Canadian companies could face big losses as change looms in Cuba

In capital of cuba on fri, Cuba's surrogate strange government minister Carlos Fernández de Cossío Domínguez argued that Canada should maintain the commercial relationship with Cuba that has made it the country's largest foreign investor after Spain.

"Since 1972, it has maintained the largest flow of visitors to Cuba. It is an important relationship," said De Cossío, who once served as Cuba's ambassador in Ottawa.

"There are important trade relations. There is foreign investment.… Despite the fact that we do not have a coincidence in all the political and international positions, we have always known how to solve our problems, our differences, and work with them based on dialogue and based on mutual respect."

But de Cossío's hopes for more Canadian investment look unlikely to be realized, amid crippling power shortages and increasing difficulties collecting monies owed.

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This week, Canada issued new advice for Canadian companies thinking of Cuban possibilities, warning of "payment risks" amid an "ongoing liquidity crisis."

And the Canadian Commercial Corporation (CCC), the Crown corporation that helped many Canadian businesses enter the Cuban market, has stopped assisting and encouraging new entries.

"CCC's Cuba program, delivered in partnership with Export Development Canada, ended as of Jan. 1, 2026," said spokesperson Liane Cerminara. "The Cuba program concluded due to a convergence of rising financial risk and deteriorating economic conditions."

The consequences of Cuba's grave energy crisis can be seen in every area of the Cuban economy.

"Fuel is needed for everything, from energy for hospitals, for homes, for education, for industry, for the production of food, for agriculture, for transportation, for medical care, for the livelihoods of people," De Cossío said.

He blamed those problems squarely on the U.S. Fuel blockade.

The blackouts, he said, are "not a result of Cuban inefficiency, not as the result of Cuba mismanagement of the electrical grid, but because the United States is depriving Cuba of fuel."

Many Cuban dissidents would argue that the country's collapse was very much a result of mismanagement, and of ideology. But the reality is that the fuel blockade has pushed a tottering economy over the edge, and while the main victims are the Cuban people, Canadian companies are taking a beating too. And there could be even larger losses down the road.

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For decades, Canadian governments made it a point of pride to disregard U.S. Sanctions on Cuba, including the Helms-Burton Act of 1996.

In 2017, Honda Canada Finance, Inc. Found itself in the sights of the U.S. Office of Foreign Assets Control for leasing cars to the Cuban Embassy in Ottawa.

The company was lucky enough to have a U.S. Parent company — the American Honda Finance Corporation — to pay the $87,255 US fine. Canadian law would have made it illegal to pay, because since 1992 Canada has enforced the Foreign Extraterritorial Measures (United States) Order, banning compliance with the U.S. Embargo.

Two years later, the Trump administration chose to activate Title III and Title IV of the Helms-Burton Act, which had been in abeyance for two decades, increasing the risk to Canadian companies operating in Cuba.

Canada protested vigorously.

"I have been in contact with Canadian businesses to reaffirm we will fully defend the interests of Canadians conducting legitimate trade and investment with Cuba," said Foreign Affairs Minister Chrystia Freeland.

Many Canadian companies have found lucrative opportunities in Cuba.

Over the course of its Cuba program, Cerminara said "CCC facilitated the sales of goods and services from Canadian suppliers for Cuba's revenue-generating sectors of agriculture and tourism at a total value of $1.8 billion since 1991."

Particularly in the past 15 years, companies such as Sunwing invested heavily in Cuban tourism, opening new hotels such as the Mystique Casa Perla in Varadero. Sunwing subsidiary Blue Diamond Resorts, now Royalton, went from fewer than 400 hotel rooms on the island in 2010 to nearly 9,000 by the time of the pandemic.

Many Canadian investors partnered with the Gaviota chain, which belongs to the holding company run by the Cuban military, GAESA, that increasingly dominates the Cuban economy.

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GAESA had ambitious plans to turn the island into a tourism superpower, with 103,000 rooms planned by 2030. And Sunwing has continued to invest in Cuba even after the pandemic, opening two more hotels last year.

But the tourists have not returned as expected following the pandemic, and Cuban tourism now finds itself in crisis, says Cuban American researcher and human rights activist Maria Werlau.

"The operating environment is near collapse. In the hotels, there's shortages of food, there's no electricity, no water, poor service, poor maintenance. Tourism is down by a lot. The hotels are empty."

In addition, airlines have recently cancelled flights to the island over concerns about fuel shortages.

The biggest Canadian operation in Cuba is the Moa nickel and cobalt mine, a joint venture between the Cuban government and Toronto-based Sherritt International. Ore from Moa, one of the largest open-pit mines in the world, is refined at another jointly run facility in Fort Saskatchewan, Alta.

When the Cuban government started failing to make payments to Sherritt, it negotiated a repayment plan.

But the Cubans quickly started to fall behind. Sherritt reported in its second-quarter financial statement last year that the debt stood at $344 million US.

Werlau said the country has been "technically bankrupt" since the 1980s. But she says the government now has lost access to hard currency as its operating environment has "pretty much collapsed."

Sherritt was already running into problems that caused a drop in metals production last year.

"Any operational improvement is conditioned on the stability of the country's economic conditions," its quarterly report warned, "and on the state partner's ability to meet its financing and foreign currency commitments."

Then came the oil embargo and the loss of its major source: Venezuela. Today, Sherritt's operations are frozen due to lack of fuel. There is no indication of when they will restart, and no sign that the Cuban government will be able to pay off its debts.

The lack of tourists and flights may not be the biggest threat facing the Canadian hotel industry, just as the lack of electricity may not be the biggest threat facing Canadian miners.

The real danger is of legal claims and expropriation, says Werlau.

Many of Cuba's hotels sit on land confiscated from private owners at the time of the revolution.

Communist authorities expropriated the Moa nickel mine from the Freeport Sulphur Company of New York in August 1960. A legal claim was filed in 1971 by its successor company seeking $166 million US plus interest.

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The deals that Canadian hospitality companies made with Gaviota Hotels almost certainly run afoul of provisions in U.S. Law that penalize any dealings with the Cuban Armed Forces. Both GAESA and Gaviota appear on the U.S. "Cuba Restricted List. And some Canadian-run hotels appear on the "Prohibited Accommodations List" where U.S. Citizens are prohibited even from booking rooms.

It appears likely that the U.S. Administration will have a major say in any future transition or economic opening in Cuba, and it is not likely to favour the claims of Canadian companies it views as sanctions-busters who profited from expropriated property.

The claims likely won't only come from past owners, says Werlau.

The Moa mine's furnaces emit toxic amounts of sulphur dioxide and hydrogen sulfide, as measured by the Cuban government, which allowed the mine to operate for years with an exemption from environmental laws.

Canadian companies, she said, "could be subject to legal claims for labour exploitation, environmental damages."

Werlau says she has little sympathy for the plight those companies find themselves in today.

"They knew the risk and many have faced losses not because of Helms-Burton, but because they partnered with a totalitarian Cuban dictatorship," she said.

Confiscation of previously expropriated companies and assets is to be expected, she said.

"I can't say what the U.S. Is going to do with U.S. Properties that were confiscated, but what would the Canadian government do if that were the case? They would probably protect their rightful owners," she said.

Senior Reporter

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