Cuba has defended the military-run conglomerate of businesses known as GAESA, long under U.S. sanctions, saying the group has contributed to the country's economic and social development despite a recent intensified U.S. pressure campaign, Reuters reported, BTA reports.
U.S. President Donald Trump's administration has accused GAESA of secretly profiting from Cuba's most valuable industries and using them to benefit the military and Cuban elite.
The accusations come amid a broader effort by the U.S. administration to use an oil embargo and tougher sanctions to starve the island of resources and force a change of government.
Cuba has denied allegations of corruption in a statement last night regarding the activities of GAESA, accusing the US government of “trying to confuse our people and international public opinion“.
“(GAESA) is not an opaque structure, nor is it parallel to the Cuban state; "On the contrary, it is a carefully crafted and proven response to the economic blockade that has historically sought to stifle the Cuban revolution," the statement quoted by Reuters said.
The Cuban leadership rarely speaks publicly about GAESA, arguing that such secrecy is necessary to circumvent US sanctions.
There is no publicly available information on how much of the Cuban economy is controlled by GAESA.
External estimates range from 40% to 70%, and that includes many of the island's five-star hotels, located on Cuba's white-sand beaches and in prestigious locations in Havana, Reuters noted.
If you stay in a hotel in central Havana or on Cuba's northern beaches, there is a good chance it is owned by the secretive GAESA group, the British newspaper said. “Financial Times“. Visit a shop on the island, especially one that accepts dollars, and it is likely to be run by the company GAESA. Send dollars to Cuban friends or relatives and the bank that processes the payment is also likely to be GAESA, the newspaper says.
In communist Cuba, most roads ultimately lead to Grupo de Administración Empresarial S.A. (GAESA, translated from Spanish as Business Administration Group AD), as the company is officially called.
The military conglomerate, which gained popularity with the support of Raúl Castro, still Cuba's supreme leader, is a “black box”, notes the “Financial Times“. It does not have its own website and does not publish details of its finances or what profits are transferred to the state. Even its ownership structure is secret. But according to Cuban economists, leaked documents and the US government, the group controls as much as 40% of the country's gross domestic product.
Such a dominant position means that GAESA is one of the most important issues in negotiations between the Cuban government and the Donald Trump administration, which is using a near-total oil embargo to force Havana to liberalize its economy, reform its system of government and release political prisoners. The US is also seeking compensation for US properties confiscated since Fidel Castro's 1959 revolution.
Some see new US sanctions on mining activities, which recently prompted the withdrawal of Canadian cobalt and nickel mining company “Sherrit“ (Sherritt), an attempt to take control of key minerals.
Cuba has said it is open to discussing democracy, human rights, business opportunities and cooperation with the US on migration and drug trafficking, but insists that its political, legal, social and economic systems are not - and will not be - subject to negotiations, the Financial Times reported.
US Secretary of State Marco Rubio has singled out GAESA as a target for criticism. "They have a military-controlled holding company called GAESA that manages 40 percent of the country's gross domestic product, and none of the money that this company generates goes to the state treasury," he said in March of this year. Rubio claims that the group's profits did not go to schools, roads or feeding the island's population.
On May 7 of this year, the US imposed new sanctions on GAESA, effectively giving foreign companies one month to end all business relations with the group.
The US also imposed sanctions on Brigadier General Ania Guillermina Lastres Morera, now head of the GAESA, who is a member of the Central Committee of the Cuban Communist Party.
The sanctions are an expression of the tougher tone that the United States has adopted in recent weeks regarding negotiations with Cuba. According to some analysts, this may be part of an effort to justify possible military action, notes the “Financial Times“.
Rubio said last week that the current leadership in Havana is unable to change the island's economy. "Serious economic reforms are impossible with these people in power, it can't happen," the US secretary of state said.
According to some Cuban economists, GAESA has become a powerful group with interests in the armed forces and intelligence services - in general, the Cuban military-industrial complex, which is used to consolidate the power of people in the regime's inner circle and is a potential source of corruption.
"They have their hands on many of the most profitable sectors of the economy, which operate with foreign currency, but also operate without any public oversight," said Pavel Vidal, who worked at the Central Bank of Cuba. "They are a kind of parallel state in the economy," he added.
Cuba experts say that any negotiations aimed at stimulating the island's private sector will have to confront the enormous political and economic influence of GAESA, the Financial Times reported.
