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Raul Castro issues stern warning to entrepreneurs pushing boundaries of Cuba's economic reform

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Cuba's President Raul Castro, center left, with a raised fist shouts,

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Cuba's President Raul Castro, center left, with a raised fist shouts, "Long live Fidel, long live the combative spirit of Fidel, long live the Revolution," accompanied by Vice President Miguel Diaz-Canel, right, Army Corps Gen. Alvaro Lopez Miera, back right, and Cuban Armed Forces Minister Leopoldo Cintras Frias, at the close of the of a twice-annual legislative sessions, at the National Assembly in Havana, Cuba, Saturday, Dec. 21, 2013. (AP Photo/Cubadebate, Ismael Francisco)

HAVANA - President Raul Castro issued a stern warning to entrepreneurs pushing the boundaries of Cuba's economic reform, telling parliament on Saturday that "those pressuring us to move faster are moving us toward failure."

Castro has legalized small-scale, private businesses in nearly 200 fields since 2010, but has issued tighter regulations on businesses seen as going too far or competing excessively with state enterprises. In recent months, the government has banned the resale of imported hardware and clothing and cracked down on unlicensed private videogame and movie salons.

Castro threw his full weight behind such measures in an address to the biannual meeting of the communist legislature, saying "every step we take must be accompanied by the establishment of a sense of order."

"Inadequate controls by government institutions in the face of illegal activities by private businesspeople weren't resolved in a timely fashion, creating an environment of impunity and stimulating the accelerated growth of activities that were never authorized for certain occupations," Castro said.

He told lawmakers that Cuba wants better relations with the U.S. but will never give in to demands for changes to Cuba's government and economy, saying "we don't demand that the U.S. change its political or social system and we don't accept negotiations over ours."

"If we really want to move our bilateral relations forward, we'll have to learn to respect our differences," Castro said. "If not, we're ready to take another 55 years in the same situation."

Cuba blames a half-century-old U.S. embargo for strangling its economy but Castro's government has also acknowledged that it must reform the state-run economy with a gradual opening to private enterprise. Many Cubans have enthusiastically seized opportunities to make more money with their own businesses, but new entrepreneurs and outside experts alike complain that the government has been sending mixed messages about its openness to private enterprise.

The conflicting signals were apparent in Cuba's handling of the dozens of private home cinemas and video game salons that sprung up around the country this year, drawing crowds of young people willing to spend a few dollars for access to the latest home entertainment technology imported, purportedly for private use, by Cubans returning from the U.S., Canada or other countries.

The government denounced the cinemas as spreading uncultured drivel to the young, and ordered them closed last month for stretching the boundaries on the kinds of private businesses allowed under reforms instituted by Castro. Then came the backlash, with entrepreneurs bemoaning thousands of dollars in lost investment and moviegoers saying they were exasperated by heavy-handedness toward a harmless diversion. The official reaction was swift, and unprecedented.

An article in the Communist Party newspaper Granma on last month acknowledged there was wide disapproval of the ban, and hinted it was being rethought. The same Granma article also offered a full-throated defence of the ban on the reselling of imported hardware and clothes.

Castro appeared to justify all of the recent moves to clamp down on private enterprise.

"We're not ignorant of the fact that those pressuring to move faster are moving us toward failure, toward disunity, and are damaging the people's confidence and support for the construction of socialism and the independence and sovereignty of Cuba."

Several Cubans interviewed on the streets of Havana said they generally approved of Castro's speech but wanted more details on economic reforms, and a softer line toward the U.S.

"I would have liked to know exactly what pace of reform we're going to follow," said Daniel Mora, a 72-year-old retired state worker. "And he told the United States that we're ready for another 55 years of blockade, but I'm not ready for that. I'm 72 and I'd like to see the light at the end of the tunnel before I die."

Castro praised the Cold War ties between Cuba and South Africa's anti-apartheid movement but did not mention his handshake with President Barack Obama at Nelson Mandela's funeral this month.

He lamented that growth would come in at 2.7 per cent for 2013, nearly a full percentage below the predicted 3.6 per cent. He said growth for 2014 was expected to be 2.2 per cent.

It is nearly impossible to know on the true size of Cuba's economy because Cuba uses two currencies, a convertible peso for tourists that's pegged to the U.S. dollar and a Cuban peso worth about 4 cents, and the government doesn't clearly distinguish between them in economic statistics.

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Anne-Marie Garcia contributed to this report.

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Michael Weissenstein on Twitter: https://twitter.com/mweissenstein

Andrea Rodriguez on Twitter: https://twitter.com/ARodriguezAP

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