John Ratcliffe, the C.I.A. director, visited Cuba on Thursday to demand major economic and security changes from its government. His visit came just as the Cuban government admitted that its oil reserves have run dry and coincides with efforts by federal prosecutors to secure an indictment against Raúl Castro for drug trafficking and the 1996 downing of humanitarian planes.
Earlier this month, President Trump signed an executive order to expand Cuban sanctions to target GAESA. The order says the conglomerate’s revenues “are likely more than three times the state’s budget.”
Secretary of State Marco Rubio ratcheted up the pressure, calling GAESA a tool of Cuba’s political elite to repress the population while enriching themselves.
GAESA “is this private company that has more money than the government does,” said Mr. Rubio during a trip to the Vatican last week. “None of this money goes to build a single road, a single bridge, provide a single grain of rice to a single Cuban other than the people that are part of GAESA.”
“It’s a sanction against this company that is stealing from the Cuban people to the benefit of a few,” he said, before adding “we’re going to be doing more.”
President Miguel Díaz-Canel of Cuba decried the executive order as “coercive.”
GAESA was born out of desperation following the collapse of the Soviet Union in 1991, but its roots trace back to the 1980s. Raúl Castro, then the defense minister, 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 a deputy assistant secretary of defense in the Obama administration.
When the U.S.S.R. fell, Cuba lost its largest trade partner and financial patron. The military was in shambles and struggled to pay its troops. Fidel allowed the military to take over state-run sectors of the economy, like tourism, in a bid to save the country.
At first, the experiment worked, analysts say, and the military proved to be a more efficient business manager than other arms of the state. The economy recovered by the late 1990s, with the military reinvesting its profits into the country to support hospitals, education and government food rations.
Some of what GAESA controls in Cuba
GAESA’s control grew more dominant when Raúl took over the presidency from his brother Fidel in 2008. It now oversees many parts of the economy, big and small. GAESA also has companies in Angola, pulling in hundreds of millions of dollars in annual profits from education, health care, construction and more.
Critics say GAESA is now just another tool for the Castro family to consolidate its power.
Today it is now more powerful than ever, yet poverty on the island has never been worse.
“The military has been the more pragmatic arm of the revolution, but that doesn’t mean they embrace political liberalization,” said Mr. Mora. “This is as much of an economic enterprise as a military institution,” he added. “So they have less incentive to disturb the status quo, unless it’s beneficial to them.”
GAESA’s finances are secret and do not appear anywhere in the government’s budget, making it unclear whether the state receives any of its profits. When the government’s comptroller admitted in a 2024 interview that she had no insights into GAESA’s finances, she was fired after 14 years of service.
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 put his son-in-law, Gen. Alberto Rodríguez Lopez-Calleja, in charge of GAESA.
After General Rodríguez died in 2022, a person unrelated to the Castro family was appointed to lead 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 preserving the Castros’ influence.
Flight records show that in 2024 they flew together on a private jet to Panama, where GAESA has registered multiple companies in order to evade U.S. sanctions, according to an investigation by a group of local media outlets.
The younger Mr. Rodríguez Castro, known as el Cangrejo, Spanish for crab, has emerged as a key player in talks with Washington, meeting with Mr. Rubio’s team earlier this year. Another Castro family member acting as a point man for those talks is Óscar Pérez-Oliva Fraga, a grandnephew of the Castro brothers. He is currently Cuba’s deputy prime minister and minister of foreign trade and foreign investment — an important pillar of the economy.
The presence of two Castros at the negotiating table casts a long shadow of doubt on whether the regime is truly willing to surrender 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 demise, analysts said.
“The government complains about the embargo when it’s convenient, but then they build these hotels as if there was no embargo,” said Ricardo Torres, an economist at the American University in Washington who specializes in Cuba.
After the 2015 deal between Cuba and the Obama administration restored diplomatic relations and eased travel restrictions, GAESA bet heavily on tourism, expecting an influx of Americans. At first the bet paid off and Americans flocked to the island. GAESA went on a spending spree: By 2025, it built 121 hotels, up from 56 a decade earlier, adding 22,000 new rooms.
But the tourism boom was short-lived.
In 2016, President Trump reimposed sanctions and barred American tourists from visiting the island. Cuba’s economy faced another blow in 2020 when the pandemic ground tourism to a halt.
Yet GAESA kept building hotels, even as it neglected other parts of the economy. Cuba’s once-famous sugar cane industry — which financed the early days of the Communist revolution — collapsed, as government spending on the sector plummeted. Cuba has had to import sugar in recent years for domestic consumption, and even imports from the United States.
According to the latest government figures, in 2024, Cuba spent nearly 40 percent of its budget on tourism and hospitality, or some $1.5 billion. Yet hotel occupancy rates that year hovered at a dismal 30 percent.
The tourism budget was about 11 times that of education and health care combined in 2024. Spending on education decreased by 26 percent that year compared to 2023. That the government is spending more on tourism while Cubans go without basics shows how far the Communist revolution has devolved, observers say.
“The Cuban constitution says that we, the people, are the owners of all the means of production,” said Mr. Torres, the Cuban economist. “But there is no oversight into GAESA’s finances or business decisions, there is no social control.”
Last year, GAESA inaugurated the Iberostar luxury hotel in Cuba’s tallest building. The five-star hotel towers over Havana’s skyline of dilapidated homes. Yet some tourists say that the hotel is mostly empty when they visit.
“These military guys have profits that have been hoarded for a rainy day,” said Ricardo Zúniga, a former U.S. official who helped broker the Obama-era deal. “Well, it’s about as rainy as it gets in Cuba. So where is GAESA?”