Cuba

High on Cuba policy proposal: restricting U.S. business deals with Cuba’s military-run entities

In this June 28, 2016 file photo, a vintage car passes in front of the Four Points by Sheraton hotel in Havana, Cuba, managed vy the U.S.-based Starwood hotel chain and owned by Gaviota, part of the military conglomerate known as GAESA.
In this June 28, 2016 file photo, a vintage car passes in front of the Four Points by Sheraton hotel in Havana, Cuba, managed vy the U.S.-based Starwood hotel chain and owned by Gaviota, part of the military conglomerate known as GAESA. AP

Cuban-American members of Congress have been pushing the Trump administration to restrict deals between U.S. companies and Cuban firms controlled by the island's military, as part of the new Trump policy toward Cuba expected to be announced this week in Miami.

White House spokeswoman Helen Aguirre Ferré confirmed Monday that the proposal is under consideration, but added that it was "one of the many possibilities under discussion."

The possibility of restrictions put a spotlight on the military-run companies, which are just about everywhere on the island.

If you're a U.S. traveler in Cuba and you buy a bottle of water in the supermarket or a souvenir in a store, or you rent a car or a hotel room, it's very likely that you're putting money into the pockets of the military-run GAESA, which experts say controls nearly 60 percent of the Cuban economy.

GAESA, the Spanish acronym for Grupo de Administración Empresarial S.A., is the business conglomerate owned by the Revolutionary Armed Forces and controls more than 50 enterprises, although the exact details are difficult to establish.

GAESA operates in virtually every profitable area of the Cuban economy, controlling hotel chains, car rental agencies and sales companies, banks, credit card and remittance services, supermarkets, clothing shops, real estate development companies, gasoline stations, import and export companies, shipping and construction companies, warehouses and even an airline.

Heading the conglomerate is army Gen. Luis Alberto Rodriguez Lopez Calleja, who, according to various reports, is married or was married to a daughter of Cuban ruler Raúl Castro.

One of the best known companies of GAESA is the Gaviota hotel chain, which owns nearly 29,000 rooms around the country and serves an estimated 40 percent of all the island's foreign tourism.

Gaviota has signed management contracts for 83 percent of its rooms with international hotel chains like Spain's Meliá and the Swiss-based Kempinski. It also has a deal with Sheraton's Starwood chain to administer the Four Points Hotel in Havana, a contract that was allowed by policy changes under the Obama administration.

Gaviota also owns the Gran Hotel Manzana in Havana, Cuba's first luxury hotel, managed by the Kempinski group. Exclusive hotel shops that sell Montblanc, Versace and Armani goods are owned by CIMEX, a Cuban business conglomerate taken over by GAESA in 2010. CIMEX, founded by the Ministry of the Interior, includes financial services, a chain of shops and import and export agencies.

Restrictions by the Trump administration on doing business with Cuba's military-run companies, if imposed, would impact more than tourism because GAESA operates in virtually every sector of the island's economy — with the exception of telecommunications and agriculture.

GAESA's Almacenes Universales S.A., for example, controls the container terminal in the Port of Mariel, which receives most of the cargo that once arrived at the port of Havana. The terminal was built by Brazil's Odebrecht company, with funding from President Dilma Rousseff's government.

Western Union has said that its operations in Cuba use the infrastructure of FINCIMEX (Financiera Cimex) to send remittances to Cuba. FINCIMEX also processes VISA and MASTERCARD transactions on the island. FINCIMEX also handles remittances sent to Cuba through companies like VaCuba.

And the room-rental company Airbnb, which saw its Cuba operations boom after the Obama Administration approved it, may be affected by any change because it pays home and apartment owners through VaCuba. Airbnb declined to comment for this story.

The birth of GAESA goes back to the 1980s. But when Raúl Castro, who was in charge of the military for more than five decades, replaced his brother Fidel in 2006, military officers began taking more control of the economy under the argument that they were more efficient than Cuban bureaucrats.

GAESA expanded even further in 2016 when it took over Cuba's International Financial Bank (BFI) as well as Habaguanex, a corporation that Fidel Castro had favored with a special license to run hotels, shops and restaurants in Old Havana.

Miami Herald staff writer Patricia Mazzei contributed to this report.

Follow Nora Gámez Torres on Twitter: @ngameztorres

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