Cuban official nixes Russian and Chinese reforms

Cuban official nixes Russian and Chinese reforms
Thu Aug 30, 2007 2:02 PM ET

By Marc Frank

HAVANA, Aug 30 (Reuters) - Cuban Vice President Carlos Lage squashed
speculation that Communist Cuba is heading toward Chinese-style reforms
of its economy, in a speech to state managers published on Thursday.

Cuba will not follow the paths of other Communist-run nations, such as
China and Vietnam where capitalist markets have flourished, and said
Perestroika reforms failed in the former Soviet Union.

"The countries that are working to build socialism today in different
parts of the world, are doing so in political and economic situations
very different from ours," said Lage, who heads Cuba's cabinet of ministers.

"Their successes and failures should enrich our efforts, but the
building of socialism in Cuba is only possible as a result of our own
experience," Lage said in the speech printed by the Communist Party
newspaper Granma.

Since Cuban leader Fidel Castro took ill over a year ago many foreign
observers have speculated that his younger brother and stand-in as
acting president, Defense Minister Raul Castro, favored the Chinese
model of market socialism.

Raul Castro has fostered a unprecedented debate within the Communist
Party over how to improve economic performance, but has yet to launch
any major changes in one of the world's most centralized economies,
which is 90 percent state-owned.

Many Cuba experts attribute this to Fidel Castro's survival and his
continued presence in the country through essays and newspaper columns,
even though he has not appeared in public for 13 months.

"Raul Castro's style is different -- no long speeches, no middle-of-the
night meetings, open criticism of economic performance, and demands for
results. But he is respecting his interim role. As a result his policy
preferences won't be known until Fidel leaves the scene," said Phil
Peters, of the Lexington Institute in Virginia.

MILITARY DESIGNED SYSTEM FAVORED

Some Cuban economists believe that the state should hold on to large
enterprises and utilities, but some light industries, agriculture and
the retail sector should be in the hands of private cooperatives or
small-scale individual businesses.

Lage, who is 55 and viewed as a possible future president, said Cuba
would follow a business management system introduced by the armed forces
two decades ago to cope with the economic crisis that followed the
collapse of the Soviet Union without resorting to private property and
markets.

Lage said profits, wages and productivity had increased in the 800
companies that are applying management methods known as
"perfeccionamiento empresarial" or perfecting the state system of 3,000
enterprises.

"The companies applying perfeccionamiento, being 28 percent of all
companies with 20 percent of sales, account for 51 percent of all
profits, 72 percent of foreign exchange earnings and are 50 percent more
productive," Lage said, failing to mention many were joint ventures with
foreign companies.

Cuba's economy is now on a better footing than it was when the armed
forces -- under Raul Castro -- first introduced the modern management
methods to boost their revenues.

Revenues are relatively strong due to the export of medical and other
services, mainly to Venezuela, high nickel prices, soft Chinese credits
and preferentially financed Venezuelan oil.

Nevertheless, Cuba has run into problems investing the revenues through
its state-run companies and the economy suffers from chronic
disorganization, poor accounting, low quality, lax discipline and graft.
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