Raul Castro offers reforms, talks with U.S.

By Esteban Israel

CAMAGUEY, Cuba (Reuters) - Cuba's acting president Raul Castro asserted his leadership on Thursday a year after his ailing brother Fidel handed over power, by promising economic reforms and offering talks with the United States once the Bush administration is gone.

He said in a speech that Washington had kept up efforts to undermine Cuba since Fidel Castro was sidelined by life-threatening surgery last July. He expressed hope that the next U.S. administration would dump a failed policy.

"If the next U.S. government puts arrogance aside and decides to talk in a civilized fashion, that is welcome. If not, we are prepared to continue facing their hostile policy for another 50 years," he said during a Revolution Day holiday speech.

The U.S. State Department and a leading dissident brushed off the comments by saying Castro needed more dialogue with his own people, who live under communist rule.

Some 100,000 government supporters, many in red T-shirts, chanted "Raul, Raul, Raul" as they waved Cuban flags during Castro's speech.

He said 80-year-old Fidel Castro, who has not appeared in public for a year, was increasingly active in an advisory role and writing editorials.

But Raul Castro's one-hour speech left no doubt that he is in charge for now.

He said salaries were too low -- a major complaint by Cubans -- and called for critical and constructive debate to rid Cuba's 90-percent state-owned economy of bureaucratic inefficiencies.

"Pay is clearly insufficient to cover people's needs," he said.

Castro, 76, is considered more pragmatic than his ideologically-driven brother. Cuba must produce more food and cut its dependence on imports, and deep reforms of agriculture are on their way, he said.

Castro said Cuba plans to allow more foreign investment more than a decade after it opened up to foreign capital and tourism to help dig the economy out of severe crisis.

INSPIRES OPTIMISM

He warned that reforms and results will take time. But his speech encouraged Cubans who have faced hardships since the Soviet Union collapsed in 1991.

"I feel more optimistic. He spoke of bread-and-butter issues, like everyone's right to drink milk," said Ismael Rodriguez, who watched the speech on television in Havana.

Fidel Castro's revolution ousted a U.S. backed dictator in 1959 and turned Cuba into a Soviet ally and led to almost half a century of hostility with Washington.