The Index of Cuba Risk for April 2026 reaches 86/100. This number is more than a metric. It is a clear signal that the situation in Cuba is increasingly challenging for Canada’s economic, corporate, and strategic interests.

Here is what drives this result.

1. Political risk remains high (85/100)

While the government maintains control, social and economic pressures are intensifying. This creates:

• concentrated political power. Cuba’s single‑party system centralizes authority in the executive, increasing exposure to policy decisions driven by political rather than economic considerations.
• limited institutional checks and balances. Weak oversight mechanisms and the absence of political pluralism reduce predictability in government actions that affect foreign investors.
• a climate of uncertainty reigns before negotiations between Trump and Raul Castro’s descendants.
• policy shifts driven by political priorities. Regulatory unpredictability in Cuba stems from frequent, abrupt policy changes and the absence of transparent, rules‑based governance. This unstable regulatory environment increases operational uncertainty, discourages investment, and forces firms to operate with limited visibility into future legal and administrative conditions.
• Cuba faces a growing potential for instability driven by deep economic deterioration, persistent shortages, and declining state capacity to provide basic services. Rising social frustration, (fueled by inflation, blackouts, food insecurity, and limited economic opportunities) has increased the likelihood of localized unrest or broader episodes of public protest. Small pockets of protest are taking place in several provinces. In March 13th, Protesters burned down the headquarters of the Communist Party in the province of Ciego de Avila. In Moron protests, dozens of detainees and political prisoners including 2 children aged 16: Jonathan David Muir Burgos y Cristian Crespo Álvarez.

For investors, this translates into uncertainty and volatility.

2. The Cuban economy is in its deepest crisis in decades (90/100)

Key macroeconomic indicators show severe deterioration:

• stagnant or contracting GDP. According to the Center for the Study of the Cuban Economy (CEEC), an official institution cited by EFE, Cuba’s economy contracted by roughly 5% in 2025.
• very high inflation. The inflation estimate for Cuba (such as the 238% figure for 2024) is reported in the Preliminary Overview of the Economies of Latin America and the Caribbean, the annual report published by ECLAC.
• unsustainable fiscal deficits. ECLAC projects that Cuba’s fiscal deficit in 2025 will amount to between 6% and 7% of its GDP.
• Cuba has sharply reduced state investment in essential sectors of the economy. Agriculture received only 2.5% of total state investment in 2024, far below strategic needs. Health and social services saw funding levels 14 times lower than tourism investment. Education continues to deteriorate due to chronic underinvestment and fiscal pressures documented in official statistical reports. Infrastructure suffers from decades of underfunding, reflected in nationwide power failures and system breakdowns.
• Cuba faces severe exchange‑rate distortions, with multiple official and informal rates diverging dramatically from one another. These gaps create pervasive price and incentive mismatches across the economy, undermining production, trade, and investment decisions. The resulting uncertainty discourages private activity, fuels inflationary pressures, and weakens the overall functioning of markets.
• critically low foreign reserves at the central bank while GAE S.A. (military) has $28 billion USD in reserves in bank accounts in Panama

This undermines the Cuban state’s ability to meet obligations with foreign partners.

3. Regulatory / FDI (83/100)

Cuba’s regulatory and FDI landscape is defined by strong state control and unpredictable legal shifts that limit investor certainty.

• broad discretionary authority. The Cuban government retains wide decision‑making power over foreign investment approvals, licensing, and operational permissions, creating significant uncertainty for investors.
• opaque and inconsistent legal framework. Regulations are often unclear, slow to update, and unevenly enforced, making it difficult for companies to predict how rules will be applied in practice.
• mandatory joint ventures with state entities. Foreign firms typically must partner with state‑owned enterprises or the military conglomerate GAE S.A., limiting managerial control and complicating dispute resolution.
• lack of judicial independence. Courts are not autonomous, increasing the risk that commercial disputes may be influenced by political considerations rather than legal merit.
• risk of sudden regulatory shifts. Key sectors such as tourism, energy, and mining are vulnerable to abrupt policy changes that can impose new compliance burdens, delays, or operational restrictions.
• Cy Tokmakjian, a prominent Canadian businessman, was arrested in Cuba in 2011 and later sentenced on economic‑related charges after a lengthy investigation. His company, the Tokmakjian Group, saw its assets in Cuba frozen, and the case raised serious concerns about due‑process guarantees and legal transparency. Canadian officials and business associations publicly criticized the proceedings, noting the lack of consistent legal protections for foreign investors. The case demonstrated how quickly commercial disputes in Cuba can escalate into criminal allegations under opaque regulatory frameworks. For Canadian investors, it highlights the importance of understanding the legal environment and the risks associated with operating through state‑controlled sectors. Careful compliance, strong documentation, and conservative risk management are essential to avoid exposure to similar situations.

