Can Cuba reforms convince island's cynics?

HAVANA — The lot in teeming Central Havana used to be the neighborhood eyesore: The shattered ruins of an abandoned building was a breeding ground for mosquitoes and rats, then it was cleared in favor of a dreary parking lot and government-run food stand.

Today, it is home for independent sellers hawking brightly colored clothing, wristbands and earrings as salsa music booms and a line of bicycle taxi drivers forms at the gate to wait for fares.

This week's announcement establishing a real estate market for the first time in 50 years comes just a month after a similar opening for vehicles, and newly empowered entrepreneurs speak excitedly of the changes.

"I've been an independent worker two times, once before in the 1990s," said Andres Lambreto Diaz, a 38-year-old clothing seller at the Central Havana bazaar who has seen earlier free-market openings abruptly slammed shut when Fidel Castro reversed course. "I think this time it's for real."

Many of the reforms merely acknowledge what had long been black-market realities, and they still fall short of the fundamental free-market transformations seen in other communist countries such as Vietnam and China. But collectively, the changes have loosened the government's iron grip over all aspects of the economy.

"This is one of the most visible economic reforms, with a direct impact on Cuban lives," said Arturo Lopez-Levy, a Cuban-born economist who teaches at the University of Denver.

A little over a year has passed since the government declared that many more people would be allowed to go into business for themselves and even hire employees.

The housing and automobile laws have come on schedule, but some announced changes have been delayed, most notably a plan to eliminate 500,000 government jobs, extend bank credits and allow for mid-sized cooperative companies.

Other reforms that were floated are still just ideas, such as proposals to relax travel restrictions and create a system of credit for private businesses. And there has been little visible progress on a wholesale market to supply entrepreneurs, though officials said from the beginning that would take years.

Officials have shown some sensitivity to popular feedback, modifying the tax code to make things easier for new entrepreneurs and repeatedly changing laws to help new private restaurants be more profitable.

That kind of flexibility has been rare during Cuba's half-century-long embrace of Marxist theory.

Agricultural reform in the 1960s redistributed land from huge farms to medium-size ones and it enjoyed moderate success before being abandoned by the government, said economist Rafael Romeu, head of the Washington-based Association for the Study of the Cuban Economy.

In the 1980s a six-year experiment with private farmers markets was scrapped, as Fidel Castro complained that unscrupulous middlemen were buying up the food and reselling at higher prices.

Castro grudgingly allowed independent workers to begin doing business for themselves after the collapse of the Soviet Union brought Cuba to the brink of economic ruin, then taxed and regulated them nearly into extinction in the late 1990s when the worst of the crisis was over.

But Fidel is no longer in charge. His brother Raul Castro has repeatedly said that while he has no intention of scrapping Cuba's socialist model, there's no turning back from his reforms.

Analysts say the changes so far do not do enough. For example, the housing law's immediate aim is to help redistribute existing homes, allowing big families crammed into tiny apartments to move into larger spaces now occupied by just a few people.

Without significant improvements in investment, supplies of construction materials and incentive to make money, it's not clear there will be much new construction to solve Cuba's underlying problem: a housing deficit estimated at between 500,000 to 1.6 million units on an island of 11 million people.

"So far there hasn't been an all-embracing change in philosophy by the government in Cuba. What they're doing is really tinkering with sectors," said Paul Hare, a lecturer in international relations at Boston University who was British ambassador to Cuba in 2001-2004.

The 80-year-old Raul Castro is walking a tightrope, eager to reform the country before it is too late, but cautious to not move so fast that the state loses control over the process, as happened in the Soviet Union and other Soviet Bloc nations. He has said repeatedly that Cuba will change "without pause, but without haste."

Nonetheless, several Cuba observers said that once started, reforms tend to snowball and could spill beyond the realm of pure economics.

"The liberalization of these markets will ignite new demands for reforms," Lopez-Levy said. "In the long run, the question will be: How long can the economic genie be out of the bottle without people asking for more substantive political reform?"

Bio: Peter Orsi is a correspondent for the Associated Press. AP writer Andrea Rodriguez contributed to this report.