Old institutions: US cars and the capitol building. Alfredo sosa – staff

Havana - A handful of Cubans are taking turns doing bicep curls and pedaling on stationary bikes. At first glance, there's nothing extraordinary about this nameless gym in the basement of a Havana apartment complex.

Yet when night falls, the machines – crafted out of wood planks and scavenged metal tubing – disappear like a government informant into the shadows. They are disassembled and tucked away to make room for the coughing Russian Ladas and '50s-era American cars that fill the building's parking lot.

Officially, this fly-by-day gym does not exist, but Guillermo Arrastia opened it five years ago. He employs a staff of three and collects monthly $5 fees from more than 100 members. It is run completely "por la izquierda" – "on the left" – a term that describes how most Cubans make ends meet. "We have to survive," says Mr. Arrastia, unapologetically.

Such gray-market microenterprises exemplify a spirit of dynamism and creativity straining to be fully unleashed, say some observers of Cuba. The question of the day: Is Raúl Castro about to release it?

The island nation's economy has struggled mightily since losing the support of the Soviet Union in the early 1990s. Free-market reforms within a socialist system, like the kind embraced by China, had been rejected by Fidel Castro, who ruled for a half century. But there are signs that younger brother Raúl, who permanently replaced Fidel in February, may orchestrate a move toward a more capitalist economy.

Raúl's reputation as a pragmatist is unfurling expectations here that the era of asceticism and austerity is coming to a close. Major agricultural reforms have been unveiled. And in a speech earlier this month, he seemed to be preparing the populace for an economic shift.

"Socialism means social justice and equality, but equality of rights, of opportunities, not of income," Raúl said on July 11 while addressing Cuba's rubber-stamp parliament in its first session since he replaced Fidel. "Equality is not egalitarianism."

It's hard to imagine the father of the 1959 revolution ever uttering such words, say Cuba analysts. And a recent flurry of headline-grabbing changes – such as allowing Cubans to patronize tourist hotels and to own cellphones, DVD players, and computers – is fueling speculation about how fast Raúl will pursue the "China model" of a managed creep toward free markets. Some expect more reforms to be announced during a speech by Raúl on July 26, Revolution Day.

"Cuba is never going to go as far as the Chinese have in dismantling the social safety net," says William LeoGrande, a Cuba expert at American University in Washington. But he says that Raúl has already exhibited an expediency that Fidel never dared: acknowledging under-the-table wages, raising salaries and enticing productivity with payment, and, most important, he says, introducing market incentives in the farming sector that could be the starting gun for reforms in other sectors.

"To some extent, they are experimenting to see how additional market mechanisms work out economically and to see the political ramifications," he says. "I think there are a lot more changes coming."

After the Soviet Union collapsed – and Cuba lost generous oil supplies and subsidies that had buoyed the economy for decades – a "special period" of economic hardship ensued. In this context, Fidel grudgingly loosened the economy, giving rise to a new crop of tailors, mechanics, and restaurateurs. The government created about 150 categories of licenses for Cubans to start their own businesses, and the ranks of self-employed swelled to 200,000.

Today that number has fallen to 150,000, says Antonio Jorge, a retired economics professor from Florida International University who also worked as a finance official in the early years of Fidel's reign. Fidel began to discourage such businesses the late 1990s, saying that they were creating economic inequality, says Mr. Jorge. A gap was growing between entrepreneurial haves and state-employed have-nots.

In response, the government stopped issuing new licenses for 40 categories of businesses (including restaurants) in 2004, jacked up taxes, and created other limits on income growth, such as reducing the number of tables permitted at paladares – private restaurants that Cubans are allowed to run out of their homes.

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