Well-maintained cars like these are now private reserves of wealth for their owners. Photo: Ben Osborn for Mercy Corps

Starting today, Cubans can buy and sell property for the first time in over 50 years. Yet while most are excited to escape the cage of government restrictions, others fear being kicked out in the cold.

Many Cubans haven't paid for rent, health care or education since 1959, when Fidel Castro seized power and began nationalizing private property in one of the staunchest socialist experiments in world history. While the results were far from perfect, many of Cuba’s poorest undeniably benefited.

During the heyday of the Revolution, most Cubans had job security and guaranteed food rations. The Cuban government tinkered with novel programs and ideas, and where those programs failed, the Soviet Union often stepped in, checkbook in hand, to balance the books. While Cuba severely limited its citizens’ rights and freedoms, it also ensured a basic economic safety net below which no Cuban would fall. For the most part, success was more a function of loyalty to the government than it was a measure of personal skills. This is the government that many older Cubans identify with.

But after decades of stuttering progress, the fall of the Soviet Union brought an end to the heavily subsidized years of Cuban socialism, and a so-called “Special Period” of austerity began. For most young Cubans, these years of recession and stagnation are all they know of the Castro regime.

So the reforms of the past five years are evoking mixed emotions among Cubans. The loosening restrictions on property and trade will finally allow a burgeoning entrepreneurial class to openly improve their lives. Cubans can now buy and sell homes and cars, private businesses can be established, and skilled workers can offer their services freelance. These reforms are part of an effort by the government to wean its bloated public sector off of government assistance and flood the private sector with cash.

Suddenly, Cubans can earn more on their own initiative. As the New York Times reports, the iconic and ancient cars that sputter through Havana can be traded or sold, transforming old clunkers into a private reserve of wealth.

But as Cubans are given their own paddles to navigate capitalism, some fear the loss of the government life jacket. "What happens if I sell my home and then I can’t find another one to buy? Where do I sleep?” laments Félix Méndez, a 47-year-old hospital technician quoted in the New York Times.

Another risk inherent to the reforms is a widening rift between the richest and poorest Cubans. People can now sell their homes and move elsewhere. This newfound mobility is expected to lead to segregation, as wealthier Cubans (and their money) leave poorer neighborhoods in search of better living. "Thousands of Cubans have been waiting for this signal, like runners crouched at the starting line waiting for the gun to go off,” writes Yoani Sánchez, a prominent Cuban dissident blogger. When the gun goes off, existing inequality will likely be increased as money is drained from some neighborhoods without the government around to replenish it.

Spectators on both sides of the ideological aisle call the reforms necessary. Capitalism's enthusiasts see the changes as inevitable; the end of an anachronism. Those farther to the left view the reforms as necessary concessions amidst tough times; concessions to ensure the survival and restoration of one the few remaining self-proclaimed socialist regimes in the world.

As Ms. Sánchez writes, “a house, for 40 years an anchor, will become a set of wings.” It remains to be seen, though, who will sink and who will fly.

Ben Osborn is a 2011 graduate of Lewis & Clark College in Portland, Oregon. Read his other contributions to Global Envision.

A fruit vendor in the informal Cuban market. Once illegal, such activity is becoming accepted and taxed by the Cuban government. Mark Rowland (flickr)

As the Cuban economy is liberalized, budding entrepreneurs are competing with more than just each other. Their biggest competitor may be the Cuban government.

Last year the Cuban government announced it would gradually lay off over one million of its employees as part of a move to wean the population from the services and payrolls of cash-strapped socialist government. The government hopes to reduce costs and increase revenue by taxing the newly privatized businesses formed after it flooded the private sector with workers.

As reported by NPR, new business are springing up across the country. Most are competing with each other. Many are competing with the state. Until recently, most services were offered by state-run agencies that faced little competition and thus little incentive to evolve and improve.

Cuban entrepreneurs are taking advantage of this stagnation by offering goods and services at lower prices than do traditional government agencies. If the entrepreneurs are successful, Cuba will come to rely more on its markets and less on its government.

Now that Cuba's free market is rolling, it may prove harder for the government to slow the free market's momentum than it was for entrepreneurs to start it.

