Havana recently announced that Cubans abroad can now own private businesses on the island. To the average investor that might sound like a long-awaited invitation to support meaningful development that will produce solid financial returns while also helping Cuba move towards greater economic opportunity and sustainable growth. But investors, particularly Cuban Americans in South Florida who genuinely want to help the Caribbean nation emerge from 25 years of authoritarian rule should treat this announcement with cautious enthusiasm.
Rather than signaling meaningful reform, this latest call for foreign investment seems to be the Cuba government looking for a quick way to alleviate the internal force building amid Washington’s maximum pressure campaign. Since late January, when the Trump administration effectively blockaded nearly all oil shipments to Cuba, conditions on the island have been deteriorating dramatically. Recently, however, the U.S. Coast Guard allowed a Russian tanker to pass through the blockade, delivering an estimated 730,000 barrels of much needed oil to the island.
While the Trump administration has offered Havana no clear roadmap for relief, the implicit demands surely include reducing military control over the country, political liberalization, and a significant realignment away from U.S. adversaries. Until then, external pressure, not political engagement, will continue as the organizing principle.
In the past, when political and economic strain has become untenable, Cubans have looked for a safety valve to ease the growing pressure throughout the country. The concept is simple: the administration offers an economic opening during sustained political or economic difficulty followed by a reassertion of government control once the extreme environment stabilizes.
History leaves no doubt.
In 2021, for example, following widespread protests and a deepening economic crisis, the Cuban government legalized small private enterprises for the first time in decades. While framed as a step toward liberalization, the reforms upheld tight state control with extreme limitations on sectors, firm size, and market access, all of which reflected a pattern of limited, easily reversible opportunities rather than a fundamental shift in the system.
By 2024, taxes increased, approvals slowed, and Cuban officials had broader authority to shutter businesses without cause. This is the extreme environment in which their economy has long teetered. As internal pressure builds, supplies on the island dwindle, food lines grow, the misery index increases, and just enough economic growth occurs to alleviate the pressure.
Now, foreign investors, including members of the Cuban diaspora, are being invited to breathe life into Cuba’s deteriorating system. There is a hope that by introducing free market options backed by American and other foreign investment, Cuba’s private sector will strengthen and mature enough to finally overcome the long-standing authoritarian system. That idea, however, overlooks the difficulty of growing a business on the island today.
If the authorities are serious about producing lasting change through external investment, they must establish conditions in Havana that ensure viable investment can be made at scale. Right now, there is no independent judiciary capable of enforcing contracts and no guarantee that property rights will not be revoked by decree. To create genuine prosperity, investors’ fears must be directly addressed and given assurances around sudden rule changes or asset seizures.
Still, today, nearly six thousand certified U.S. property claims tied to post-1959 expropriations remain unresolved, representing billions in value. Ownership in Cuba has never been reliably protected, and investors intuitively know what that means. Capital does not thrive where it’s not protected or able to take root.
Circumstances must be generated that attract substantive international investment: independent courts, enforceable contracts, property rights that survive politics, and the ability to operate without interference from the government or the military. Until foreign investors find more security for basic commercial freedoms like the ability to hire workers directly, repatriate profits, and manage supply chains without interference, the lawless environment will give investors pause.
Another sizable concern that cannot be overlooked is the military’s indiscriminate authority over the private sector. Through the GAESA or Grupo de Administración Empresarial S.A., the sprawling state-run conglomerate dominates key sectors of the economy, wielding outsized control. Their influence maintains power over various aspects of Cuba’s economy from hotels, ports, logistics, and import laws to the flow of finances, including foreign currency transactions as well as banking, telecoms, construction, and real estate.
This difficult reality is reflected in outcomes. Remittances, for example, which exceeded $3 billion annually before the pandemic, remain one of the country’s most reliable sources of hard currency. Tourism is well below pre-pandemic levels, and stated investment figures rarely translate into real capital on the ground. When investors discover a system where rules shift on a whim and enforcement follows political priorities, progress stops.
For more than half a century, Washington has optimistically approached each engagement with Havana, thinking that the system would eventually liberalize on its own. But since 1962, when President Kennedy first imposed the embargo, subsequent openings under Presidents Nixon, Carter, Clinton, and Obama, have all ended the same way: Cuba’s authoritarian rule returns to the status quo, continuing by tightening its grip at home and offering little in return abroad.
Now, sixty-four years later, the protests, the shortages, the rolling blackouts are all evident signs that the model depends on outside cash to survive. While the U.S. has not yet laid out what criteria Cuba must meet for the pressure campaign to end, Cuba’s economic reform must start now. Allowing limited investment in decentralized energy solutions and restoring direct financial flows to households would be a good starting point.
In the meantime, savvy investors realize that progress in Cuba depends on addressing these underlying issues. Investors entering Cuba’s economy without these basic guarantees know they would only be underwriting a system that has no intention of changing. Capital would flow in, but nothing lasting could take shape.
Until ownership truly means ownership, nothing of consequence will ever be built in Cuba.
Rick de la Torre, a retired CIA senior operations officer, advises companies operating at the intersection of geopolitics, national security, and global commerce as the founding partner of Tower Strategy based in Washington, DC.
Image via CiberCuba.
