The US is imposing sanctions on Cuban government companies that are key to the island nation’s economy

The United States hit Cuban state-owned companies on Tuesday with new sanctions that analysts say are expected to deter foreign investors and deepen the country’s dire economic situation.

US Secretary of State Marco Rubio said the sanctions target five Cuban companies, including three linked to Grupo de Administración Empresarial SA (GAESA), a business organization run by the Revolutionary Armed Forces of Cuba.

GAESA is believed to control about 40 percent of the country’s gross domestic product. As of early 2024, it was holding $14.5 billion in reserves.

“The situation in Cuba is evolving as the island’s corrupt, brutal and anti-Communist U.S. regime continues to assert its total control over the freedom, opportunity and basic welfare of the Cuban people,” Rubio wrote in X.

Rubio, the son of Cuban immigrants, accused “state leaders” of using GAESA to “steal the island’s few resources, diverting them for repression, anti-American insurgency and espionage instead of schools, power plants, and the basic needs of the Cuban people.”

Bruno Rodríguez, Cuba’s foreign minister, dismissed the sanctions, calling Rubio “disloyal and dangerous.”

“Cuba has proven stronger, more capable, and more successful than it expected in the face of brutal violence and collective punishment inflicted on its people and their living conditions,” he wrote in X. “What this person is promoting in the world’s greatest power is a crime.”

Foreign investors are expected to be cautious

Anyone providing services to targeted Cuban companies is at risk of being penalized and kicked out of the US financial system.

“By designating certain organizations, they make it clear to foreign investors: ‘If your business in Cuba affects any of these people, you are at risk of being banned,'” said Michael Bustamante, professor and chair of Cuban and Cuban-American Studies at the University of Miami.

“For many of these companies, it’s a bridge too far,” he said of the impact of the new sanctions.

Almacenes Universales SA, or AUSA, is among the authorized organizations. As the state’s main transport and logistics company, it handles Cuba’s export and import system and is the main transport operator at the port of Mariel, west of Havana. It is also the largest storage company used by the government, private Cuban companies and foreign investment partners, Bustamante said.

Last week, Cuba announced a series of economic reforms, including allowing the private sector to bypass the government when importing goods. But Bustamante said that he does not believe that this measure is still effective.

If people or companies avoid doing business with storage companies, he said, that can disrupt the flow of goods and lead to humanitarian consequences.

He was also punished by Rafin SA, which Bustamante described as an “obscure” company that he believed was operating as a financial company within GAESA. He said it is not a bank but it holds money for the government and GAESA, and it may be involved in financial matters.

“That seems to throw cold water on foreign investors who are already there,” Bustamante said.

The third business related to GAESA was approved by Banco Financiero Internacional SA, a commercial bank that Bustamante said serves as an important institution for foreign investors. “If you don’t have a bank to go to as a foreign investor, it makes your operation very difficult, to put it mildly.”

Max Meizlish, a former sanctions enforcement officer at the US Treasury, said the bank was targeted because it was a “critical link” to GAESA-related funds, adding, “This is important.”

Others sanctioned are Geominera SA, the state-owned mining company, and Empresa Siderúrgica Jose Martí, which the US has described as Cuba’s largest producer of crude steel.

The final punishment was inflicted on Annalie Lilliam Rueda Cardero, daughter-in-law of former Cuban president Raúl Castro.

It adds to the list of existing penalties

These sanctions are the latest in a recent series against GAESA itself and Cuban President Miguel Díaz-Canel.

“It’s very difficult to determine what’s going on here,” Bustamante said. “Does this set the table for a massive sale of Cuban assets to the highest bidder or the lowest bidder? … Is this part of the recipe for a brutal takeover?”

The administration of US President Donald Trump has been putting pressure on changes in the political and economic situation in Cuba, accusing the island country of representing a threat to the US because of its relations with America’s enemies. The Cuban government has repeatedly denied that this is dangerous.

Meanwhile, Cuba unveiled economic reforms last week that Bustamante described as “possibly the biggest liberalization of the Cuban economy in 60 years,” although he said questions and doubts remain.

On Tuesday, a U.S. State Department spokesman said the changes “are small, long overdue and the smoke signals from the Cuban government are overwhelming. This is part of the dictatorship’s playbook: announce a cycle of hypothetical reforms to fuel the desire for change, then quickly roll back any changes when total control of the regime is threatened.”

“The American administration will continue to put pressure on the government until the state is like a completely different beast,” said Meizlish, a researcher at the United States-based organization for Defense of Democracies.

Cuba is already struggling with severe power outages, food and water shortages and a crumbling health care system stemming from the US energy embargo.

At the end of January, Trump threatened to impose tariffs on any country that sells or supplies oil to Cuba, which was heavily dependent on oil shipments from Venezuela that were halted after the United States invaded the South American country.