Download Complete Report in English
Descargar Dossier completo en español
GAESA (Grupo de Administración Empresarial S.A.) has lost control of the remittance business in Cuba, due to a quiet “citizens’ financial rebellion” against its banking monopoly. Just over 95% of the flow of remittances from the Cuban diaspora to the island is being channeled through a network of more than 150 “informal banks”. This phenomenon is a severe blow to the ruling elite’s finances, given that remittances were their second main source of foreign exchange.
Despite GAESA’s desperate maneuvers to regain lost ground, the reality is that its control over remittances has collapsed. According to estimates based on accumulated revenues up to May 2024, GAESA will only collect around US$81.6 million at the end of this year, which represents only 4.13% of the total volume of the remittance market that was collected in 2023, which was US$1,972 million. This is evidence that most of the business has passed into the hands of informal networks that operate more quickly, efficiently and with greater confidence for users.
For decades, GAESA controlled remittances through entities such as FINCIMEX, S.A. and American International Services S.A. (AIS). It later established ORBIT, S.A. to make it appear as an independent company to evade U.S. sanctions. Investigations, reports and press conferences of various independent academic institutions and media since 2020 warned of GAESA’s new move to create ORBIT, S.A. to circumvent these sanctions.
Despite independent reports documenting how the regime diverted remittances to GAESA accounts abroad, benefiting that corporation at the expense of the Cuban people, the Biden administration gambled on a second thaw and chose to ignore that evidence. It was the protests of July 11, 2021, and the brutal repression that followed those protests, that created a new context that made it politically costly to continue with that strategy.
Citizen financial rebellion
A recent investigation by the Miami Herald confirms how citizens and small informal businesses broke GAESA’s remittance monopoly. Currently, 95% of the remittance flow is done outside state control, thanks to the efficiency and speed of these alternatives. This change has drastically reduced GAESA’s revenues in this sector, to the point where it barely manages 5% of the market in 2024.
Factors precipitating the fall of state control
One of the main triggers for the loss of state control over remittances was the implementation of the so-called Monetary Ordering Task, an economic measure that promised to solve the country’s financial problems, but resulted in a deep inflationary crisis. In addition, the creation of stores in Freely Convertible Currency (MLC), which was initially planned as an experimental project, ended up becoming a system that dollarized the retail trade managed by GAESA companies. These policies not only generated discontent among the population, but also deepened distrust in state institutions, especially in national banks.
Sanctions imposed by the Trump Administration also played a role. Among these measures was the prohibition of transactions with entities controlled by the Cuban armed forces, such as FINCIMEX, which until that time was the main agent for sending remittances to the island. Although GAESA tried to circumvent the sanctions by creating ORBIT, S.A., this strategy failed in regaining control of the market. The clumsiness of its fragile masking left the military conglomerate exposed as the actor behind this business façade.
The arrival of the COVID-19 pandemic further exacerbated the situation. The closure of Cuban airports for more than 20 months paralyzed informal remittance channels, which traditionally accounted for about 50% of total remittances. This disruption severely affected the finances of many Cuban families and increased reliance on more efficient informal channels, especially with the gradual reopening of the borders.
Another crucial factor was the massive wave of migration in recent years. Between 2020 and 2023, more than 850,000 Cubans migrated to the United States, seeking better opportunities amid the growing economic crisis. However, this phenomenon, which the regime hoped would translate into an increase in the volume of remittances, had the opposite effect. Most of these migrants prioritized family reunification and faced their own economic challenges abroad, thus limiting their ability to send money to their relatives in Cuba.
Impact on finances and political control
GAESA’s inability to regain control of remittances reflects a loss of public confidence in the regime’s financial institutions. This has left the military conglomerate with a severely weakened source of income. The truth is simple: Cubans prefer to process their foreign exchange directly in the informal market.
Conclusion
GAESA’s failure to retain control of remittances is evidence of the fragility of Cuba’s financial system and the decline of its militarized governance. The informal financial rebellion not only deprived the regime of a key source of foreign exchange, but also marked an irreversible change in the island’s economic dynamics. The loss of control over the flow of remittances and the growing economic informality are symptoms of a system that is unable to adapt and that, with each failed maneuver, moves closer to an inevitable final collapse.