These conditions collectively heighten regulatory and investment risk, requiring continuous monitoring and strong mitigation strategies for any foreign venture in the country.

4. Financial risk is extreme (96/100)

For Canada, this is one of the most sensitive dimensions:

• chronic shortages of foreign currency have caused repeated delays in settling commercial debts and contractual obligations.
• the Cuban government is subject to various lawsuits where international creditors are demanding payment. CRF I Ltd., a London‑based investment fund registered in the Cayman Islands, has sued the Cuban government and the Banco Nacional de Cuba in UK courts, seeking repayment of approximately €72–78 million in defaulted sovereign debt originally issued by France’s Crédit Lyonnais and Italy’s Istituto Bancario Italiano. Several European creditors, including entities from Spain, France, and Italy, have pursued legal action or arbitration after years of unpaid commercial debts and unresolved arrears linked to Cuban state enterprises. Cuba also faces pressure from government creditors such as Russia, Japan, and Spain, which have repeatedly renegotiated or restructured Cuban debt due to persistent non‑payment, with some cases escalating into formal disputes or legal claims.
• severe restrictions on profit repatriation. The Canadian mining and energy company has long reported difficulties converting Cuban pesos into hard currency, limiting its ability to repatriate dividends from its nickel and energy operations. Sherritt has repeatedly disclosed these restrictions in its financial statements. Several foreign airlines, including carriers from Europe and Latin America, have faced delays in repatriating ticket revenues due to Cuba’s inability to provide foreign currency. Some airlines have reduced operations or demanded payment guarantees as a result. The Spanish hotel chain (Meliá and Iberostar) has repeatedly been unable to repatriate profits generated by its Cuban joint ventures due to the government’s strict foreign‑exchange controls and chronic shortages of hard currency. Funds have remained trapped in Cuba for years.
• Cuba has virtually no access to external financing due to its long history of defaults, accumulated arrears, and extremely high sovereign‑risk ratings. International capital markets remain effectively closed to the country, as investors demand prohibitively high risk premiums and major credit agencies classify Cuba as an uncreditworthy borrower.
• elevated sovereign risk

Canadian companies face an environment where collecting payments is uncertain and operating costs are rising.

5. The energy collapse is the dominant factor (95/100)

Without energy, operational continuity becomes nearly impossible. Cuba is experiencing an unprecedented energy crisis:

• Cuba has experienced prolonged power outages of up to 18 hours, severely disrupting daily life and economic activity. In March 2026, two nationwide blackouts in the same week highlighted the fragility of the electrical system and the government’s limited capacity to stabilize it.
• the national grid has deteriorated after decades of insufficient investment, outdated equipment, and chronic shortages of spare parts. As a result, generation units frequently fail, and the system operates with minimal redundancy, increasing the likelihood of large‑scale outages.
• Cuba relies heavily on imported fuel to operate its power plants, making the country highly vulnerable to external supply shocks. Any disruption in shipments (whether due to geopolitical tensions, financial constraints, or logistical issues) directly translates into reduced electricity generation.
• manufacturing plants, refineries, and other industrial facilities are often forced to suspend operations due to power shortages and unstable electricity supply. These interruptions reduce productivity, damage equipment, and undermine the reliability of supply chains.
• Trump threats to impose higher tariffs on countries exporting oil to Cuba created pressure on some regional suppliers, leading Mexico to scale back shipments. Russia, however, continued supplying fuel despite the warnings, underscoring Cuba’s dependence on a narrow set of geopolitical partners.

For Canada, this directly affects:

• mining operations and joint energy ventures
• tourism infrastructure
• fuel shortages seriously affect transportation (canadian airlines) and the logistics chain.

6. Operational risk is elevated (76/100)

Cuba’s infrastructure is deteriorating rapidly:

