By Francisco Acevedo
HAVANA TIMES – The bomb has just exploded, after Cuban authorities informed several foreign companies this week that they will no longer be able to freely use the foreign currency they have in bank accounts in the country — totaling several million dollars.
With a single stroke, the Cuban government prohibits them from withdrawing those funds and forces them to use them solely for operations within Cuba.
As soon as the news broke, the announcement sparked widespread discontent, not only because it came as a surprise but also because it is being carried out semi-secretly, through individual meetings with company representatives, according to those involved.
We are still waiting for an official statement, but the uproar is important—perhaps enough to shame them into reversing the decision—because this would be a fatal blow to foreign investment, precisely when it is needed like the May rains.
According to journalistic sources, some of these investors have already complained to their respective governments.
The audacity doesn’t stop there. In addition to trying to seize foreign currency that doesn’t belong to them, Diaz-Canel and company are “offering” the affected parties the chance to open a new type of foreign currency account on the island. In other words, not only are they being told that their money is not entirely theirs, but they are also being asked to bring in even more hard currency. It’s the height of insolence.
Just as they did the same to their submissive population by “converting” MLC magnetic dollar accounts into a new card called Clasica, into which old funds couldn’t be transferred, only new money could be deposited, now they are telling businesses to open new accounts with fresh money.
According to official data, by the end of 2023, Cuba recognized the operation of 334 foreign investment ventures from more than 40 countries, most through international economic association contracts. A little over a hundred are joint ventures, and the rest are wholly foreign-owned enterprises.
This form of expropriation—because there’s no other word for it—especially affects Spanish entrepreneurs, who represent the largest foreign presence in Cuba’s tourism industry, with over 100 approved management contracts operated by around 20 foreign hotel chains, including well-known ones such as Melia, Iberostar, Roc, Barcelo, and Valentin.
Some representatives of the affected foreign companies recalled that restrictions had already been in place for years, since in practice, it has been nearly impossible to get a dollar out of Cuba. This is a coercive measure that, far from encouraging investment, discourages any interest in investing here.
They nobly hope that with the new accounts, they will be able to carry out international operations or repatriate profits. But if the government has already pulled this “trick” once, there’s no reason to think they won’t do it again. After all, we’re dealing with a government specialized in pushing limits. Take a finger, end up cutting off the whole hand, just as it has done with its people over the past 65 years.
They’ve been sold the idea that they will be immune to the severe liquidity problems plaguing Cuban banks, which are hemorrhaging due to parallel exchange rates, decapitalization, and lack of liquidity, both in Cuban pesos—rationed since last August—and in foreign currency. All operations are subject to restrictions for both civilians and businesses, foreign and domestic.
The island’s failed economic and monetary policies have not solved the severe liquidity problem. Even to collect an inheritance, for example, an average citizen may have to spend months going to the bank just to receive the money in cash.
The Cuban State urgently needs millions of dollars because it currently imports about 80% of what is consumed on the island—especially fuel and food—the latter driven by the extremely weak national production.
The much-hyped banking reform and recent partial dollarization of the economy seem insufficient to attract more foreign currency and cover debt payments abroad, so now they are turning to foreign companies with assets on Cuban soil.
Domestically, sectors that generate foreign currency—such as healthcare (through services and personnel abroad), biotechnology, tobacco, and tourism—cannot access the resources they generate. Everything must be handed over to the Central State Treasury, and it is the Ministry of Economy and Planning that decides how much foreign currency they are given to continue operating.
This kind of financial enclosure—known in other countries as a corralito—will hardly resolve the severe economic crisis Cuba has been mired in for five years, due to the scarcity of basic goods and other problems. But for now, it’s a slap in the face to foreign investment.
Even before this, the 2024 Economic Freedom Index published by the conservative US think tank The Heritage Foundation ranked Cuba as the worst in the Americas to invest. They cite an inefficient and uninviting regulatory environment for business and a highly restrictive investment climate. Now, nothing will lift us from the bottom of the global rankings.
To many opposition voices, this serves as a lesson to those who insist on doing business with the dictatorship, companies that end up tarnishing their image by rubbing shoulders with the regime at official events, shamelessly indulging in gourmet meals while the people go hungry, never speaking out about the human rights situation or political prisoners, nor offering a ride to a Cuban who has no transportation to a hospital.
Now that their toes are being stepped on, as the saying goes, the foreign business executives must remain silent because their money is at the mercy of the generals, and they could lose everything. They realize that these deals are always a lion vs. a monkey, and they regret bringing their savings to this destination. I don’t think a single new investor will come. Hopefully, Diaz-Canel and his entourage can squeeze out as much as they can now—because these may be the last dollars they’ll ever see.
