FACTBOX-Key political risks to watch in Cuba

By Jeff Franks

HAVANA Jan 3 (Reuters) - Reforms aimed at strengthening Cuba's fragile economy will be key as President Raul Castro tries to ensure survival of Cuban communism once the current, aging leadership is gone.

The cash-strapped government is looking to reduce its role while maintaining control of an economy that will have a bigger private sector and less state spending. It could get long-term help if offshore oil exploration due to begin in 2011 is successful. [ID:nN05129084]

Relations with longtime ideological foe the United States continue to be rocky, with little prospect for near-term change.

ECONOMIC REFORMS

President Raul Castro plans to slash 500,000 jobs from state payrolls by March, although there is little evidence the process has begun.

About 200,000 of those jobs are expected to shift over to employee-run cooperatives converted from businesses now operated by the state.

The government also has begun issuing 250,000 new licenses for self employment and for the first time, the self-employed will be able to hire workers. At least 35,000 licenses have been granted so far. [ID:nN13223894]

Self-employment was allowed in communist Cuba after the 1991 collapse of the Soviet Union, the island's main ally. In 2009, there were 143,000 licensed self-employed, and many more illegal ones.