By Marc Frank and Nelson Acosta
HAVANA (Reuters) - Cuba started implementing a government reshuffle aimed at improving governance on Thursday, naming Miguel Diaz-Canel to the new position of president of the Republic and removing the last of the revolutionary generation from the council of state.
Diaz-Canel, 59, who took office last year from Raul Castro, has three months to nominate a prime minister to head up the council of ministers he used to lead, as well as governors for the country's 15 provinces - also newly-created positions.
The president of the National Assembly, Esteban Lazo, 75, took Diaz-Canel's position as head of the council of state, the assembly's top executive body, despite talk the job might go to a younger candidate.
The reorganization, mandated by a constitution approved in a referendum earlier this year, aims to strengthen provincial governance and free up the president from the day-to-day activities of governing.
The president remains all powerful, and behind him the Communist Party, however, said Arturo Lopez-Levy, a former analyst for the Cuban government and now assistant professor at Holy Names University in California.
"There is a split of functions, and more delegation in the management of day-by-day activities, but in the personnel and decision area, nominally and institutionally, power is more concentrated on the president," he said.
Two revolutionary commanders, Ramiro Valdes, 87, and Guillermo Garcia Frias, 91, were removed from the council of state, which was reduced to 21 from 31 members.
As a result, the council will no longer include any members of the so-called "historic" generation that fought in its 1959 revolution, reflecting the broader generational transition that some Cubans hope will result in more reforms.
Cuba has been suffering from a severe fuel shortage that has forced austerity measures. September saw public transportation crippled, huge lines at gas stations, oxen replacing tractors, work places closed and hours cut, and wood being used to cook in some bakeries and schools.
In a speech to the assembly on Wednesday, broadcast by state television on Thursday, Diaz-Canel blamed the crisis on U.S. efforts to stop bartered fuel shipments from ally Venezuela and other countries and said the United States was "chasing (fuel imports) ship by ship and negotiation by negotiation."
The Trump administration has piled new sanctions on top of the decades-old trade embargo, exacerbating a cash shortage due to the implosion of Venezuela’s economy, which is also under sanctions.
Diaz-Canel said Cuba was now operating with 62 percent of the fuel it used before September and hoped to reach 80 percent, while also trying to build up reserves.
Venezuela increased crude and fuel shipments to Cuba at the end of last month to try to ease the crisis but it is unclear if that will continue.
(Reporting by Marc Frank, Nelson Acosta and Sarah Marsh in Havana; Editing by Sonya Hepinstall)