack on the Moncada Barracks that launched Cuba's revolution, added to the intrigue surrounding one of the singular political figures of the 20th century. Thursday marked one year since Castro's last public appearances, during speeches commemorating the Cuban revolution, in Bayamo and Holguin.

At the time, "we could hardly expect what a hard blow was awaiting us," Raúl Castro said in the opening line of his address.

Five days after Fidel Castro's speeches last July 26, the Cuban government made the startling announcement that he had undergone emergency surgery and was relinquishing power, for the first time, to his brother.

In recent months, Fidel Castro, who turns 81 next month, has seemed more active, receiving foreign dignitaries and writing more than two dozen sharply worded editorials. He has appeared weak and frail in several recorded television segments, though his supporters, most notably Venezuelan President Hugo Chávez, have insisted for months that he is improving.

Raúl Castro, who made a low-key entrance Thursday while the audience was distracted by a dance troupe, acknowledged that "these have truly been very difficult months." But there has been "a diametrically different impact to that expected by our enemies, who were wishing for chaos to entrench and for Cuban socialism to collapse," he said.

The crowd formed a sea of red as participants streamed away from the event in Camaguey's Plaza de la Revolucion Agramonte, many chanting "Viva Fidel."

"It would have been great to see him today," Angel Morel, 56, a Camaguey dairy manager, said after the speech. "But the commander in chief is sick, and he needs time to recover."

Although Cubans seem to have accepted Raúl Castro's legitimacy, his brother's absence has been unsettling to many, who had grown accustomed to his four-hour speeches and impromptu neighborhood visits.

It is almost certain that Fidel Castro continues to wield great influence, but it is equally clear that Cubans are preparing themselves emotionally for life without him. In some respects, this past year has unspooled like a dry run for the post-Fidel era and for his certain evolution into a historic symbol, a la Ernesto "Che" Guevara, the revolutionary figure whose legend has grown dramatically in the decades since his death.

"Che is more active now than he ever was," renowned Cuban poet Pablo Armando Fernández said in an interview. "Fidel will always live in the minds of Cubans. He is electric -- like a messiah."

Fidel Castro is widely considered to have been an impediment to efforts by his brother and other political figures to bring more businesses to Cuba, where hundreds of miles of spectacular coastline are a developer's dream. Cuba's economy finally opened in the 1990s, after the economic crisis provoked by the collapse of the Soviet Union, which had heavily subsidized the brothers' rule. Faced with a starving populace that was grilling banana peels and eating house cats to survive, Fidel Castro relented, allowing tourism businesses, which are administered by generals under Raúl Castro's command.

The Spanish hotel giant Sol Melia built beach resorts and Havana hotels, while other European and Canadian firms also established footholds. Top-line Havana hotel rooms now go for $250 a night or more in a city where workers are paid about $30 a month. U.S. companies are prohibited from doing business in Cuba because of a four-decade-long embargo.

Foreign investment plateaued as Cuba's economy improved early this century. Raúl Castro, friends say, was unable to persuade his brother to further open the economy. But Thursday's remarks could signal that Raúl Castro has consolidated power enough to continue advancing his agenda. It is also likely that any investment would come from Cuban allies such as Venezuela and China.

On Thursday, Raúl Castro even suggested that Cuba's sworn enemy, the United States, might play a role in his new Cuba. He looked forward to the 2008 U.S. presidential election and the end of what he called President Bush's "erratic and dangerous administration."

"The new administration," he told the crowd, "will have to decide whether it will maintain the absurd, illegal and failed policy against Cuba or if it will accept the olive branch that we offered" in December.

Castro condemned the United States for using "corn, soy and other food products" to produce fuel, saying prices for those food staples were sure to rise. But he also leveled withering criticism at his countrymen for "absurd inefficiencies" in food production that force Cuba to import food and promised unspecified "structural changes."

When it came time to say goodbye, Raúl Castro, a plodding speaker with none of his brother's rhetorical flourishes, returned to Cuba's one sure applause line: "Long live the revolution! Long live Fidel!"

© 2007 The Washington Post Company