• strained ports: Cuba’s ports operate with outdated equipment, limited dredging, and chronic congestion, which slows down cargo handling and increases turnaround times. These bottlenecks disrupt supply chains and raise the cost of importing essential goods.
• unreliable transportation: The national transportation system suffers from aging vehicles, fuel shortages, and poor maintenance, making logistics slow and unpredictable. These weaknesses hinder domestic distribution and reduce the efficiency of both state and private production.
• shortages of basic inputs: Producers across agriculture, manufacturing, and services face persistent shortages of fuel, fertilizers, spare parts, and raw materials. These deficits severely limit output and force firms to operate far below capacity.
• frequent disruptions in mining and tourism: Mining operations are regularly interrupted by power outages, equipment failures, and shortages of imported inputs. Tourism also experiences recurrent disruptions due to infrastructure problems, service limitations, and inconsistent availability of supplies.
• several international airlines have cancelled their flights to Cuba due to a lack of fuel at the airports: Fuel shortages at major Cuban airports have forced multiple foreign airlines to suspend or reduce flights (including canadian airlines). These cancellations weaken tourism revenues and further isolate the country from international markets.
• high cost of internet: Internet access in Cuba remains among the most expensive in the region relative to average incomes. High prices limit connectivity for households and businesses, restricting digital participation and economic opportunities.
• internet disconnections have been reported during major anti-government protests: Independent monitoring groups have documented nationwide or localized internet shutdowns during periods of social unrest. These disruptions hinder communication, restrict information flows, and raise concerns about digital rights.
• the use of a VPN is necessary to bypass internet censorship: Many users rely on VPNs to access blocked websites, independent media, and uncensored information. VPNs have become essential tools to navigate state-imposed digital restrictions and maintain access to global content.
• foreign investor should be aware that Cuba maintains strict controls over telecommunications equipment, and unauthorized devices can be treated as a national‑security concern. Despite the country’s limited access to modern technology, investors should avoid bringing in unapproved communications hardware (satellite technology). Past incidents, including the well‑known case of Alan Gross, show that importing such equipment without explicit authorization can lead to severe legal consequences (accusation of espionage).For foreign investors, caution and regulatory due diligence are essential to prevent exposure to similar situations.

This directly affects the ability of Canadian companies to operate effectively.

7. Geopolitical risk is rising (75/100)

Cuba is navigating a complex international environment:

• the Cuban regime associates with and supports a range of adversarial nations, international terrorist organizations, and other hostile actors opposed to the United States, such as Russia, the People’s Republic of China, Iran, Hamas, and Hezbollah.¹
• Cuba hosts Russia’s largest foreign signals‑intelligence site, which targets sensitive U.S. national security information. The country is also expanding its extensive intelligence and military collaboration with the People’s Republic of China.
• Cuba provides a haven for transnational terrorist organizations, including Hezbollah and Hamas, offering conditions that allow these groups to strengthen their economic, cultural, and security networks across the region and work toward destabilizing the Western Hemisphere, including the United States.
• strongest U.S. sanctions to the communist government for suppressing and abuses political dissidents, restricts freedom of speech and the press, exploits its population for profit, and engages in additional serious human‑rights violations.
• doing business in Cuba exposes investors to potential secondary sanctions from the United States.
• Trump threatens with imposition of new tariffs, an extra ad valorem duty may be applied to imports from any foreign country that, whether directly or indirectly, sells or supplies oil to Cuba.
• after Maduro’s capture, ties with Venezuela are increasingly weak, which is reflected in serious problems obtaining oil supplies
• dependence on Russia and Venezuela
• it appears that Mexico will take Venezuela’s place as the main supplier of oil
• The activation of Title III of the Helms‑Burton Act affects Canadians investors by exposing Canadian companies operating in Cuba (especially in tourism, mining, and energy) to potential lawsuits in U.S. courts for allegedly “trafficking” in properties nationalized after the Cuban Revolution. In practice, however, the impact is limited because Canada rejects the extraterritorial reach of the law and shields its citizens through the Foreign Extraterritorial Measures Act, which blocks enforcement of Helms‑Burton judgments in Canada and even allows countersuits against anyone who files such claims in the United States.
• A significant portion of the Cuban‑American exile community in the United States has urged former President Trump to adopt even harsher measures against the Cuban government, including tighter sanctions, the elimination of OFAC licenses that allow limited economic engagement, and, in the most extreme cases, even a military intervention aimed at overthrowing the regime. These demands reflect the frustration and long‑standing political opposition many exiles feel toward the Cuban authorities, as well as their belief that stronger pressure from Washington could accelerate political change on the island.
• The U.S. fears that the destabilization of the country could eventually turn into a massive and uncontrolled wave of migration.
• the FBI is concerned about the large number of Cuban wives operating in the US

This forces Canada to operate in a diplomatically sensitive space.

Conclusion

The 86/100 score reflects a situation where risks to Canada are systemic, not temporary. The combination of energy collapse, economic deterioration, and geopolitical pressure creates a landscape where operating in Cuba requires:

• extreme caution
• continuous monitoring
• risk‑mitigation strategies

I will continue to track these developments and provide updated assessments.

Source:

1. 2026, Executive order, ADDRESSING THREATS TO THE UNITED STATES BY THE GOVERNMENT OF CUBA, White House. https://www.whitehouse.gov/presidential-actions/2026/01/addressing-threats-to-the-united-states-by-the-government-of-cuba/ ↩︎