Cuban entities controlled by the military are in the spotlight for all the wrong reasons. President Donald Trump’s prohibition on conducting transactions with those companies will likely reveal new information on the military’s participation in the Cuban economy—a topic that has steered U.S. policy toward the island for decades.
Trump’s policy intends to weaken the Revolutionary Armed Forces’ (MINFAR) massive GAESA conglomerate, whose holdings include hotels, retail chains, banks and remittance services, import and export companies, bars and restaurants, and construction companies, among others. GAESA’s expansive portfolio has led many to ask how entrenched the military is in the economy.
In the days leading up to Trump’s announcement, several media outlets including Cuba Trade reported that some Cuba experts estimated the military to control up to 60 percent of the economy. Economic analyses conducted by the Havana Consulting Group and Back Channel to Cuba author William LeoGrande challenge that claim. They show revenue from GAESA and Interior Ministry (which oversees the police) entities constituted about one fifth of Cuba’s gross income in 2016.
So what’s behind the huge difference?
In June, LeoGrande claimed the 60 percent figure originated from a 2004 Miami Herald report that cited the USAID-funded Cuba Transition Project conducted by the Institute for Cuban and Cuban-American Studies (ICCAS). Outgoing ICCAS director Jaime Suchlicki confirmed the figure’s origins. “This is based on the [Cuba Transition Project] analysis of Cuba’s government control of businesses in Cuba, including Grupo Gaesa, the largest military complex in the island,” he wrote.
One of the major problems with the 60 percent figure, says LeoGrande, is that ICCAS refers to entities led by current or former military officers, and not entities that report to MINFAR. An example of Suchlicki specifically discussing the participation by military officers in the economy appears in a 2007 Harvard International Review essay he wrote: “Today, more than 60 percent of major industries and enterprises are in the hands of current or former military officers.”
Suchlicki says the findings about military officers leading industries and enterprises should be treated as an equivalency to the armed forces operating 60 percent of the economy.
LeoGrande and Morales disagree, insisting there is no basis to the claim that the armed forces control enterprises and ministries led by active or retired military officers. “Sometimes the government decides to put somebody who was working in the army into a civil company. That doesn’t mean it belongs to the army,” Morales said.
The Havana Consulting Group used a narrower definition of military participation in the economy to conclude it contributed less than 21 percent of the island’s gross income in 2016. Its analysis used data Morales has collected over the last 15 years to generate revenue estimates for GAESA and Interior Ministry entities. Those figures were compared to estimates for state-controlled and private entities.
LeoGrande says his analysis, which used the same definition of military participation in the economy, produced similar estimates.
Now, the Trump administration faces the difficult task of identifying military-controlled entities. That decision may have significant impacts on sectors such as tourism, because GAESA’s Gaviota tourism wing controls about 40 percent of country’s hotel rooms. And Tourism Minister Manuel Marrero Cruz is a former colonel. The military’s participation in that sector, however—like others—will vary depending on who is being asked.