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Raul Castro unveils economic reform

Raul Castro has said his government will scale back controls on small businesses, lay off unnecessary workers and allow more self-employment - significant steps in a country where the state dominates nearly every facet of the economy.

Cuba's president, however, squashed notions of a sweeping overhaul to the country's communist economic system in response to the financial crisis it faces.

"With experience accumulated in more than 55 years of revolutionary struggle, it doesn't seem like we're doing too badly, nor that desperation or frustration have been our companions along the way," the president said.

Mr Castro spoke before parliament, which opened its biannual session without Fidel Castro, who has made a number of recent public appearances of late but missed another chance to share a major public stage with his younger brother.

Instead, politicians got Raul, who said authorities will "update the Cuban economic model", suggesting reforms could be on the horizon.

Cuban officials plan to reduce state control of small businesses, authorise more Cubans to become self-employed and build a new tax structure that will compel state employees to contribute more.

About 95% of all Cubans currently work for the government and Mr Castro suggested that as many as one in five state employees are redundant.

He promised job cuts, calling for "the reduction of work forces that are considerably bloated in the state sector".

Mr Castro said those left out of work would be retrained or reassigned so as not to stay unemployed, but also warned that few sectors would be immune to job-cuts.

While he offered no specifics, his comments on economic and employment reform could mean a lot in Cuba, where many had hoped the government of Raul Castro could embrace small economic openings after he took power from his brother, first temporarily, then permanently, in July 2006.

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