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Alejandro, a 20-year-old history student at the Universidad de la Habana, proudly shows off a sampling from his collection of foreign currencies.

"Chile, Argentina, Bahamas," he trumpets while shuffling the money he has just pulled from his wallet. "Do you have Canadian dollars — just for looking? In my whole life, I've never seen Canadian dollars." He marvels at the royal blue of a $5 bill and says he dreams of visiting the "very good country" to the far north.

"I want to travel," says Alejandro (who, like most Cubans speaking to foreigners, is wary about giving his full name). "In Canada, you work and you get money. In Cuba, you work and you get nothing."

But now, for the first time in Alejandro's life — and that of the generation before him — expectations of being able to profit from their labour or see the world outside their insular nation are on a dramatic upswing as the communist country undoes some basic tenets of the 1959 revolution that brought Fidel Castro to power.

President Raul Castro, who officially succeeded his frail, 81-year-old brother on Feb. 24, has shocked many with his hasty moves to introduce a flurry of economic and administrative reforms that Fidel had dogmatically resisted for decades.

The biggest, and potentially most subversive, came a week ago with a decree that will allow those who retire or leave their jobs in public enterprises — more than 90 per cent of working Cubans are state employees — to gain title to homes or apartments normally reserved only for workers. It amounts to nothing less than property ownership.

The decree came on the heels of the April 10 removal of wage limits on state salaries — henceforth, those who work more will be duly rewarded. While meant to encourage productivity in Cuba's woefully inefficient economy and thwart discontent with salaries that average less than $20 a month, the elimination of the wage ceiling transforms workers from comrades into free agents and entrepreneurs.

Despite the "more perfect socialism" spin put on it by an editorial this week in Granma, the state-run newspaper, it's clearly counter-revolutionary — especially added to Raul's other recent moves, such as allowing Cubans to own cellphones, DVD players and personal computers; to stay at hotels previously reserved for foreign tourists; and to become private farmers.

Raul Castro, 76, is negotiating a fine line. He is trying to initiate just enough change to alleviate the pent-up anger — and demand — Cubans have accumulated during five decades of political repression and economic decline, without undermining the Communist Party's grip on power.

But as reform-minded communists have discovered everywhere, outside perhaps China and Vietnam, it is rarely possible to open the door to political and economic freedom just partway.

On the eve of its 50th birthday, is communist Cuba on the cusp of joining its fallen Soviet allies among history's failed experiments?

A sub-ultimate leader

Most Cuba experts agree that Raul Castro, who ran the military with an iron fist before succeeding his ailing brother on an interim basis in 2006, is no softy.

But with his popular reforms, he is imitating every other charismatically challenged politician — from Paul Martin to Gordon Brown — who follows a lider maximo (ultimate leader, as Fidel called himself): He's trying to get his approval rating up.

"Raul is pragmatically going step by step" by removing the "nasty little irritants" that cause deprivation for average Cubans, says Arch Ritter, a professor of economics and international affairs at Carleton University in Ottawa. "In the longer run, it's hard to predict where these steps will go.

"There is still a solid phalanx of people who support the regime, and not just in the military. … Fidel and the party have presented themselves as the embodiment of universal virtue and morality. A lot of Cubans certainly don't buy that, but a lot do."

Eliminating travel restrictions, as Raul has all but vowed to do, might swell the ranks of those pushing for change, as more Cubans see other ways of life with their own eyes rather than through the propaganda lens of the state-run media and schools.

Even without travel, Cubans are developing an appetite for the accoutrements of capitalism as they marvel at the electronic gadgets and designer clothes of foreign tourists. (Many are even marrying foreigners.) Canadians are doing more than their share, accounting for more than 600,000 of the 2.1 million foreigners who visited Cuba last year. Americans, officially banned from visiting Cuba since 1961, remain few.

Conspicuous consumption — officially illegal, of course — is newly apparent everywhere, even in the crumbling slums of Central Havana, as more Cubans get their hands on coveted pesos convertibles, the currency used by foreigners, worth 24 times the Cuban peso with which locals are paid. (One convertible peso is worth about $1.09.)

No Cubans officially earn enough to contemplate such extravagances as a cellphone or DVD player, which can easily cost a year's salary. Yet that doesn't stop a group of taxi drivers huddled around their cars — mostly old Ladas and a couple of newer Hyundais — from comparing their new phones and bending over in laughter. It becomes clear why when one flashes his new gadget to a passerby: It's playing porn.

"Two hundred pesos," one of the drivers offers when asked how much he paid for the phone. "Convertibles."

