John Ratcliffe, the CIA director, visited Cuba on Thursday to demand sweeping economic and security changes from his government. His visit came just as the Cuban government admitted that its oil reserves had been exhausted coincides with the efforts of the Federal Prosecutor’s Office to seek an indictment against Raúl Castro for drug trafficking and the shooting down of humanitarian planes in 1996.
Earlier this month, President Trump signed an executive order extending Cuba sanctions to GAESA. The Order says The conglomerate’s revenue “is likely to be more than three times the national budget.”
Secretary of State Marco Rubio ratcheted up the pressure, calling GAESA a tool used by Cuba’s political elite to oppress the population while enriching themselves.
GAESA “is this private company that has more money than the government,” Mr. Rubio said during a trip to the Vatican last week. “None of these funds go toward building a single road, a single bridge, or providing a single grain of rice to a single Cuban, other than the people who are part of GAESA.”
“It is a sanction against this company that steals from the Cuban people for the benefit of a few,” he said, adding: “We will do more.”
Cuban President Miguel Díaz-Canel described the order as “coercion.”
GAESA was born out of desperation after the collapse of the Soviet Union in 1991, but its roots date back to the 1980s. Raúl Castro, then defense secretary, convinced his older brother, President Fidel Castro, to allow him to make changes to the military’s business interests, according to Frank Mora, who served as deputy assistant defense secretary in the Obama administration.
With the fall of the USSR, Cuba lost its largest trading partner and financial patron. The military was in shambles and struggling to pay its troops. Fidel allowed the military to take over state industries such as tourism to save the country.
At first, the experiment worked, analysts say, and the military proved to be a more efficient business manager than other state organs. The economy recovered in the late 1990swith the military reinvesting its profits into the country to support hospitals, education and government food rations.
Some of what GAESA controls in Cuba
When Raúl took over the presidency from his brother Fidel in 2008, GAESA’s control became increasingly dominant. It now oversees many large and small parts of the economy. GAESA too has companies in Angolagenerating hundreds of millions of dollars in annual profits from education, healthcare, construction and more.
Critics say GAESA is just another tool for the Castro family to consolidate their power.
Today it is even more powerful than ever Poverty on the island has never been worse.
“The military was the more pragmatic arm of the revolution, but that does not mean they favor political liberalization,” Mr. Mora said. “This is as much a commercial enterprise as it is a military institution,” he added. “So they have less incentive to disrupt the status quo unless it benefits them.”
GAESA’s finances are secret and do not appear anywhere in the state budget, so it is unclear whether the state receives part of its profits. When the government’s auditor admitted in an interview in 2024 that she had no insight into GAESA’s finances, She was fired after 14 years of service.
The Castro family has used its authority over GAESA to maintain a tight grip on the entire Cuban economy. In 2011, shortly after becoming president, Raúl put his son-in-law, General Alberto Rodríguez Lopez-Calleja, in charge of GAESA.
After Gen. Rodríguez’s death in 2022, a person unrelated to the Castro family was appointed head of GAESA: Brig. Gen. Ania Guillermina Lastres Morera, who was sanctioned by Washington this month. But the former GAESA chief’s son and Raúl’s grandson, Raúl Guillermo Rodríguez Castro, appears to have ties to Brigadier General Lastres, likely maintaining the Castros’ influence.
Flight records show they flew together in 2024 in a private jet to Panama, where GAESA has registered several companies to avoid US sanctions, according to an investigation from a group of local media outlets.
The younger Mr. Rodríguez Castro, known as el Cangrejo, Spanish for crab, has become an important player in talks with Washington, meeting with Mr. Rubio’s team earlier this year. Another member of the Castro family acting as an intermediary for these talks is Óscar Perez-Oliva Fragaa great-nephew of the Castro brothers. He is currently Cuba’s deputy prime minister and minister of foreign trade and foreign investment – a key pillar of the economy.
The presence of two Castros at the negotiating table casts a long shadow of doubt over whether the regime is truly ready to give up its economic monopoly, as the Trump administration demands.
While the Cuban government often blames Washington’s sanctions and trade embargo for its financial woes, GAESA’s investment strategies have also contributed to the island’s economic decline, analysts say.
“The government complains about the embargo when it suits them, but then they build these hotels as if there was no embargo,” said Ricardo Torres, an economist specializing in Cuba at American University in Washington.
After the 2015 agreement between Cuba and the Obama administration restored diplomatic ties and eased travel restrictions, GAESA relied heavily on tourism and expected an influx of Americans. At first the bet paid off and Americans flocked to the island. GAESA went on a spending spree: by 2025, the company had built 121 hotels, up from 56 a decade earlier. There will also be 22,000 new rooms.
But the tourism boom was short-lived.
In 2016, President Trump reimposed sanctions and banned American tourists from visiting the island. Cuba’s economy suffered another blow in 2020 as the pandemic brought tourism to a standstill.
Nevertheless, GAESA continued to build hotels even as other sectors of the economy were neglected. Cuba’s once-famous sugar cane industry – which financed the early days of the communist revolution – collapsedas government spending on the sector collapsed. Cuba has had to import sugar for domestic consumption in recent years, even from the United States.
According to the current government figuresIn 2024, Cuba spent almost 40 percent of its budget on tourism and hospitality, or about $1.5 billion. Nevertheless, hotel occupancy this year was a dismal 30 percent.
The tourism budget in 2024 was about eleven times the budget for education and healthcare combined. Spending on education fell 26 percent this year compared to 2023. The fact that the government is spending more on tourism while Cubans go without basic necessities shows how far the communist revolution has progressed, observers say.
“The Cuban constitution says that we, the people, are the owners of all means of production,” said Mr. Torres, the Cuban economist. “But there is no control over GAESA’s finances or business decisions, there is no social control.”
Last year, GAESA opened the luxury hotel Iberostar in the tallest building in Cuba. The five-star hotel towers over Havana’s skyline of run-down houses. Still, some tourists say the hotel is mostly empty when they visit.
“These military men have profits that were hoarded for a rainy day,” said Ricardo Zúniga, a former U.S. official who helped negotiate the Obama-era deal. “Well, Cuba is about as rainy as it gets. Where is GAESA?”
