By Rakuyilo Joel Athikho, Salineeta Chaudhuri & Shilpa Srivastava
The US seizure of Venezuelan leadership and the effective severing of Caracas's oil lifeline has produced a strategic shock to Cuba's fragile economy. For policymakers and investors alike, this shock reconfigures risk and opportunity. President Donald Trump, however, has shown interest in making a deal with Cuba, where Cuba would have to make a change in its political structure in exchange for removing the sanctions imposed.
This article outlines the potential economic benefits for Cuba - and for investors - should Havana agree to a negotiated alignment with the United States on terms that protect core Cuban institutions while opening space for foreign investment and integration into global finance.
Sanction losses
The strained relationship between the US and Cuba began after 1959 when Castro led a revolution and overthrew the US-backed dictatorship of Fulgencio Batista. Since then, the US has imposed multiple sanctions limiting trade between the two nations and discouraging other nations from trading with Cuba through the threat of sanctions.
The Cuban Government estimated the loss from the sanctions to be around $933 billion dollars since its inception. As per the US Chamber of Commerce, the US also suffered losses from the sanctions, with estimates reaching $1.2 billion per year in sales and exports.
US agriculturists, in particular, are against the sanctions since a potential market in Cuba is being disrupted by multiple restrictions and regulatory work. This hurts their business while benefiting their competition from other nations.
Immediate macroeconomic benefits
The removal or easing of US sanctions would reduce overseas banks’ counterparty risk concerns, enabling dollar-denominated transactions, lower-cost trade finance, and improved access to insurance and credit.
Easing travel restrictions and restoring US travel would unlock a major source of hard currency. Cuba has not recovered pre-pandemic tourism levels of 4.2 million in 2019 vs 2.2-2.4 million in 2023-24, so upside is immediate and measurable.
Western suppliers and international financiers could underwrite grid upgrades, distributed solar, and port dredging at Mariel, reversing chronic blackouts that currently constrain productive capacity. An increase in trade between the US and Cuba would also increase the foreign exchange currency of Cuba.
Sectoral opportunities
Hotel refurbishment, airport and cruise infrastructure, and hospitality chains, primarily Spanish and regional operators, would see high returns from reopening the US and European demand.
Cuba is in need of restructuring its energy sector, which is heavily dominated by oil, and the current infrastructure needs updating to keep up with the country’s demand. Public-private partnership projects in solar farms, battery storage, and grid modernization.
The Mariel Special Economic Zone provides an opportunity for foreign businesses that are interested in investing in Cuba. It provides facilities such as special tax exemptions, and its port supports logistics while also acting as a port of call for passing ships. Nickel and cobalt projects, existing JVs such as Sherritt’s Moa operations, can be expanded to supply the battery value chain.
Cuba’s advanced biotech human capital makes it an attractive partner for manufacturing, contract research and joint ventures. Investments in cold chains, fertilizers and mechanization would reduce import dependence and capture import substitution gains. Close proximity between the two countries will provide a cheaper alternative for agricultural products.
Countries and companies likely to invest
Already active, these states would compete to preserve influence. Chinese firms are especially positioned to finance and build large infrastructure and solar projects.
Meliá and other European hospitality companies would likely expand their footprint under clearer rules. Sherritt and other Canadian miners have established partnerships and could scale operations.
Trade and food‑supply firms would expand contracts and processing plants. If sanctions are lifted and legal protections granted, US capital would pursue tourism, telecoms, and energy projects, particularly if coupled with safeguards on expropriation and repatriation.
Practical policy preconditions
A phased agreement where the US provides sanctions relief in exchange for specific reforms or security guarantees would reduce political resistance in the US and provide predictable timelines for investors.
Allowing dollar accounts for authorized projects, limited repatriation windows, and transparent tax/tariff regimes will make ventures investible.
Clear Joint Venture frameworks, dispute resolution, and transitional guarantees reduce expropriation risk.
Steps to combat corruption, demonstrate procurement transparency, and empower independent auditors would attract institutional capital.
Risks and caveats for investors
Political and legal risk: Sudden policy reversals, secondary sanctions exposure, and domestic political backlash could materialize if deals are mishandled.
Currency/repayment risk: Cuba’s foreign-exchange controls and offshore banking constraints will complicate profit repatriation without pre-agreed mechanisms.
Infrastructure fragility: Power outages and logistical bottlenecks raise operational risks until investments in grids and ports are completed.
Social and political instability: Rapid liberalization without social safety nets risks unrest or elite capture.
Conclusion
The economic upside from a conditional realignment between Havana and Washington is substantial: immediate foreign-exchange gains, high-return tourism and energy investments, and longer-term industrial partnerships in biotech and mining. However, realizing these benefits requires carefully sequenced policy commitments, credible legal protections, and multilateral engagement that combines incentives with safeguards.
For investors and policymakers, the moment is both opportunity and obligation - opportunity to catalyze recovery and obligation to ensure that economic opening supports sustainable, inclusive outcomes for the Cuban people.
[Rakuyilo Joel Athikho is a student of BSc Economics and Data Analytics, Dr Salineeta Chaudhuri is an Associate Professor of Economics, and Dr Shilpa Srivastava is an Associate Professor of Computer Sciences at Christ University, Delhi-NCR, India]
The views expressed are not necessarily those of The South Asian Times
