Castro to U.S.: communist Cuba will not change

Cuba's President Raul Castro (L) attends a meeting of the National Assembly next to Revolution Commander Juan Almeida in Havana August 1, 2009.

HAVANA (Reuters) - President Raul Castro said on Saturday he would not change Cuba's communist system to make peace with the United States, but repeated his willingness to discuss all issues with the island's longtime enemy.

In a speech to the Cuban National Assembly, Castro acknowledged the United States under President Barack Obama was less "aggressive" toward Cuba, but he expressed irritation with Secretary of State Hillary Clinton for saying repeatedly that Washington expected Havana to make changes in exchange for better relations.

"I have to say, with all due respect to Mrs. Clinton ... they didn't elect me president to restore capitalism in Cuba, nor to hand over the revolution," said Castro, who succeeded his brother Fidel Castro as president last year.

"I was elected to defend, maintain and continue perfecting socialism, not destroy it," he added, prompting a long standing ovation from assembly members, most of whom are members of the Communist Party.

"We are ready to talk about everything, but ... not to negotiate our political and social system," he said.

Obama has said he wants to "recast" relations with Cuba and eased the 47-year-old U.S. embargo by allowing Cuban-Americans to travel and send money freely to the island 90 miles from Key West, Florida.

His administration has reopened immigration talks with the Cuban government that were suspended by his predecessor, George W. Bush, and recently turned off a news ticker on the U.S. Interests Section in Havana that Cuba viewed as an affront.

But Obama and Clinton have said further improvements depend on Cuba making progress on human rights and political prisoners.

"It's true there has been a diminution of the aggression and anti-Cuban rhetoric on the part of the administration," Castro said.

But he noted the embargo remained in effect and the ending of restrictions on Cuban-Americans had not yet been implemented.

MORE BUDGET-CUTTING

Castro also gave the assembly more bad economic news, saying the government had cut its budget for the second time this year to confront the country's worst financial crisis since the 1990s.

He did not say how much had been cut, but said the Cuban economy, battered by the global financial crisis and three hurricanes last year, grew just 0.8 percent in the first half of 2009. He said growth of 1.7 percent was expected for the full year.

The combined economic shocks cut income from exports and forced the government to spend more on imports of food and other items, which has depleted the country's cash.

As a result, Castro said, "We've been forced to renegotiate debts, payments and other commitments with foreign entities."

The plan for next year, he said, calls for Cuba to have a "balance of payments, without deficit" and to put priority on producing products and services that bring hard currency.

The official newspaper Granma quoted Economy and Planning Minister Marino Murillo Jorge on Saturday as saying there would be more decentralization of the economy.

Castro's biggest reform since taking office has been the decentralization of decision-making in agriculture and putting more land in the hands of private farmers to increase food output.

He also has pushed for Cubans to be paid based on their production, with the aim of creating incentives for them to work harder.

Castro has also launched a fight against widespread corruption that he says is choking the Cuban economy. Before his speech, the National Assembly approved creation of the comptroller general's office, with powers to audit and control all government and economic activities.

(Editing by Peter Cooney)