WHEN ON JULY 31st 2006 Cuban state television broadcast a terse statement from Fidel Castro to say that he had to undergo emergency surgery and was temporarily handing over to his brother, Raúl (pictured with Fidel, left), it felt like the end of an era. The man who had dominated every aspect of life on the island for almost half a century seemed to be on his way out. In the event Fidel survived, and nothing appeared to change. Even so, that July evening marked the start of a slow but irreversible dismantling of communism (officially, “socialism”) in one of the tiny handful of countries in which it survived into the 21st century.

Raúl Castro, who formally took over as Cuba's president in February 2008 and as first secretary of the Communist Party in April 2011, is trying to revive the island's moribund economy by transferring a substantial chunk of it from state to private hands, with profound social and political implications. He has abolished a few of the many petty restrictions that pervade Cubans' lives. He has also freed around 130 political prisoners. His government has signed the UN covenants on human rights, something his brother had jibbed at for three decades. Repression has become less brutal, though two prisoners have died on hunger strikes. Cubans grumble far more openly than they used to, and academic debate has become a bit freer. But calls for democracy and free elections are still silenced. The Communist Party remains the only legal political party in Cuba. And Raúl Castro has repeatedly dashed the hopes of many Cubans that the hated exit visa, which makes it hard (and for some, impossible) to leave the country, will be scrapped.

The economic reforms, set out in 313 “guidelines” approved by a Communist Party congress in April 2011, are being implemented slowly and with great caution. That is because they face stubborn resistance from within the party and the bureaucracy. Indeed, the leadership shuns the word “reform”, let alone “transition”. Those terms are contaminated by the collapse of the Soviet Union, an event that still traumatises Cuba's leaders. Officially, the changes are described as an “updating” in which “non-state actors” and “co-operatives” will be promoted. But whatever the language, this means an emerging private sector.

The new president often says his aim is to “make socialism sustainable and irreversible”. The economy will continue to be based on planning, not the market, and “the concentration of property” will be prohibited, Raúl Castro insisted in a speech to the National Assembly in December 2010. He is careful not to contradict his elder brother openly: his every speech contains several reverential quotes from Fidel, who despite his semi-retirement is consulted about big decisions. (For brevity and clarity this report will refer to each Castro brother by his first name.)

Fidel's frail and ghostly presence in his compound in Siboney, a leafy enclave of mansions on Havana's western outskirts, doubtless checks the speed of reform. But he no longer controls the levers of power and rarely comments on domestic politics.

This special report will argue that whatever the intentions of Cuba's Communist leaders, they will find it impossible to prevent their island from moving to some form of capitalism. What is harder to predict is whether they will remain in control of the process of change, or whether it will lead to democracy.

No turning back this time

When the Soviet Union collapsed in 1991, many outsiders believed that communism in Cuba was doomed. Massive Soviet subsidies and military aid for Cuba had offset the economic embargo imposed by the United States in 1960. By the 1970s they had also brought stability after Fidel had all but bankrupted the island by his manic shifts from forced industrialisation back to exaggerated reliance on sugar, the economy's mainstay since colonial days. The overnight withdrawal of Soviet subsidies and trade links caused Cuba's economy to contract by 35% between 1989 and 1993 (see chart 1).

In response, Fidel declared a national emergency, dubbed “The Special Period in Peacetime”. He opened the island to foreign investment and mass tourism and legalised small family businesses and the use of the dollar. But then he found a new benefactor in Venezuela's Hugo Chávez, who began to provide Cuba with cheap oil. A big chunk of that is officially counted as a swap of oil for the services of some 20,000 Cuban doctors, sports instructors and security advisers working in Venezuela. China, too, emerged as a new source of credit. Thus bolstered, Fidel reversed course again. Many family businesses, as well as some foreign ventures, were shut down; the dollar ceased to be legal tender in 2004. The ageing leader launched “the Battle of Ideas”, sending out armies of youths as ill-trained teachers and social workers. This time, Raúl has insisted, there will be no turning back: the reforms will happen sin prisa, pero sin pausa (slowly but steadily). But Raúl is no liberal. He and Ernesto “Che” Guevara, the Argentine adventurer who died in Bolivia in 1967, were the orthodox Marxists among the leaders of Fidel's Rebel Army, the ragtag band of bearded guerrillas who toppled the corrupt, American-backed dictatorship of Fulgencio Batista. As defence minister from 1959 to 2008, Raúl set up and led Cuba's formidable armed forces. When Raúl took over from Fidel, he moved slowly at first, amid factional fighting. To general surprise, the men who lost out in 2009 were Carlos Lage, who had run the economy since the Special Period and was seen as a reformer, and Felipe Pérez Roque, the young foreign minister. They were denounced for having criticised the Castros (Mr Lage was caught on tape describing the leadership as “living fossils”) and for having been corrupted by power. Instead, José Ramón Machado Ventura, an 81-year-old Stalinist, was named as Raúl's deputy.

But Raúl also quietly discarded nearly all of Fidel's ministers and key aides. Their replacements are mostly army officers. Rafael Hernández, an academic who edits Temas, a quarterly journal attached to the culture ministry, points out that many of them are engineers by profession.