Cuba's Castro warns world economy may slow reform

HAVANA (Reuters) - Cuban President Raul Castro moved todampen rising expectations on Friday, warning that globaleconomic problems may slow increases in worker pay, one of thekey economic reforms he has proposed since taking office.

In a speech to the first National Assembly meeting since itelected him to succeed ailing brother Fidel Castro in February,Castro said he wanted to move faster to improve the daily livesof Cubans but that rising prices and a slowing economy forcedhim to be realistic.

Castro, 77, has raised hopes for change by taking steps tomodernize Cuba's state-run economy that included removingsalary caps and increasing economic incentives for workers tobe more productive.

Earning more money is viewed as an urgent need by mostCubans, who receive several social benefits, but on averageearn less than $20 (10 pounds) a day.

Castro said "the salary problem" was being studied andwould be addressed "gradually and according to priorities" butthat quick action may not be possible.

"It will depend on the economic situation of the country,inevitably linked to crisis in the world today, which couldworsen," he said. "It wouldn't be ethical to create falseexpectations.

"We would like to go more rapidly, but it's necessary toact realistically," he said.

Castro's reforms have included decentralization ofagriculture to increase food production, allowing Cubans to buycell phones and computers and opening up tourist facilitiespreviously off-limits to Cubans.

He sat next to an empty chair reserved for Fidel Castro,who has not appeared in public since he provisionally cededpower to his brother after intestinal surgery for anundisclosed illness in July 2006.

Fidel Castro, 81, took power in a 1959 revolution andremains a deputy in the National Assembly, which keeps hischair open, awaiting his return.

BELT-TIGHTENING

Raul Castro's speech was preceded this week by NationalAssembly meetings in which government officials warned thatbelt-tightening would be needed due to rising prices for fueland imports.

They also said the government would decentralize a saggingconstruction sector to make it more efficient and considerraising the retirement age to help Cuba cope with an agingpopulation.

The proposal would gradually raise the retirement age to 65from 60 for men and to 60 from 55 for women, but is notexpected to be approved until the assembly meets again inDecember.

Castro, who wore a traditional white guayabera shirt toaddress the assembly, said the change was needed to maintainthe work force as Cuba ages.

Forecasts "indicate that in 2025, there will be 770,000fewer citizens of working age than there are now," he said.

He also reiterated the need for agriculture reform, whichwould include letting private farmers work more land.

The amount of land under cultivation in Cuba had dropped 33percent between 1998 and 2007, Castro said.

Castro has taken a more conciliatory tone toward the UnitedStates than his brother, even offering in speeches to talk withthe country that has maintained a trade embargo against Cubasince 1962.

But on Friday, he accused the United States of subvertingthe changes he had pushed and adding to Cuba's woes.

"The enemy," he said, "is doing everything possible toincrease the difficulties, with the absurd hope of bringing usto our knees."

(Additional reporting by Rosa Tania Valdes; Editing by JeffFranks and Editing by Peter Cooney)

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