Trump Sanctions Drive Hotels, Banks and Investors Out of Cuba
Four foreign hotel operators are ceasing operations in Cuba as Trump’s May 1 executive order is about to take effect. Spain’s Iberostar and Meliá, Canada’s Blue Diamond and Indonesia's Archipelago International have all announced plans to leave or reduce operations in Cuba ahead of a June 5 deadline.
Executive Order 14404 imposes “secondary sanctions” that effectively give carte blanche to Rubio, a Cuban-American politician from South Florida who has never stepped foot in Cuba, to go after third parties in other countries doing business on the island. Companies engaging with GAESA, which is heavily invested in Cuba’s tourism industry, have borne the brunt of the order’s impact.
On May 7, the Treasury Department gave foreign companies until June 5 to wind down transactions involving GAESA before facing potential sanctions.
Tourism remains one of Cuba’s main sources of foreign exchange and supported hundreds of thousands of jobs across the country before the first Trump administration began ramping up the U.S. government's long-running economic war on the island.
The impact of the order has gone beyond the hospitality industry. The Cuban Central Bank announced this week that Visa and Mastercard transactions will be suspended beginning June 6 after a foreign bank severed ties with Fincimex, which is a part of GAESA.
And last month, Canada’s Sherritt International, which operates a 50/50 joint nickel mining venture with the Cuban government, announced it would dissolve its Cuban operation immediately following the executive order. Just days after the decision, Sherritt reversed course when a former Trump executive signed a pre-agreement to acquire a majority stake in the company.
The May 1 executive order is the latest onslaught in an economic war that seeks to asphyxiate the island’s economy. Cuba has already been suffering from an oil blockade that has ground daily life to a halt and is pushing the country toward a full-blown humanitarian crisis. The one-two knockout punch of the fuel blockade and secondary sanctions has come on top of around eight years of “maximum pressure” measures that began during Trump’s first term.