HAVANA (Reuters) - New President Raul Castro has lifted some of Cuba's more onerous restrictions and opened cracks in one of the world's remaining state-run economies to make socialism more user-friendly.
How far the small-scale reforms will go remains anybody's guess, but in the past five weeks, Castro has introduced changes at what amounts to lightning speed by Cuban standards.
Bans on the sale of computers, DVD players and other products have been lifted, and Cubans who can afford it can now stay at tourist hotels and buy a cellphone.
Agriculture is being decentralized, farmers can decide for themselves what supplies they need and the prices paid to them are rising to boost food production.
It became clear after Cuba's revolutionary leader Fidel Castro underwent intestinal surgery in 2006 and temporarily handed over power to his brother Raul Castro that change would come to the Soviet-style economy.
The younger Castro unleashed a Cuban version of Soviet "glasnost" by ordering the official media to investigate social and economic problems, demanding that bureaucrats tell the truth, calling on Cubans to be more critical and fostering a grass-roots debate on the country's ills.
With Fidel Castro too ill to return to power, the 76-year-old Raul Castro formally took over as president on February 24, becoming Cuba's first new leader in half a century, and immediately promised to lift excessive regulations.
Unlike the "special period" of the 1990s, when the collapse of the Soviet Union, Cuba's former benefactor, forced Fidel Castro to introduce limited free-market reforms to confront dire economic hardship, Cuba is not currently being pushed into reform by economic circumstances.
"The situation is very different from the crisis of the 1990s," a Cuban economist said.
"Fidel is no longer leading the country, we are in better financial shape, we have never had so much support from Latin American governments and Raul is a no-nonsense manager," he said, asking not to be identified, like others interviewed.
HOW FAR WILL REFORMS GO?
The biggest question for foreign analysts and Cubans alike is just how far Raul Castro's reforms will go.
For decades, he was seen as a communist hardliner but in recent years he has shown a softer side and developed a reputation as a pragmatist who believes that Cuban socialism needs to reform to survive.
"This is just the beginning. Decentralization and more individual initiative will slowly spread from agriculture to the entire economy, it's inevitable," said another local economist, adding for now that this would strengthen, not weaken the Communist Party and state.
Domingo Amuchastegui, a former Cuban intelligence officer who defected to Miami in 1994, said much the same thing.
"Survival and continuity will depend on the ability to reshape the system, safeguarding its basic social achievements but transforming the economics into a more market oriented and democratic system," he said.
Cuban officials insist that Fidel Castro, 81, who has not been seen in public since his surgery in July 2006, is fully consulted on important decisions and in a recent written message he endorsed Raul Castro's policies.
Some experts and Cubans have their doubts.
"It is highly unlikely that Fidel Castro would have approved such a wide-ranging series of moves if he had remained in power," said Dan Erikson of the Inter-American Dialogue think-tank in Washington.
EYE ON THE PESO
A major public complaint that Raul Castro's government will need to deal with is that state wages paid in Cuban pesos are too low, while many consumer goods have to be paid for in convertible pesos, or CUCs, worth 24 times more than pesos.
About 60 percent of Cubans have access to some hard currency from cash remittances sent by relatives abroad, mainly in the United States, or through factory and farm bonuses and tips from foreign tourists.
A class of "new rich" Cubans that has developed over the last 15 years will be the first to benefit from access to seaside hotels, computers and cellphone lines that cost $120, or six times the average monthly wage.
"The government is recognizing that around 15 percent of the population has 85 percent of the pesos in the banks," said one of the Cuban economists.
"It is tempting the new rich -- from farmers to black market dealers -- to exchange their pesos for CUCs to buy goods, and thus reduce the pesos in circulation and strengthen the currency and wages of everyone," he said, adding increased food production had the same strategic aim.
(Editing by Michael Christie and Kieran Murray)
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