What changes and what doesn’t
By Eloy Viera Cañiva (El Toque)
HAVANA TIMES – On March 2, 2026, Cuban state media echoed a meeting of the Council of Ministers in which Miguel Diaz-Canel said that urgent transformations in the country’s economic and social model had to be promoted. Among those possible transformations was a change in the ways the state and private sectors of the economy can associate with one another.
Hours later, the Official Gazette published Decree-Law 114/2025 and a complementary regulation governing partnerships between state-owned business entities and private actors.
Formally speaking, the message seems clear: cooperation between the socialist state enterprise and the private sector is being institutionalized. From now on, according to the regulation, “domestic joint ventures” may be created jointly; mergers, equity acquisitions, and economic association contracts between state companies and private actors will be allowed.
In a country where for decades the relationship between the state and the private sector has oscillated between limited tolerance and structural suspicion, this step does not seem insignificant.
But the question is not whether there is regulatory novelty—clearly there is. The question in the Cuban case will always be whether there is a real redistribution of economic power.
This is also important because in recent days the idea has taken hold that part of the US administration’s strategy to promote regime change in Cuba consists of deepening economic interdependence between the two countries and encouraging economic openings that could, “eventually,” lead to political transformations.
From that perspective, a measure like this could be interpreted—by the average reader—as a highly significant signal: a supposed gesture by the Cuban regime in the direction of Washington’s theoretical demands.
However, serious analysis requires nuance. And those nuances may inevitably prove uncomfortable for some.
Association Yes, Autonomy with Limits
The Decree allows for the creation of mixed limited liability companies between state and private entities. It also authorizes state enterprises to acquire stakes in private companies and even absorb them.
On a superficial reading, this could be interpreted as an explicit recognition that the so-called “non-state sector” has ceased to be marginal and is now a structural part of Cuba’s economic landscape.
However, a closer analysis reveals two dominant features in the regulatory design: unilateralism and centralization.
Unilateralism is expressed most clearly in the rules governing absorptions. This corporate restructuring mechanism—whereby an acquiring company incorporates another, assuming its assets, liabilities, and workforce—may operate, according to the regulation, only when the acquiring entity is “a corporation with one hundred percent Cuban capital or a state limited liability company.”
Corporations with 100 percent Cuban capital are organizational forms that the Cuban regime has used in recent years to grant greater operational flexibility to certain public business structures, reducing bureaucratic rigidities and facilitating their participation in the market, especially in operations linked to international actors. But what the regulation clearly establishes is that vertical integration may occur in only one direction: the State may absorb the private entity, but the private entity may not absorb the State one.
Some might present this formula as a tool to strengthen productive linkages. However, it can also be interpreted as an expansion of the perimeter of state influence over the most dynamic segments of the private sector, without introducing reinforced guarantees of legal stability for the private partner.
The result is that the balance of power is not redefined. Coexistence is institutionalized, but under a hierarchical logic.
Secondly, centralization remains a structural feature of the association system. Every operation requires approval from the Ministry of Economy and Planning, and each substantial modification demands new authorizations. Mergers, acquisitions, and association contracts are subject to inter-ministerial evaluation, and approval from the superior body to which the state entity belongs is mandatory. Business viability is not simply a market issue, but an administrative judgment.
In regulatory terms, association is possible, but it is not free: it is granted.
Formal Equality and Structural Inequality
The legal text speaks of “equal conditions,” but the legal architecture maintains state centrality. The corporate purpose of the new mixed companies must align with the policy approved for state-owned enterprises. In other words, the private partner does not redefine the rules of the game; it integrates into pre-existing ones.
The Ministry retains the power to approve or deny partnerships on broad and vague grounds that, in the Cuban case, can always give rise to arbitrariness or the imposition of political filters. Among the categories that may be invoked to deny an association between a private and a state actor are: public order, defense, national security, economic viability, and prior tax noncompliance.
The margin of discretion is considerable, and final decision-making power remains in the hands of the State.
Business Autonomy… Within the Perimeter
The mixed companies created as a result of partnerships between private and state actors will be able to export and import directly “in accordance with current legislation,” which does not appear to eliminate the requirement to work through state import entities that continue to centralize foreign trade. They will also be able to set wages autonomously, distribute profits, and manage their assets.
These are significant powers in an environment where wages and profit distribution—especially in the state sector—are heavily regulated.
However, that autonomy operates under conditions that may ultimately function as a burden or obstacle for the newly created entities. On the one hand, the new entities will be subject to the national foreign currency allocation system; they will be required to submit periodic reports of strategic indicators to the State; and they will need ministerial approval to implement substantial changes.
This means that the new companies will not formally be subjects of the National Economic Plan, but they will be obliged to provide key information to continue sustaining centralized planning, which is one of the most significant structural distortions of the Cuban economic model.
Full autonomy does not even extend to economic association contracts—the most flexible form. According to the regulation, these forms of association require prior authorization and cannot be modified without state approval.
In market economies, private contracts are freely entered into and judicially reviewed only if there is a dispute. Here, administrative intervention is constitutive.
What Changes and What Doesn’t?
What does change with this regulation is that more clearly defined rules now exist for cooperation between state and private actors. It also changes in that the State more explicitly acknowledges the need to articulate productive linkages and to offer the private sector an institutional channel to participate in larger-scale projects. In that sense, there is formal recognition that the Cuban economy can no longer function with its back turned to the emerging private sector.
However, the essentials remain intact. The supremacy of the state enterprise within the model is not altered. Nor is state control over the regulatory architecture or the State’s authority to authorize or deny associations based on broad administrative criteria. Likewise, macroeconomic management of foreign currency and strategic sectors continues under centralized control.
Decree-Law 114 does not dismantle the core of Cuba’s economic system; it adjusts it. It expands the space for interaction but does not redistribute the center of power. The state enterprise remains the axis around which the rest of the actors revolve. The private sector integrates, but it does not emancipate itself. What is consolidated is the institutionalization of the link, not a structural reconfiguration of the model.
In political terms, the message is transparent: the State recognizes that it needs the private sector to energize the economy, but it is not willing to cede its dominant position in the system’s hierarchy.
The Underlying Question
True economic transformation does not depend solely on allowing partnerships. It depends on how decision-making rights, risks, and guarantees are distributed. As long as administrative authorization precedes economic activity and final validation power remains concentrated, the system will continue to operate under the same logic of control.
The new regulation modernizes the language and fine-tunes the instruments. But it does not alter the fundamental balance.
The questions remain the same ones that run through every discussion of reform in Cuba: Is it possible to energize the economy without decentralizing real economic power? Does Cuba require a transformation of its economic model, or a total change of its political regime?
First published in Spanish by El Toque and translated and posted in English by Havana Times.
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