Cuba defends military-run GAESA as US sanctions prompt hotel exodus

HAVANA, June 2 (Reuters) – Cuba on Tuesday defended a ​military-run conglomerate long the target of U.S. sanctions, saying the group of businesses known as GAESA has ‌contributed to the nation’s economic and social development despite a recently ramped-up U.S. pressure campaign.

The administration of U.S. President Donald Trump accuses GAESA of secretly hoarding profits from the country’s most valuable industries and using them for the benefit of the military and the Cuban elite.

Those accusations ​come amid a broader effort by the Trump administration to use an oil blockade and tightened sanctions to ​strangle the island of resources and force a change in its government.

Cuba on Tuesday denied corruption ⁠claims in a statement on GAESA, accusing the U.S. government of seeking to confuse “our people and international public opinion.”

“(GAESA) ​is not an opaque structure, nor parallel to the Cuban State; on the contrary, it has been a carefully crafted response ​of proven efficiency against the economic blockade that has historically tried to suffocate the Cuban Revolution.”

Cuba’s leadership rarely talks publicly about GAESA, saying such secrecy is necessary to circumvent U.S. sanctions.

There is no public information about how much of Cuba’s economy is controlled by GAESA.

Outside estimates ​range from 40% to 70%, including many of the island’s five-star hotels along white-sand beaches and in prime locations in ​Havana.

Several hotel companies that operate on the Caribbean’s largest island have discreetly distanced themselves from GAESA amid U.S. sanctions and threats.

Reuters ‌viewed brief ⁠statements provided to tour operators serving Cuba by top hoteliers Blue Diamond Resorts of Canada and Iberostar of Spain, severing ties with GAESA-linked and sanctioned hotels.

The top hotel chains’ decisions follow a Trump executive order on May 1 that vastly broadened U.S. sanctions on commerce with Cuba to include “any foreign person” operating in any sector of the Cuban economy.

A grace period intended ​to allow companies to make ​decisions about their Cuba ⁠operations ends on Friday.

Blue Diamond will pull out of Cuba altogether, leaving 15 hotels under various chains, while Iberostar will continue to manage some hotels not tied to GAESA.

The decisions do ​not necessarily mean the hotels will close, but rather, management will transfer to GAESA-linked ​tourism firm Gaviota, ⁠according to two industry sources. Prices and packages for the hotels once managed by Iberostar, for example, would remain available through October.

Iberostar did not immediately respond to a request for comment. Blue Diamond’s website is inaccessible and a press contact could not ⁠be found.

The ​open-ended U.S. executive order has prompted shipping companies CMA CGM and Hapag-Lloyd ​to suspend bookings to and from Cuba until further notice, jeopardizing as much as 60% of Cuba’s shipping traffic by volume.

Several airlines, including Russia’s Rossiya ​and Air Canada, have suspended service to Cuba amid a jet fuel shortage and plummeting tourism.