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The government is preparing to transform the country’s economy as Fidel Castro says the Cuban model no longer works These days the battle is for shade as pink tourists hop across baking sands seeking refuge from the sun, but half a century ago a more momentous struggle unfolded in the Bay of Pigs. Cuba’s infant revolution routed a US-backed invasion force in what Fidel Castro termed the first defeat for American imperialism in the western hemisphere. Amid the drama, he declared for the first time that the revolution was socialist. A museum in the bay, with more guides than visitors, has frozen in time the moment euphoric revolutionary forces took over farms and industries. “The victory of socialism,” says a banner. Drive north to Havana, however, and the landscape tells of a bleak sequel: idle fields abandoned to weeds and derelict tractors. The capital too reeks of decay. Ancient cars putt-putt past crumbling buildings. Obsolete machinery gathers dust in factories. Evidence, as Castro himself said in a recent interview, that “the Cuban model doesn’t even work for us any more”. Which is why on Saturday the Communist party will inaugurate its first congress in 14 years to cement radical changes to the economy and, intentional or not, to Cuban society. “The narrative is really Thatcherite,” said one senior western diplomat in Havana. “It’s all about cutting rights and welfare and putting greater emphasis on personal responsibility and hard work.” Raul Castro, who succeeded his brother as president in 2008, has said Cuba cannot continue blaming the US embargo for all its problems and must liberalise its moribund economy to “save socialism”. Timing the four-day congress to coincide with the Bay of Pigs anniversary has given authorities an excuse to fill TV screens with stirring archive footage and to plan a big military parade: reminders of glory and continued power. “This congress is huge. It will put the seal on a series of reforms and decide strategy for the next five to 10 years,” said Stephen Wilkinson, a Cuba expert at London Metropolitan University. Can the government transform the economy, rewrite Cuba’s social contract and remain in power? Despite an average state salary of just $20 a month there is little sign of Arab-style rebellion threatening the Castros’ tight control. An older population, curbs on social media and dependence on the state for 80% of jobs have muffled dissent. The question is what will happen as the state slashes subsidies and sheds a million workers – a daunting target delayed by bureaucratic resistance – and crosses its fingers that a liberated private sector soaks them up, Vietnam-style. In recent months budding entrepreneurs have taken out more than 171,000 licences for approved businesses such as restaurants, DVD stalls and taxis – about two-thirds of this year’s target of 250,000 licences. “Is socialism renewable?” Estado Sats, a recently formed group of thinkers and artists, asked at a seminar. The conclusion, said Antonio González-Rodiles, a founder, was no. “At least not in the way they are currently going about it.” Taxes and red tape threatened to strangle new ventures because central planners could not truly let go. “It’s like expecting torturers to become shepherds.” Some new businesses have swiftly folded – a phenomenon hardly unique to Cuba – but others are doing well and injecting bustle into pockets of Havana. Restaurants known as paladares , in some cases little more than family living rooms, offer pizza and traditional Cuban fare. Many of Havana’s Del Boys – fast-talking street traders who dodge authorities – are becoming legitimate. Rodolfo Mera used to carry flowers in a zipped shoulder bag and sidle up to people, hissing “flores” , but now he has a licence pinned to his chest and a corner on 25th street where his bicycle cart displays bouquets in six buckets. A born salesman, he convinced one sceptical middle-aged woman to part with 20 pesos (43p) for wilting tulips. “They’ll perk up when you get them home, love.” On San Lorenzo street Rubio, a former black-market watch seller, had just opened a barber shop – a chair and table with brushes and scissors – in an apartment block hallway. Tacked to the wall was his “special touch” – photos of pouting near-naked models – to lure customers from porn-free competitors. “It’s good to offer something extra,” he said. Such entrepreneurs may be the antithesis to Che Guevara’s 1960s vision of a “new man” motivated by socialist values rather than personal gain but they are hardly new, just more visible. Inequality remains an official taboo but a sizeable minority – thanks to remittances and shadier means – has designer clothes, iPods and cash to enjoy restaurants with tourist prices. The final draft of Raul’s proposed economic changes has not been published but there is little doubt the party congress will rubber-stamp what will be, in effect, a transition to a new Cuba. The government has released virtually all political prisoners but stepped up harassment of dissidents and verbal attacks on foreign media. A battening of the hatches, say some, in case of squalls to come. While many Cubans relish the incremental, unfolding changes, many are anxious they will lose subsidised food and goods and state jobs, however badly paid. In Marianao, a gritty Havana district, a living room TV showed grainy stills from the Bay of Pigs invasion. Fidel was leaping from a tank – a famous image – but the Acosta family paid no heed. Conversation had turned to a recurring, all-consuming topic: what would Gabriela, 36, do if laid off from her state film company job? “They say half of us will go, but not which half.” Miami remembers the Bay of Pigs invasion In the anti-Castro stronghold of Calle 8, the centre of Miami’s Little Havana, a small monument with an ever-lit flame remembers the “Martyrs of Girón”. Just before midnight on 16 April 1961, a group of about 1,350 Cuban exiles, backed by the CIA, launched an invasion of Cuba from the sea in the Bay of Pigs – known in Cuba as Playa Girón – aimed at overthrowing Fidel Castro and the revolution. The invasion turned out to be a victory for Castro and a humiliating defeat for President Kennedy. “About 2,000 mortar rockets fell around us in just four hours. That was something truly dreadful. I can still hear them falling”, says 74-year-old José “Pepe” Hernández, who was involved in the fiasco. For Hernández, who fled Havana to Miami when he was a university student a few months after the triumph of Castro’s revolution, their main mistake was the faith they placed in “the support and experience we thought our ally, the United States, had. That turned out to be a terrible tactical failure” which helped cement Castro’s rule. “Looking back one asks oneself why Fidel Castro and the Cuban revolution are still in power,” says Hernández, who now heads a powerful Miami-based exiles group, the Cuban-American National Foundation. “There are several reasons, one can say several errors, for that. Certainly, one of the biggest ones was the invasion of Playa Girón. I hope now us Cubans on both sides of the straits can find peaceful solutions to our differences.” Andres Schipani Cuba Fidel Castro United States Rory Carroll guardian.co.uk