Cuban President Raul Castro made the strongest statement yet that the island nation is preparing for a post-Castro era in announcing yesterday that he will step down in five years with plans to institute term limits.

He also replaced his No. 2 with a younger Cuban who would be poised to rule if something were to befell Mr. Castro before his second term ends in five years – the first time the nation would be led by someone who did not directly fight in the 1959 Cuban revolution.

Castro himself told lawmakers the nation was at a moment of “historic transcendence.”

But while a monumental announcement internally, it does not necessarily imply that a vastly different Cuba awaits in 2018 – one of capitalism and free elections, for example. And the generational transition underway faces several risks as Cuba inches forward with reforms to save its economy, says William LeoGrande, a Cuba expert at American University.

“One risk is that it fails, that resistance from... party bureaucrats prevents the government from carrying out reform,” he says. “The other is that the reforms will work but they create both winners and losers, that they’ll intensify economic inequality and undermine the social safety network that Cuba has been so proud of.”

Raul Castro, who temporarily took over from his ailing brother Fidel Castro in 2006 and permanently two years later, has long been considered the more practical of the Castro brothers. In just under seven years he has already ushered in historic change, introducing a legalized real estate market, an end to travel restrictions, and more permissions for private businesses.

He had long said he was committed to generational change in top leadership but his words were never followed by action.The Castro brothers have preserved legitimacy in Cuba for several reasons, including free healthcare and education for all. But much of it came from the direct role that government officials played in the successful revolution that overthrew a US-backed regime that was widely unpopular.

On Sunday, however, Castro hinted that a non-Cold War figure will soon lead the nation, replacing Jose Ramon Machado Ventura with Miguel Diaz-Canel, aged 52, as his number 2.

Term limits

On Sunday he said that he would like to establish two consecutive term limits with age limits for leaders, including presidents. In doing so, he would set the first example, in contrast to his brother, who held onto power for nearly 50 years.

Yet while it’s a direct break with the Fidel Castro government, it does so in the name of preserving the old system, which Raul Castro reiterated on Sunday. "I was not chosen to be president to restore capitalism to Cuba," he said. "I was elected to defend, maintain, and continue to perfect socialism, not destroy it."

“He is slowly but continuously rolling out his version of a new Cuba, which is half continuity with the past and half breaking with past,” says Ted Henken, president of the Association for the Study of the Cuban Economy. That means that he is forging forward with change, but in a way that “protects the top-down control and authoritarian nature of the regime,” Mr. Henken, also a professor at Baruch College at The City University of New York, says. “This is the first sign of a real of generational transfer. But it doesn’t mean at all that there will be a transition.”

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That’s because the changes announced are not the result of grassroots work but a hand-picked succession in an authoritarian context. At any time, any member of the younger generation could be reined in for not aligning closely enough with the revolution, says Henken. “This is the older generation methodically and thoughtfully choosing people they can then trust with their revolution,” he says.

Still, a new generation is likely to be more open to change, particularly economic reform but also administrative and political reform. “They are going to be pragmatic, maybe more pragmatic than some of the older generation,” says Mr. LeoGrande. “They have a better sense of some of the problems the country faces because they’ve grown up with them.”