C.I.A. Director John Ratcliffe visited Cuba on Thursday to demand significant security and economic reforms from the Cuban government. This high-level diplomatic move coincides with a critical domestic crisis, as the Cuban government has admitted its oil reserves have run dry.
The visit occurs amid escalating legal and economic pressure from Washington. Federal prosecutors are currently working to secure an indictment against Raúl Castro for drug trafficking and the 1996 downing of humanitarian planes.
Targeting the Economic Engine: The Role of GAESA
A central pillar of the current U.S. Strategy is the targeting of GAESA, a military-run conglomerate. President Trump recently signed an executive order expanding sanctions against the entity, noting that GAESA’s revenues are likely more than three times the size of the state’s budget.
Secretary of State Marco Rubio has described GAESA as a tool used by Cuba’s political elite to enrich themselves while repressing the population. Rubio asserted that the company’s funds do not support public infrastructure or basic needs, calling the sanctions a move against a company “stealing from the Cuban people to the benefit of a few.”
A Legacy of Military Control
GAESA’s origins trace back to the 1980s, though it was formally established out of desperation following the 1991 collapse of the Soviet Union. To save the country after losing its primary financial patron, Fidel Castro allowed the military, led by Raúl Castro, to take over state-run sectors such as tourism.
While the military initially proved to be efficient managers—reinvesting profits into hospitals and education in the late 1990s—critics argue the conglomerate has since become a tool for consolidating Castro family power. GAESA now oversees vast portions of the economy and maintains operations in Angola, generating hundreds of millions of dollars in annual profits.
Economic Mismanagement and the Tourism Gamble
Analysts suggest that GAESA’s own investment strategies have accelerated Cuba’s economic decline. Following a 2015 deal with the Obama administration, GAESA invested heavily in tourism, increasing its hotel count from 56 to 121 by 2025 and adding 22,000 rooms.
However, this bet failed as President Trump reimposed sanctions in 2016 and the 2020 pandemic halted travel. Despite this, the government continued to prioritize luxury hospitality over essential services. In 2024, Cuba spent approximately $1.5 billion on tourism and hospitality—nearly 40 percent of its budget—while hotel occupancy hovered at 30 percent.
This spending spree came at a steep cost to the public. In 2024, the tourism budget was roughly 11 times larger than the combined budgets for education and health care. During the same period, spending on education decreased by 26 percent, and the once-vital sugar cane industry collapsed, forcing Cuba to import sugar from the United States.
The Path Forward
The Trump administration’s demands for the regime to surrender its economic monopoly face a complex reality. Currently, the “point men” for talks with Washington are members of the Castro family: Deputy Prime Minister Óscar Pérez-Oliva Fraga and Raúl Guillermo Rodríguez Castro, known as “el Cangrejo.”
The presence of these family members at the negotiating table could cast doubt on whether the regime is truly willing to dismantle its economic grip. Future developments may include further sanctions or intensified legal efforts against the Cuban leadership, especially as the government struggles with depleted oil reserves and a crumbling infrastructure.
Frequently Asked Questions
What is GAESA? GAESA is a military-run conglomerate that oversees significant portions of the Cuban economy, including tourism, health care, and construction, with operations extending to Angola. Why is the U.S. Targeting GAESA with sanctions? U.S. Officials, including Secretary of State Marco Rubio, argue that GAESA is used by the political elite to enrich themselves and repress the population rather than investing in the country’s infrastructure or basic needs. How has the Cuban government’s spending shifted recently? In 2024, the government spent nearly 40 percent of its budget ($1.5 billion) on tourism and hospitality, which was 11 times the amount spent on education and health care combined, while education spending dropped by 26 percent.
Do you believe economic sanctions are an effective tool for forcing political change in the current Cuban climate?
