With a Heavy Hand

The period of stable diplomatic relations between the U.S. and Cuba did not last long. The Yankee U-turn from the brief thaw could already be perceived when President Trump demanded Havana accept his demands regarding domestic policy. The refusal 15 days ago by the Cuban regime to negotiate on the right to free self-determination of their issues precipitated the change in U.S. policy toward the island, with the partial leveling of the recent agreements signed by his predecessor.

Trump took the step he declared he would take and reversed some of the administrative directives passed by former President Barack Obama in January 2015. Within the framework of the new policies Trump has established since June, he has drawn up a package of measures that revive sanctions and renew old tensions. The menu includes the prohibition of commercial transactions between U.S. citizens and a large list of companies linked to the Cuban military, intelligence and security services, and the restriction of tourist visits, except those for academic or social support purposes and which are accompanied by an official United States representative.

U.S. companies that had formalized commercial activities before the measure was put in place, as well as tourist trips already contracted for the coming months, were salvaged from the purge and can continue operating to avoid financial injury and loss to investments. Chains such as Hilton and Carson are continuing to negotiate partnerships, and Marriott has signed an agreement for the management of a historic hotel in Havana, thanks to a special license provided by the Obama administration. Also within the exceptions are cruises and direct commercial flights between both countries.

On the list of 180 restricted entities, the hardest hit will be those that have ties to the tourism sector. The principal entity that will be affected is the Grupo de Administración Empresarial, or Business Administration Group – the most powerful economic emporium of the Cuban Armed Forces, consisting of 100 companies that operate in diverse sectors of the economy and produce 65 percent of the island’s income. At the core of its portfolio is the largest hotel group in the country, Gaviota, and the luxury chain Habaguanex, dedicated to cultural and historical accommodations in the old town of Havana, where its 23 hotels remain off-limits to tourists and future commercial activity.

The Gaviota Group is a successful conglomerate of holdings, which drives 70 percent of the retail commerce in dollars and is the engine for tourist activity in Cuba. It has 62 hotels, 33 of which are run by foreign management companies through administration contracts; it offers 26,725 rooms and directs a dozen marinas along the length and breadth of the archipelago. All the hotels, hostels, marinas and travel agencies in the various tourist areas of the island are included in the program of vetoes and sanctions.

The activities of the hotel group are managed by a completely silent official – the influential, and yet unknown General Rodríguez López-Callejas, about whom little is reported in the Cuban press. The only thing known about him is that he acts as the guardian of foreign investors and that he is a protégée of President Raúl Castro, who, since taking office in 2008, has left control of the economy in the hands of the military. Since then, the Grupo de Administración Empresarial has taken off and multiplied its business operations in a financial system which has, for a long time, been based on market laws.

Cutting off bilateral relations, which are now subject to a detailed regulatory process, constitutes a sensitive breaking point for the island of Castro, which cradles the idea of consolidating a tourist boom with the flow from the U.S. Last year saw a 90 percent increase in U.S. nationals compared with 2015, while in the first semester of this year, the increase was around 145 percent from the previous year. The surge had anticipated 760,000 tourists for 2017, way more than the 100,000 received in 2014.

Despite the new charter, the regime has maintained the decision to shake up its limited tourist infrastructure by promoting investment plans that allow it to widen its accommodation capacity for 2020 to more than 85,000 rooms. It will continue to attract the investment of business owners linked to Canada, Germany, the United Kingdom, France and Italy – countries that made up the lion’s share of its 4 million tourists in 2016.

With the return of the politics of action and reaction, Trump has proposed cutting the economic supply line to the communist government and the Cuban military forces in order to weaken their finances, and with a heavy hand on the table, he is taking the temperature of the Cold War. The risk is that a high fever could develop!