CIA Director John Ratcliffe visited Cuba on Thursday and called on the government to make sweeping economic and security changes. His visit coincided with Cuba’s government acknowledging that its oil reserves were depleted and efforts by federal prosecutors to secure indictments against Raul Castro on drug trafficking and the 1996 shooting down of a humanitarian plane.
Earlier this month, President Trump signed an executive order expanding sanctions on Cuba targeting GAESA. The order says the large company’s revenue “is likely to be more than three times the state budget.”
Secretary of State Marco Rubio has stepped up pressure on GAESA, calling it a tool for Cuba’s political elite to oppress its people and enrich themselves.
GAESA is “a private company with more money than the government,” Mr. Rubio said during a visit to the Vatican last week. “None of this money is used to build one road, one bridge or provide one grain of rice to one Cuban, except those belonging to GAESA.”
“We are sanctioning this company that is stealing money from the Cuban people to benefit a few,” he said, adding, “We will take more action.”
Cuban President Miguel Diaz-Canel criticized the executive order as “coercive.”
GAESA was born out of despair following the collapse of the Soviet Union in 1991, but its roots go back to the 1980s. According to Frank Mora, who served as assistant secretary of defense in the Obama administration, then-Defense Secretary Raul Castro persuaded his brother, President Fidel Castro, to allow him to change the military’s business interests.
When the Soviet Union collapsed, Cuba lost its largest trading partner and financial supporter. The army was in disarray and struggling to pay its men. To save the country, Fidel allowed the military to take over state-owned economic sectors such as tourism.
At first, the experiment worked, and analysts say the military has proven to be a more efficient business manager than any other branch of the country. The economy recovered in the late 1990s, and the military reinvested its profits into the country to support hospitals, education, and government food distribution.
Some of the things GAESA controls in Cuba
GAESA’s control grew stronger when Raúl took over the presidency from his brother Fidel in 2008. GAESA now oversees many parts of the economy, large and small. GAESA also has a presence in Angola and generates hundreds of millions of dollars in annual revenue through education, healthcare and construction.
Critics say GAESA is now just another tool for the Castro family to consolidate power.
Today it is stronger than ever, but poverty on the island is worse than ever.
“The military was the more practical weapon of the revolution, but this does not mean they accept political liberalization,” Mr. Mora said. “This is as much an economic enterprise as it is a military institution,” he added. “Therefore, they have less incentive to disrupt the status quo unless it is in their own interest.”
GAESA’s finances are kept secret and do not appear anywhere in government budgets, making it unclear whether the country benefits. She was fired after 14 years on the job when a government auditor admitted in a 2024 interview that she had no knowledge of GAESA’s finances.
The Castro family has leveraged its authority over GAESA to maintain a firm grip on the broader Cuban economy. In 2011, shortly after becoming president, Raúl entrusted GAESA to his son-in-law, General Alberto Rodriguez López-Cayeja.
After General Rodriguez’s death in 2022, a person unconnected with the Castro family was appointed to lead GAESA: Brig. Gen. Ania Guillermina Lastres Morera was sanctioned by Washington this month. However, Raúl Guillermo Rodríguez Castro, the son of the former head of GAESA and Raúl’s grandson, appears to have ties to Brigadier General Lastres and is likely to maintain Castro’s influence.
Flight records show they flew together on a private jet to Panama in 2024, and an investigation by local media outlets revealed that GAESA had registered several companies to evade US sanctions.
The younger Mr. Rodriguez Castro, known as el Cangrejo, meaning crab in Spanish, has emerged as a key figure in negotiations with Washington, including meeting with Mr. Rubio’s team earlier this year. Another Castro family member who has been a key figure in these talks is the Castro brothers’ nephew, Óscar Pérez-Oliva Fraga. He currently serves as Deputy Prime Minister and Minister of Foreign Trade and Foreign Investments, an important pillar of Cuba’s economy.
The appearance of two Castros at the negotiating table casts a long shadow of doubt over whether the North Korean regime is truly willing to give up its economic monopoly as demanded by the Trump administration.
The Cuban government often blames U.S. sanctions and trade embargoes for its financial problems, but GAESA’s investment strategy has also contributed to Cuba’s economic downfall, analysts said.
“The government complains about the embargo when it is convenient, but they are building these hotels as if there is no embargo,” said Ricardo Torres, an economist at the American University in Washington who specializes in Cuba.
After a 2015 agreement between Cuba and the Obama administration restored diplomatic relations and eased travel restrictions, GAESA invested heavily in tourism in anticipation of an influx of Americans. At first the bet paid off and Americans flocked to the island. GAESA has spent a lot of money. By 2025, GAESA will have built 121 hotels and added 22,000 new rooms, up from 56 hotels a decade ago.
But the tourism boom did not last long.
In 2016, President Trump reimposed sanctions and banned American tourists from visiting the island. Cuba’s economy took another hit in 2020 when the pandemic halted land-based tourism.
But GAESA continued to build hotels while ignoring other parts of the economy. Cuba’s once-famous sugar cane industry, which had financed the early days of the communist revolution, collapsed as government spending plummeted. Cuba has had to import sugar for domestic consumption in recent years, even from the United States.
According to the latest government figures, in 2024 Cuba spent almost 40% of its budget on tourism and hospitality, amounting to about $1.5 billion. However, hotel occupancy that year was only 30%.
The 2024 tourism budget was approximately 11 times the education and healthcare budgets combined. Spending on education fell 26% that year compared to 2023. Observers say the fact that the government is spending more on tourism while Cubans have no foundation shows how far the communist revolution has gone.
“The Cuban constitution states that our people are the owners of all means of production,” said Torres, a Cuban economist. “But there is no oversight of GAESA’s finances or business decisions, and there is no social control.”
Last year, GAESA opened the Iberostar luxury hotel in Cuba’s tallest building. The five-star hotel towers over Havana’s old-house-lined skyline. However, some tourists say that the hotels are mostly empty when they visit.
“These soldiers have their profits set aside for a rainy day,” said Ricardo Zúniga, a former U.S. official who helped broker the Obama-era deal. “So it rains as much as Cuba, where is GAESA?”
