Cuban official nixes Russian and Chinese reforms

[El Presidente]

HAVANA, Aug 30 - 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.