Cuba’s Largest Company: The Revolutionary Armed Forces
HAVANA TIMES – In Cuba, renting a car, sleeping in a hotel, diving or buying in a store has one thing in common: the companies that provide these services belong to the Grupo Empresarial Empresarial S.A. (GAESA) led by the Revolutionary Armed Forces, reported dpa news.
GAESA is the largest Cuban holding company and includes a conglomerate of more than 50 companies, all directed under the laws of the market and chaired by brigadier General Luis Alberto Rodríguez López-Callejas, ex-son in law of President Raul Castro.
The most well-known company under GAESA is the Gaviota hotel chain, which has more than 29,000 rooms throughout the country, many of them in shared management with foreign companies such as Melia, Iberostar and even Starwood of the US Marriott chain.
The crown jewel of GAESA is the tourism sector, with a market share of 40 percent, but this conglomerate is much broader than many people think, reaching almost all sectors of the economy, as long as they bring benefits.
GAESA owns a shipping company, has its own airline, construction companies, car sales, real estate companies, banks and the company Almacenes Universales SA, which controls the container traffic at the Port of Mariel with its Special Development Zone, the big hope of the Cuban Government to attract foreign investments to the island thanks to the tax benefits.
At the outset, the Ministry of the Interior and the Revolutionary Armed Forces had their own separate companies separated from each other to self-finance their daily activities. By giving each institution a part of the economic pie ensured a peace between them.
The balance existed until 2010, when CIMEX, the island’s largest commercial conglomerate founded by the Ministry of the Interior, was absorbed by the military (GAESA), increasing their chain stores, but above all in financial services and import-export capacity.
The GAESA Empire increased last year with the acquisition of Habaguanex, the company that manages the tourist businesses in the historic center of Old Havana, formerly in the hands of the powerful Havana City historian Eusebio Leal.
The other takeover was that of Banco Financiero Internacional (BFI), the country’s main entity for currency management.
Both acquisitions made GAESA continue to capture highly profitable economic sectors because of its relationship with the foreign market.
The sending of remittances to Cuba is monopolized by its Financiera Cimex (Fincimex), which has agreements with companies such as Western Union. Fincimex also controls the processing of Visa and Mastercard international cards on the island.
These international financial alliances are also linked to the tourism sector, because it is via Fincimex that companies that send remittances pay in Cuba to the owners of houses and apartments that use the services of the US company Airbnb, specialized in renting rooms.
I don’t know ‘max’s pad’ whether you recall a Mr. John Goodrich a committed socialist, contributing to these pages. His opinion was that Cuba was not socialist, but “State Capitalist”. Like many socialist theoreticians, Mr. Goodrich denied that socialism had ever been practiced anywhere in reality – thus excusing all the very evident failures of such systems. However, in Cuba it is not ‘State Capitalism’ it is self evident military capitalism with over 80% of the total economy being owned and controlled by the military.
It can be argued that the military lies under the control of the Cuban State – ie: the Communist Party of Cuba, but that is only the case as long as Raul Castro Ruz is both Head of State and Head of the Military. Raul Castro has not said that he is to retire as Head of the Military.
Looming ahead is 2018 and the intended retirement of Raul as President. There are also rumours that his state of health is declining. Therein lies a potential power struggle. GAESA is under the control of Raul’s son-in-law and security (both internal and external) is under the control of Raul’s son. So both economic and physical controls (policing, CDR etc) lie with that one family. Diaz-Canel as the already annointed successor as President with Bruno Rodriguez and Marino Murillo as hencemen are the supposed political future. The difficulty is that history demonstrates that under communist administrations dictatorship is inevitable. Only one person can hold such power. There could well be a struggle between the two described interests – especially if Raul joins his predecessor.
To an extent rodrigvm you are correct. Following the Obama initiatives there was a blip in tourism due to the sudden increase in American tourists. That door is it appears now being closed again, but that doesn’t affect tourists from the rest of the capitalist world.
However what will affect GAESA and its rapid increase in the number of hotel bedrooms through Gaviota which it owns, is that the anticipated rapid and substantial increase in American tourists will no longer occur.
Remember that in 2015, GAESA spoke of increasing the number of hotel bedrooms by 15,000 within two years. So, the Cuban state does have reason to worry.
But larger than the Canadian military as a member of NATO and with over three times the population.
The Cuban military is the Cuban State. Almost all senior party members are military officers & and most senior governmental posts are held by officers of the FAR. The military ownership of GAESA places control of the Cuban economy in the military’s hands.
