Alberto Luzárraga, a Cuban lawyer based in Miami, has strongly criticized the role of the Business Administration Group S.A. (GAESA) in Cuba's economy. He argues that the military conglomerate is not a solution but rather "a part of the problem that needs to be addressed."
Luzárraga stated in a recent interview, "It's unjust that the most profitable state-run company belongs to the military. This is something unique to Cuba." His remarks came shortly after he participated as a panelist in the "Helms-Burton Act and Cuban Democracy" symposium, organized by Patria de Martí last Thursday in Miami.
Military Dominance in the Economy
With an extensive background in privatization processes throughout Latin America during the 1980s and 1990s, Luzárraga dismissed the view that GAESA is essential for any transition due to its capital and business structure. He emphasized, "These are essentially military-owned enterprises," highlighting that GAESA's profitability stems from monopolies rather than genuine efficiency.
GAESA exerts control over approximately 40% of Cuba's economy, boasting over $18 billion in liquid assets, according to 2024 data. It operates through a complex and opaque structure with companies registered in Panama, Cyprus, and Liberia to circumvent international sanctions.
Historical Context and Economic Impact
The conglomerate was established in the 1990s to enable the Revolutionary Armed Forces (FAR) to generate their foreign currency following the Soviet Union's collapse. By the end of that decade, its companies were covering 80% of the FAR's operational budget, reversing the usual dynamic where the state relies on the military.
Regarding Cuba's exports, Luzárraga acknowledged that the island still exports tobacco, but he was blunt in his assessment: "There are a few things left, but it's really a very poor export. For a country with 10 million people, it's quite meager."
He also pointed to the global decline in tobacco consumption, particularly among millennials, as a factor that will further impact this sector in the long run. In 2021, Cuban tobacco exports reached $204 million, ranking second after mining, according to the National Office of Statistics and Information.
Prospects for a Transition in Cuba
When discussing a potential transition in Cuba, Luzárraga identified two main investment opportunities for Cuban Americans and Cubans abroad. The first, and most accessible, is real estate. "In a free and prosperous Cuba, any investment in real estate will be valuable," he asserted, including homes, farms, and beachfront properties.
His optimism is based on geography: "Cuba will improve. Why? Because of its geographical location."
However, he cautioned that real privatizations require two conditions absent in the island today: legal stability and social tranquility. He described the complexity of Cuba's situation as "10.5 on a scale of 1 to 10."
Luzárraga suggested that the first step in any transition process should be "a thorough audit of state-owned companies to determine which ones are viable and which are not," as many operate with chronic losses, excessive staffing, and unjustified state budgets.
His views align with economist Orlando Freire Santana, who, in April 2026, recommended privatizing state enterprises, freeing up prices, and dismantling GAESA as prerequisites for any genuine reform, along with repealing the 2019 Constitution.
Understanding GAESA's Role in Cuba's Economy
What is GAESA and why is it significant in Cuba?
GAESA, or the Business Administration Group S.A., is a military-controlled conglomerate that dominates approximately 40% of Cuba's economy. It is significant because it operates through monopolies and has substantial liquid assets, making it a key player in the economic landscape of the island.
How does GAESA affect Cuba's potential for economic transition?
GAESA's control over major economic sectors and its military ties pose challenges for any economic transition. Critics argue that its monopolistic practices hinder genuine economic reform and that dismantling its influence is crucial for a successful transition.