"In any economic reform plan, a big part of it must be dismantling GAESA," said Ricardo Herrero, head of the Cuba Study Group, a Washington-based non-governmental organization that advocates for urgent changes to Havana's economic and political system, as well as U.S. policy toward the island. “This is the meaning of economic liberalization in Cuba“, the expert added.
GAESA was created during the so-called Special Period by Cubans after the collapse of the former Soviet Union, when Castro decided he had no choice but to open the country to tourism and remittances from abroad. Properties on the coast owned by the military were turned into hotels, and two Russian planes were converted to transport tourists.
The company grew rapidly when Raul Castro, Fidel's brother, became president in 2008 - the former defense minister believed that the military was better at managing business than other state structures, notes the “Financial Times“.
GAESA took control of a significant number of hotels on the island, as well as import-export enterprises, supermarkets and gas stations. Its operations also include a special economic zone that houses manufacturing plants and a container terminal, as well as one of the country's main commercial banks.
As a result, GAESA dominates many of the economy's foreign exchange-generating sectors, something Cuba desperately needs amid a collapse in tourism revenues and a U.S. campaign of "maximum pressure."
Some economists believe that GAESA's influence is one of the main causes of Cuba's severe energy crisis, which has led to a series of power outages across the country.
According to research by Ricardo Torres Pérez, a Cuban economist now living in the United States, investment in tourism has significantly outpaced investment in energy over the past decade—partly a reflection of the boom in hotel construction undertaken by the GAESA.
Between 2019 and 2024, a period during which the Cuban economy was in crisis, 40% of investment in the country was directed at tourism, including the construction of hotels. At the same time, in several years of the same period, investment in basic infrastructure, such as energy and water supply, was less than 10% of the total.
The investments include the 42-story hotel “K23 Tower“, owned by GAESA, which is the tallest building in Cuba and opened last year, just as tourist numbers began to plummet.
There is almost no transparency about GAESA's finances or operations, the “Financial Times“ reports. In 2024, the chief financial inspector and head of Cuba's Court of Auditors, Gladys Bejerano, told a Spanish media outlet that her agency had no jurisdiction to audit GAESA. She lost her job shortly thereafter.
Vidal, now a professor at the Pontifical Universidad Javeriana in Colombia, said that when he worked at the Central Bank of Cuba, he and his colleagues did not have access to information about GAESA's holdings of dollars or other foreign currencies.
One of the few glimpses into the company's finances came from leaked documents published last year by the Miami Herald, which showed the conglomerate had made a profit of $2.1 billion in the first quarter of 2024. Another document indicated that the group had $18 billion in cash, although other reports have suggested that the group's actual dollar assets are much lower.
A representative for GAESA was not immediately available, and neither Cuba's armed forces nor the Cuban Communist Party responded to requests for comment from the Financial Times.
This mix of wealth and secrecy makes the company an easy target for critics of the Cuban regime based in Florida. "GAESA is a kleptocracy, pure and simple," said Emilio Morales, president of the Havana Consulting Group, a Miami-based consulting firm. "It's the big black hole that has destroyed the Cuban economy," Morales said.
The group is connected to the highest echelons of the Cuban power system. Former Cuban Prime Minister Manuel Marrero Cruz ran its hotel management company. Until his death in 2021, GAESA was led for more than a decade by General Luis Alberto Rodríguez López-Calleja, who was Raúl Castro’s son-in-law.
López-Calleja’s son, Raúl Guillermo Rodríguez Castro, is one of Cuba’s main negotiators in talks with the Trump administration and is believed to have close ties to current GAESA leaders.
Analysts believe the group’s secretive structure may have been created in part as a way to circumvent U.S. sanctions. But many Cuba experts say the company has already become a vehicle for funding the military and intelligence services outside of Cuba’s official budget. It has also become an important patronage network among military and other officials - especially at a time when it is increasingly difficult to justify Cuba's revolutionary idealism, the Financial Times notes.
GAESA creates enormous opportunities for corruption. The question is whether the company is run as a means of extracting funds for a few or as a tool for the state to circumvent sanctions, said Emily Morris of University College London.
Vidal says the issue of GAESA is one of the most difficult political issues in negotiations with the United States.
"We will not be able to carry out any significant reform of the economy unless we dismantle the structures of GAESA," he said. "But, of course, because of its financial and political power, this is the last thing the Cuban government would want to discuss in the negotiations," concluded the former official at the Central Bank of Cuba.