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Cuba under Raúl: Creeping toward capitalism?

Since Raúl Castro took the helm in February, he's rolled out a series economic changes, including allowing Cubans to buy cellphones and giving farmers profit-incentives.

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"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.

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"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.

Jorge says that Fidel wouldn't allow anything that detracted from absolute central government control. But, he says, that Raúl could, for example, boost the number of categories of small businesses and be more liberal in the granting of licenses, or remove some of the barriers such as high taxes. "These are measures that won't affect his hold on power or change the collectivist nature of the regime, but will improve standards of living for some people," says Jorge.

But for now, the burdens Fidel imposed have merely pushed entrepreneurial activity underground.

Ani, a 20-something Cuban woman – who like most Cubans interviewed for this series withheld her last name – has opted out of the state jobs system, one that she once idealistically embraced, she says.

She was trained as a teacher in her home province Pinar del Rio, and moved to Havana to teach junior high students. But after a few years of making 200 pesos ($9) a month, she quit. "The [pay for the] job was not worth it," she says.

Now she has no official job, aside from helping her aunt rent out a room to foreign tourists, an illegal but far more lucrative venture. When asked about the loss of her contribution to society as an educator, she shrugs: "This is how it works here. What we don't have we invent."

Everything is 'on the left'

It takes no more than a half day with Jorge Aviles to see that nearly everyone in his Havana neighborhood, and in his sphere of activities, operates "on the left."

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