It was a casual remark over a lunch of salad, fish and red wine but future historians are likely to parse and ponder every word: "The Cuban model doesn't even work for us any more."

Fidel Castro's nine-word confession, dropped into conversation with a visiting US journalist and policy analyst, undercuts half a century of thundering revolutionary certitude about Cuban socialism.

That the island's economy is a disaster is hardly news but that the micro-managing "maximum leader" would so breezily acknowledge it has astonished observers.

Towards the end of a long, relaxed lunch in Havana, Jeffrey Goldberg, a national correspondent for the Atlantic magazine, asked Castro if Cuba's economic system was still worth exporting. The reply left him dumbfounded. "Did the leader of the revolution just say, in essence, 'Never mind'?" Goldberg wrote on his blog.

The 84-year-old retired president did not elaborate but the implication, according to Julia Sweig, a Cuba expert from the Council on Foreign Relations who also attended the lunch, was that the state had too big a role in the economy.

Raúl Castro has been saying the same thing in public and private since succeeding his older brother two years ago. With infrastructure crumbling, food shortages acute and an average monthly salary of just $25 (£16), it has become apparent that near-total state control of the economy does not work.

But for Fidel to acknowledge the fact could be compared to Napoleon musing that the march on Moscow was not, on reflection, a great success.

"Frankly, I have been somewhat amazed by Fidel's new frankness," said Stephen Wilkinson, a Cuba expert at the London Metropolitan University. "This is the latest of a series of recent utterances that strike me as being indicative of a change in the old man's character."

The remark should not, however, be interpreted as a condemnation of socialism, added Wilkinson. "That is clearly not what he means, but it is an acknowledgement that the way in which the Cuban system is organised has to change. It is an implicit indication also that he has abdicated governing entirely to Raúl, who has argued this position for some time. We can now expect a lot more changes and perhaps more rapid changes as a consequence."

Raúl has said Cuba cannot blame the decades-old US embargo for all its economic ills and that serious reforms are needed. Fidel's statement could bolster the president's behind-the-scenes tussle with apparatchiks resisting change, said Sweig.

Agriculture has been a big disappointment. The lush Caribbean island of 11 million people could be a major food exporter but central planning and state-run co-operatives have produced chronic shortages, prompting an old, bitter joke that the revolution's three biggest failures are breakfast, lunch and dinner. Raúl's reforms are not going well: food production fell 7.5% in the first half of the year.

Once propped up by the Soviet Union, Cuba's lifeline is now cheap oil from Venezuela, where President Hugo Chávez considers Fidel a mentor.

Chávez swiftly followed another surprise statement of Castro's – accusing Iranian president Mahmoud Ahmadinejad of antisemitism – with an announcement that he would meet Venezuelan Jewish leaders. The move was "a direct result of Fidel's statement", according to Goldberg.

• This article was amended on 10 September. Headings on the original characterised Fidel Castro as saying that communism does not work. This has been corrected.

Marxist reforms?



The remarks about Cuban economic policy are not the only surprise statements made recently by the former Cuban leader. Others include:

• He feels responsible for the "great injustice" of the persecution of Cuban homosexuals in the 1970s.

• He laments Jewish suffering over the centuries, defends Israel's right to exist and accuses Iran's president Mahmoud Ahmadinejad of antisemitism.

• He appears to regret urging the Soviet Union to nuke the US during the 1962 missile crisis. "After I've seen what I've seen, and knowing what I know now, it wasn't worth it all."