Economic reform in Cuba could lead to less government control over small businesses, like taxi services. Photo: raunov (flickr)

The Cuban government recently announced that it plans to lay off about 500,000 employees over the next seven months. This may signal the start of economic reforms that would privatize small parts of the centrally planned Cuban economy, writes the Economist.

In a speech announcing the government's decision, Cuba's only official labor union, the Cuban Workers Federation, said that the layoffs are motivated by a desire to curb inefficiency caused by cushy government jobs. As quoted in a story by NPR, the union says:

"Our state cannot and should not continue supporting businesses, production entities and services with inflated payrolls, and losses that hurt our economy are ultimately counterproductive, creating bad habits and distorting worker conduct."

But in a country where Time Magazine estimates that the government employs about 90 percent of the labor force, where will 500,000 suddenly jobless people find work?

According to Reuters, the government plans to legalize self-employment in 178 different fields, ranging from restaurant ownership to transportation to construction. Small businesses will also be able to hire their own workers for the first time since 1968, when small businesses were nationalized. An article in the Economist says that the reforms will also let employees take control of some small state-owned businesses.

These reforms are meant to reinvigorate Cuba's stagnating socialist economy by mixing in tiny bits of capitalism. This tactic has been successful in both China and Vietnam, where communist leaders control mostly privatized economies. However, the New York Times suggests that the Cuban government might not want to overhaul the system the way China and Vietnam have:

The plan announced so far is much more modest than what the Asian countries have done. Instead, it seems designed simply to boost Cuba’s economic productivity in small-scale enterprises and thus loosen up a state-run economy and work force that have been sputtering for more than a decade.

U.S. experts on Cuba disagree on how effective the reforms will be. The University of Miami's Jaime Suchlicki told the Wall Street Journal that "there is no private sector" to absorb laid-off workers. But in the same article, Philip Peters of free-market think tank Lexington Institute said it depends on how committed the Cuban government is to true reform. "If they carry this thing out fully," said Peters, "it will vastly improve the welfare of thousands of families."

Earlier this month, Obama began taking the first small yet significant steps to implementing a different relationship with the island by signing new measures into law. These new measures will allow Cuban-Americans to send more money to family members and travel more freely between the U.S. and Cuba.

Since 2004, travel to Cuba under the Bush administration was limited to once every three years for Cuban-Americans, with visits limited to only nuclear family and no longer than 14 days. Remittances were also only allowed to be sent to nuclear family and limited to $300 every three months.

In contrast, the new measures under Obama remove all restrictions on the amount and frequency of remittances and travel to the island. The changes also make it easier for telecommunications companies to do business in Cuba, which would allow quicker and easier access to the Internet for Cubans.

Cuba has been receptive to these changes. Raúl Castro has unexpectedly and publicly declared that Cuba is ready to "discuss everything" with the U.S. There are still no official plans for future talks between the two countries. Until then, the question remains of whether or not these measures will help to significantly alleviate poverty in Cuba and improve people's standard of living.

In Cuba, the mood among citizens ranges from cautiously optimistic to skeptical. An article in the St. Louis Post Dispatch profiles Cuban citizens like Ivan, a computer programmer, who expresses hope that Obama will bring about a much needed change. "Obama, to Cuban people, is our, how do you say, our hope," Ivan says. "We believe he wants to lift restrictions on Cuba. To Cubans, he is a very good presidente."

For the most part, the Cuban-American community has reacted with enthusiasm to the new measures. The Cuban American National Foundation, the leading organization for Cuban exiles in Miami, has expressed its support for a new course in U.S.-Cuba policy, calling for "a break from the past" that would "chart a new direction."

In Little Havana, a strongly Cuban neighborhood in Miami, residents seemed to welcome change in U.S.-Cuba relations. "It is stupid to have no relationship with Cuba," said a middle-aged man, identifying himself only as Alex. "It didn't work for 50 years... The way the system will change is by having a relationship."

In a country where the average salary is $20 a month, the ability to receive money from relatives abroad is likely to become an economic lifeline for thousands of people. However, with U.S. economic sanctions still in place, BBC correspondent Michael Voss thinks the remittances will have little effect:

It will give more spending power, it will allow people to buy mobile phones, possibly, you know, have a slightly better standard of living. But in terms of kick-starting the economy, I don’t think we’re going to see that at all.