As usual with Trump, his speeches are full of boasts & exaggerations, but the substance of the changes he announced, are limited to an adjustment to Obama’s policy, and not a wholesale repeal of it.
The recently announced changes to US-Cuba policy aim to direct US tourism dollars away from the military and toward private business. The military will lose some revenue, but they will eventually take their cut from taxes & sales. The significant part of the new rules is that by directing US tourism toward private business in Cuba, there will grow a body of people not so completely dependent on the State. Eventually, this growth in economic power will lead to political power for the Cuban people.
Not Capitalist per se, but GAESA owns a shipping company, has its own airline, construction companies, car sales, real estate companies, banks in addition to the Hotel industry. That consolidation rivals that of most US holding companies except for the value of the two economies. Monopoly is monopoly.
The longest speech at the UN was over 7 hours by India’s former finance minister V.K. Krishna Menon in 1957.
New policy is another Trumpish lie, most hotels are co owned by the FAR so is the airport etc So how should people get there? Buy food in the streets? Bad advice and ignorance again by Trump
Administration. Which is why Cuban state not worried.
Less than the 250,000 it was before!
Funny Chuck1938 how no one can recall what Fidel Castro said – only the duration of his haragues.
You obviously never heard of Winston Spencer Churchill whose speeches actually had content, emotion and unequalled delivery.
It was Churchill who in a speech delivered in Fulton, Missouri spoke of the Iron Curtain that had descended across Europe.
Do please give a comparable phrase from Fidel Castro? As for prophecy, maybe you could also include a few of those?
You may recall that I have quoted Churchill previously in these pages:
“The inherent vice of socialism is the equal sharing of misery.”
He had something to say. Many of his speeches have been coined as historic, visionary and prophetic statements. No other public figure speeches were comparable in content, emotion and delivery. That is another reason for the time difference.
The difficulty in Cuba Martin Reid is that all the stores are military – there is no alternative. Where else could one buy frozen ostrich legs?
Yes CErmle, Trump(f)’s narcissistic spoutings remind one forcibly of the similar exaggerated spoutings of his fellow narciissistic President Fidel Castro. But thankfully Trump(f) usually quits after 25 minutes, Fidel Castro would rave on for hour after hour to audiences assembled for him. He still holds the record at the UN where he bored the pants off the assembled delegates for four hours twenty nine minutes.
Again Trump lies since his changes and bravado in Little Habana will amount nothing. People will continue going to Cuba. By the way the Cuban army under Raul was downsized from 250,000 to around 50,000. Smart move and many officers were sent to Scandinavian countries to study business! Raul as part of term limits (yes) will step down next year as president, will remain leader of the party. Likely Diaz Canel a younger leader will become president.
For once, I agree with your observations and your opinion.
Is this a shock? It’s a bit clumsy, as a matter of administration, but did someone believe that Cuba was a capitalist country, for some reason? All of a sudden, it’s newsworthy that military force is expensive? Or does the Havana Times think that Cuba needs no military defense?
Having listened carefully to President Donald J. Trump(f) giving what was described as a speech in Little Havana today, I found only one statement that had potentially serious implications. That was a claim that the document he was signing:
“By-passes the military and the government.”
the implication being that US companies would not be allowed to deal with military owned and controlled organizations (ie: GAESA subsidiaries).
There were the usual ‘trumpetings’ which go down well with Trump sycophants but hold little real meaning.
A few quotes:
“I am cancelling the last administrations completely one sided deal with Cuba.”
“A military monopoly that exploits the people of Cuba.”
“We will restrict the flow of dollars.”
“We will enforce the embargo.”
“A regime which shipped arms to North Korea.”
“We will be a voice for the voiceless.”
“We will not be silent in the process of communist repression.”
and with typical Trump(f) exaggeration:
“A free Cuba is what we will soon achieve.”
In playing to the gallery of Cuban exiles, Trump(f) made little actual change to the Obama introduced changes. As is his custom, he was full of promises without any substantive actions.
How he ensures that US businesses do not deal with GAESA subsidiaries is the big question, for that would necessitate avoiding dealings with over 80% of Cuba’s economy. Regarding the embargo, decisions regarding it depend upon the US Congress, not the President.
Great idea! Maybe Canada & US should adopt and save taxpayers a bundle! Just think if we dont like what government is doing militarily we just boycott their stores etc!!
GAESA manages an estimated 5 billion dollar business which includes those businesses described in the post. More importantly, GAESA profits fund the Cuban Armed Forces. Corporate leadership of the various businesses, certainly the most profitable is manned by high-ranking military officers. This is how the Castros are able to obscure actual military spending.