By Marc Frank HAVANA, Jan 23 (Reuters) - Cuba's armed forces, which run the Communist country's most efficient companies, joined a nascent public debate on future economic policy on Tuesday and appeared to take a stance opposed to full free-market reforms. The debate, said to be prompted by acting President Raul Castro while his ailing brother Fidel Castro recovers from surgery, is aimed at finding solutions for the most glaring problems of an economy 90-percent owned by the state. Col. Amando Perez Betancourt, the head of the Cuban military's effort to make state-run companies more profitable, said profits, wages and productivity had been raised in more than 800 companies by applying methods known in Cuba as "perfeccionamiento empresarial" -- roughly translated as perfecting of the (state) company system. "If you ask me what the most important task facing the state companies is, I would say it is better organization and the way to do that is through perfecting the state company system," Perez told the Communist Party newspaper Granma. "The numbers speak for themselves," he said of the business management system introduced by the armed forces two decades ago to help the economy get through the collapse of the Soviet Union while avoiding privatization and market economics. Col. Perez's comments contrasted with those of more reform-minded Cuban economists who believe greater opportunity for private initiative is the way forward for Cuba as Fidel Castro fades slowly into the background. BETTER FOOTING Some Cuban economists believe that only by adopting China's model of a capitalist market under Communist political control, or at a minimum by decentralizing and developing private cooperatives in nonstrategic sectors, can internal production be improved. "'Perfeccionamiento empresarial' is not a free-market reform and it is not privatization. But it would benefit Cuba's economy to carry out the process fully," said Phil Peters, an expert on Cuba at the Lexington Institute in Virginia. Col. Perez said productivity at more than 800 companies under the new management system was 42.4 percent above that of other state companies and wages were 22.5 percent higher than average. Only 7 percent operated at a loss in 2006 compared with 38 percent in the economy as a whole. Cuba's economy is now on a better footing than it was when the armed forces -- under Raul Castro -- first introduced the modern management methods to boost their revenues. Revenues are relatively strong due to the export of medical and other services, mainly to Venezuela, high nickel prices, soft Chinese credits and preferentially financed Venezuelan oil. Nevertheless, the state has run into problems investing the revenues through its more than 3,000 state-run companies. The economy suffers also from chronic disorganization, poor accounting, low quality, lax discipline and graft. Raul Castro, who took over when his older brother underwent intestinal surgery in late July, has urged the official media to be more critical of state companies. He has told academics to study socialist economic problems and voiced frustration over inefficiencies. "We are tired of excuses in this revolution," Raul Castro snapped during a discussion of economic matters at a parliament session in December. "There is no question Raul wants improvements, but that does not mean he will go outside the existing system if he thinks it can work better," a Cuban economist said, asking not to be named.
