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ANALYSIS - Raul Castro's army could drive reform in Cuba

The rise of army generals to top political posts under Cuba's new leader Raul Castro does not signal iron-fisted rule but rather the key role the army will play as a motor for economic change.

General Julio Casas Regueiro attends a meeting of Cuba's National Assembly in Havana February 24, 2008. The rise of army generals to top political posts under Cuba's new leader Raul Castro does not signal iron-fisted rule but rather the key role the army will play as a motor for economic change. (REUTERS/Claudia Daut)

The army has over the last two decades moved from fighting wars in Africa to become Cuba's most efficient institution with a big stake in the economy through a network of profitable businesses, and experts say it can serve as a model of reform.

Raul Castro, 76, succeeded his ailing, 81-year-old brother Fidel Castro on Sunday and faces the challenge of delivering a better standard of living to Cuba's 11 million people.

His first step was to promote loyal and aging generals to the top ranks of Cuba's top governing body, the Council of State, including the chairman of the holding company that presides over military-run industries.

Military historian Hal Klepak said Raul Castro wants to reform the economy, but without departing from the socialist state built by his brother after their 1959 revolution.

The younger Castro is following Machiavelli's recommendation to rulers to surround themselves with loyalists before embarking on the risky path of change, he said.

The promotions could help Raul Castro convince hardliners in the ruling Communist Party that it is possible to reform the economy without losing control or triggering a political collapse like the one that brought down the Soviet Union.

"The army's job is to show everyone that this will not go out of control," Klepak said. "Who else is going to do it? The party can't. Only the army can tell the dinosaurs, 'Guess what? This will not be a Tiananmen Square and it will not be Eastern Europe either,'" he said.

Cubans earn on average a scant $15 a month and many are looking to Raul Castro to improve living standards.

Cuban economists say that cannot happen until productivity rises through a more efficient and disciplined economy. They expect minor tweaks to the economy, not sweeping free market reforms like those implemented by China's communist leaders.


Maj. Gen. Julio Casas Regueiro, 72, was named defense minister and one of the five second-tier vice presidents of the Council of State. And two three-star generals, Army Chief of Staff Alvaro Lopez Miera and Western Army Chief Leopoldo Lopez Cintra, were also named to the 31-member Council.

As deputy defense minister, Casas Regueiro built up a vast holding company called GAESA that manages profitable enterprises in agriculture, retail shopping and the lucrative tourism industry, owning dozens of hotels, an airline and marinas as well as bus and rent-a-car companies.

GAESA accounts for 25 percent of Cuban economic output and roughly the same proportion of all its foreign currency earnings, experts and foreign businessmen in Havana estimate.

"Casas Regueiro is one of the most trusted Raulistas. The same applies to Lopez Miera. These guys are Raulistas to the end," said Frank Mora, a Cuba watcher and professor at the National War College in Washington.

Mora said the promotions do not, however, signal a larger political role for army generals than they already have.

"They will likely continue taking the lead in the economic reforms that may come. They were already doing this, but the reforms will be more consistent," he said.

Under Regueiro, the army was first to introduce capitalist business and accounting practices in Cuba's socialist economy, importing textbooks in English and sending officers to foreign universities to get MBAs.

Casas Regueiro, a graying general who moves about in a chauffeur-driven Russian-made Lada, was the architect of the "perfeccionamiento empresarial" (enterprise enhancement) program to make state companies efficient and profitable.

"He might be old, but he is an essential figure, a man who has been at Raul's side for all things related to reform, and also utterly loyal," Klepak said.

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