CORRECTED - Cuba says will ease state's role in economy

Sun Aug 1, 2010 2:42pm EDT

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(Drops references to Murillo giving speech to National Assembly)

* Cuban minister: Cuba "updating" not reforming economy

* State "doesn't have to be in charge of everything"

* Says no to markets, private property, market socialism

By Nelson Acosta

HAVANA, Aug 1 (Reuters) - The Cuban government plans to reduce its role in small businesses, but continue to direct a centralized economy that eschews markets and private property, a Cuban official said on Sunday.

Economy Minister Marino Murillo said the communist-led island is "updating," not reforming its fragile economy and does not plan to copy the market socialism of China or Vietnam.

"We are of the opinion that today the state has a group of activities it must get out of. The state doesn't have to be in charge of everything," he told reporters at a meeting of the National Assembly.

"The state has to be in charge of the economy, of the most important things," Murillo said.

He cited the example of small barber shops, where barbers have been allowed for several months to lease their chairs and charge their own prices, within limits, instead of having the state run the entire enterprise.

That kind of change "must be extended to other services," Murillo said.

Cuba has been in the grips of an economic crisis the past two years that has forced it to cut imports, freeze the Cuban bank accounts of foreign businesses on the island and hold off on paying its bills.

Murillo said the Cuban government is looking at ways to modernize the island's economy, but that "one cannot speak of reform."

"It's an updating of the economic model where the economic categories of socialism, not the market, will take priority," he said.

"It lightens a group of things of the economic model, but we are not going to hand over property," Murillo said.

The government, which controls 90 percent of the economy, owns most things on the Caribbean island.

EXPECTATIONS OF CHANGE

When Raul Castro replaced older brother Fidel Castro as president in 2008, there were expectations of change in one of the world's last communist economies.

Many thought that Raul Castro was less of a communist ideologue than his brother and would move toward opening the economy as communist-run China and Vietnam have done.

Many Cubans have said they are anxious for changes that will allow them to make more money.

They receive social benefits such as free medical care and subsidized food rations, but the average monthly salary is equivalent to $18.

Raul Castro, 79, has tweaked the system with such things as allowing barbers and taxi drivers to function more like small businesses, but thus far avoided major changes.

When asked by reporters about the possibility Chinese or Vietnamese-style changes, Murillo said, "I think the Cuban model is a very Cuban model. We cannot copy what many people in the world do."

"We can't forget that the most powerful country in the world is our enemy," he said, referring to the United States.

The United States and Cuba have had hostile relations since the 1959 Cuban revolution that put Fidel Castro in power and transformed the island into a communist state.

The United States has maintained a trade embargo against Cuba for 48 years, which the Cuban government blames for many of its economic woes.

Raul Castro was set to speak later in the day to the National Assembly session.

Fidel Castro, 83, is a member of the assembly, but did not attend Sunday's session. His chair, which is next to his brothers, has been empty since he fell ill in July 2006.

(Editing by Jeff Franks and Eric Beech)

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