The taxi drivers are proof of a growing inequality: Like most workers who have the chance to rub shoulders with foreigners, they probably got their hands on convertibles via clients' tips. A rising number of Cubans earn them by exercising a much older profession.

The result is a two-tier economy in which obedient foot soldiers of la Revolucion wallow in poverty while those clever enough to squeeze money out of foreigners join senior state officials in economic privilege.

Alejandro is not among them. Sitting under one of the giant laurel trees on campus, he explains that only the "children of government people" have cellphones. "I have no computer, no Internet, no telephone, no nothing," he shrugs. He writes his essays longhand.

Havana hotels, meanwhile, are teeming with delegations of business people from Europe and Canada, as the government openly courts foreign investment to develop its tourism, mining and energy.

"In one or two years, this place will be like China," says a German businessman, who withheld his name to protect a potential deal. "The government is moving faster to expedite contracts."

The foreign-business presence means that it's increasingly common to spot a Murano or Mercedes on the streets of Havana, among the sea of fifties-era U.S. models and Soviet-era Ladas that belch out thick smoke and break down constantly.

Snitch central

But Raul Castro's Cuba is full of contradictions. Propaganda remains ever-pervasive — and not just in pages of the communist-run Granma and Juventud Rebelde (Rebel Youth). Anti-American billboards line the highways and Fidel Castro's slogans cover walls: "Before threats and aggression Cuba answers: More Revolution."

In central Havana, a notice taped to walls announces an evening meeting of the local Committee for the Defence of the Revolution, warning members to be on time. All Cubans technically belong to a neighbourhood CDR, whose job is to monitor and report on counter-revolutionary activity — that is, to snitch.

On a park bench in front of the neo-classical Museum of the Revolution, Ricardo Lopez, a 26-year-old high-school teacher, says many Cubans will be wary of openly taking advantage of some of Mr. Castro's reforms because their local CDR would question where they got the money.

"If you go to a hotel, that information goes directly to the CDR in your block," Mr. Lopez explains, asking his name be changed to avoid retaliation.

"This is an idea to get the last enemy of the Revolution," he says of the reforms. "It is to know which people are not under control."

His fears may reflect the paranoia that infects citizens in all totalitarian regimes, but it's clear that, as more Cubans watch their neighbours accumulate wealth, envy is bound to set in. Some will react by snitching.

Mr. Lopez holds out little hope that the regime will crumble. Cubans have "the virtue of impotence," he says: "Cubans live with this wall because they know they cannot break it down. … That is why Cubans are happy — because if a problem has no solution, it is no longer a problem."

He is echoed by Jose, 31, a driver and interpreter for the German businessman. "No one learns independence in this country because everyone needs the authorization of someone else to do anything."

As a rule, independent thinkers are persecuted here. As military chief, Raul Castro imprisoned — even executed, experts say — journalists and opponents of the regime. More than two dozen were locked up as part of a major crackdown in March, 2003.

Lately, some dissent has been tolerated. A group of wives and female relatives of those in jail, known Las Damas de Blanco, or Ladies in White, have held peaceful protests weekly. Yoani Sanchez, a 32-year-old philosophy graduate, has been allowed to write a critical blog called Generacion Y from within Cuba, with only intermittent harassment.

Real ideological troublemakers are either sent into exile or jailed. Cuba remains, for all intents and purposes, a police state. La patrulla (the patrol) saturates Havana streets as zealously as ever as a deterrent to "delinquency."

Simply speaking with an outsider can land a Cuban in trouble.

On El Malecon, Havana's waterfront thoroughfare, three young Cubans chatting with a foreigner are interrupted by two policemen who check their IDs, then order them to squeeze into the back seat of their Lada patrol car. They are driven away. The police refuse the foreigner's requests for an explanation.

"So many critics of the government have emigrated. And if and when they let the political prisoners out, they will be forced or encouraged to emigrate," Prof. Ritter says, adding that the opposition remains too fragmented to be effective.

"What they need is a Lech Walesa — or three, or four," he says, referring to the Polish labour leader whose brave opposition to the communists in the early 1980s emboldened dissidents throughout the Soviet bloc.

Communism's demise in Europe, however, was not really sealed until later that decade, when Soviet leader Mikhail Gorbachev embraced glasnost (opening) and perestroika (restructuring).

Raul Castro probably has China, rather than the Soviet Union, in mind as he introduces elements of capitalism. But by giving Cubans a hint of the possibilities that come with economic freedom, the pragmatic Castro brother has a chance to become another Gorbachev — in spite of himself.

Konrad Yakabuski is a member of The Globe and Mail's Montreal bureau.