On Tuesday, the United States government issued a public warning to global investors about the risks of conducting business in Cuba, describing the island's economic system as a "rigged environment designed to benefit the regime and its cronies." "Cuba is not open for business—it is rigged for the regime’s cronies," stated the Bureau of Western Hemisphere Affairs of the State Department on its official X account (@WHAAsstSecty).
The statement highlights that the Cuban government mandates foreign companies to form joint ventures, allowing the state to claim at least 60% of the profits, while the remainder is "withheld" and rarely distributed to foreign partners. Moreover, it underscores the regime's history of defaults and manipulating contractual terms to its advantage.
The official message emphasizes that the true barrier to the island's economic development is not external sanctions but internal corruption, lack of transparency, and market manipulation by the Cuban state. "Money doesn't flee Cuba because of the outside world. It's driven away by the regime's corruption," the statement declared.
This announcement aligns with an official report from the State Department, which holds the regimes of Cuba and Venezuela accountable for their respective economic crises, attributing them to decades of corruption, mismanagement, and authoritarianism. In Cuba's case, the report criticizes the regime for allocating over 37% of its 2024 investment to tourism and hospitality, in stark contrast to minimal investments in health and education, despite the dire shortages faced by its citizens.
The report further warns that military conglomerates such as GAESA wield significant economic control and may privatize key assets to benefit the ruling elite. Although Havana's government has yet to formally respond to the latest U.S. statement, it is likely to counter with its usual rhetoric regarding the economic blockade, accusing Washington of attempting to strangle its economy and undermine its international trade relations.
Understanding the Economic Challenges in Cuba
Why is the U.S. warning investors about doing business in Cuba?
The U.S. has cautioned investors due to Cuba's rigged economic system that primarily benefits the regime and its allies, along with the risks of manipulated contracts and withheld profits.
What issues does the State Department report attribute to Cuba's economic crisis?
The report cites decades of corruption, poor management, and authoritarian rule as key factors contributing to Cuba's economic challenges.
How does the Cuban regime allocate its investments?
In 2024, the Cuban regime reportedly allocated over 37% of its investments to tourism and hospitality, neglecting crucial sectors like health and education despite significant shortages.