Nevertheless, with Cuba's poverty level as one of the lowest in the developing world, even small improvements could make a noticeable difference. With the Obama administration now planning informal meetings with Cuban diplomats, hopefully any future change in U.S.-Cuban policy will make the Cuban people its central focus.

Farmland such as this will now be leased to farmers. Gerry Vandermaesen (flickr)

Since he was officially sworn in as Cuba's president in February, Raul Castro has been busy giving back to his constituents in ways his brother never did — allowing Cubans to hold licenses for private taxis, stay in tourist hotels and own a cell phone.

But these are primarily symbolic changes. After all, many Cubans can't afford to purchase a cell phone or pay for a night at a hotel. The average monthly wage is only $20. Two of the most recent reforms, however, are potentially dynamic: the opportunity for farmers to lease state-owned land and for workers to earn production bonuses beyond their state-set salaries.

The land reforms are a response to rising global food prices. Castro recently estimated that the country would pay an extra $1 billion in food imports — enough for him to declare the food crisis a national security threat. Cuba has plenty of empty farmland left to cultivate: half of state-owned farm land is covered with weeds, according to estimates. The idea is that giving farmers an incentive to plant some of this land should reduce the need for costly food imports.

Then there's the new system of bonuses laid out by the country's vice-minister for labor, Carlos Mateu. "Writing in the communist party newspaper Granma Mr Mateu said workers would receive a minimum 5 percent bonus for meeting targets but with no ceiling on salaries," the BBC reported. "The minister pointed out that the current wage system sapped employees' incentives to excel since everyone earned the same regardless of performance."

These are revolutionary ideas in Cuba, a socialist system built on the egalitarian ideal. Last month Raul Castro challenged the governmental mindset when he said,"egalitarianism is not convenient."

When Cuba's president speaks out against the very foundation of a 49-year-old government system, it's hard not to believe that real change is happening.

Photo: voxphoto (flickr)

In a span of just ten days, 7,400 Cubans signed new mobile phone contracts. On April 14, President Raul Castro lifted a ban restricting ordinary citizens from purchasing personal cell phones. The number of contracts is impressive, the BBC reports, considering that a cell phone in Cuba costs six times the average monthly salary.

Under Raul's brother Fidel, only government officials and people working for foreign firms were allowed to own cell phones. In addition to lifting the ban on personal cell phones, Raul Castro has lifted restrictions on DVDs, car rentals and other goods.

What more changes in Raul Castro's Cuba lie ahead?

Although Cuba's new leader says he will continue to run the country under a socialist framework, economic changes may soon be underway.

According to The Economist:

In his speech, Raúl also gave broad hints of economic changes. He recalled a commitment by Fidel in 2005 gradually to revalue the peso. Since many prices are set in hard currency, that is essential if wages are to rise above their average of $20 a month. This would take time, he said, but would involve moving away from the state-run rationing system and taking more account of wages and prices. That amounts to a move towards market mechanisms. And he praised decentralisation.

Some predict that Cuba will try to mimic progress made in Vietnam in Cuba by embracing markets while still adhering to the concept of socialism. This would be a substantial change for Cuban economic policy.

Fidel has resigned, but a Castro still rules over Cuba. What are the differences between Fidel Castro and his brother Raul, and what will these differences mean for a post-Fidel Cuba? While there is a general consensus that Fidel's official resignation is unlikely to bring substantial political and economic change in Cuba in the near future, there have been indications that Raul may follow the "Chinese model" and gradually open up the Cuban economy while maintaining strict political control.

Many Cubans say Raúl will have no option but to give Cubans more leeway, economically if not politically. “People here say they are fidelistas, but not necessarily socialistas,” said an analyst in Havana, who asked to remain anonymous. Without Fidel, “Raúl will have to renegotiate an agreement with the Cuban people”.

Raúl is hardly likely to jettison half-a-century of socialist reforms and throw the country open to foreign capital, as Russia did in the 1990s. But he has hinted that he wishes to gradually open up the system, acknowledging the “excessive number of prohibitions” in Cuba and starting a national debate about the shortcomings of the regime.