The Cuban regime's "investment opening" as seen by the markets: eight demands that Havana does not fulfill

The Cuban regime announced in March 2026 that it will allow Cubans residing abroad to invest in the private sector of the island. This measure was presented as a historic turning point. However, international capital markets — investment funds, development banking, political risk insurers, and the Cuban-American diaspora with business experience — do not read ministerial statements: they read treaties, records, and arbitration awards. This analysis examines, pillar by pillar, why the announced opening does not reach the minimum threshold that any emerging economy must surpass to attract serious investment.

The standard is not ideology: it is technique

Before delving into the details, it is important to clear up a rhetorical trap that the Cuban regime frequently uses: presenting any external demand as a political imposition or a disguised condition for systemic change.

The internationally accepted standard for investment does not require democracy. Does not require multiparty systems. Does not require Cuba to dismantle the Communist Party. What it demands is codified in more than 3,000 Bilateral Investment Treaties (BITs) currently in force around the world, in the guidelines of the OECD for foreign direct investment, and in the principles of customary international law represented by institutions such as the ICSID and UNCTAD.

Vietnam demonstrates this. The Viet Kieu —Vietnamese living abroad— are investing heavily in their country even though Hanoi has not dismantled the Communist Party. Remittances to Ho Chi Minh are projected to exceed 10.5 billion dollars by 2025. What Vietnam does offer, and Cuba does not, is something much more modest: written laws that do not change retroactively, an impartial mediator when disputes arise, and the certainty that incoming money can be withdrawn.

Cuba, in its current state, systematically fails to meet the four basic criteria: predictable rules, non-discriminatory practices, enforceable before an impartial third party, and non-retroactive.

Pillar I: Fair and Equitable Treatment (FET)

Fair and Equitable Treatment is the most invoked clause in international investment arbitration and is present in almost all existing BITs. International arbitral tribunals have broken it down into five specific obligations: regulatory transparency (rules must be published and not changed without notice); no frustration of legitimate expectations (no retroactive changes that destroy the value of the investment); no arbitrariness or discrimination in administrative decisions; fair administrative process with access to appeal before independent bodies; and full protection and security against the state apparatus itself.

Cuba has APPRIs signed with more than 60 countries that include fair and equitable treatment clauses. However, the actual practice systematically violates this standard: decisions regarding investments are made arbitrarily and on a case-by-case basis, without published criteria. In 2025, the regime blocked the repatriation of foreign currency from already operating foreign companies without public resolution or compensation. The Expropriation Law of 2022 does not strictly limit the concept of "social interest".

Comment: This is not a technical problem of legal drafting. It is a structural feature of the system. Opacity and discretion are not failures of the Cuban regime: they are its tools of control. A company investing in Cuba does not know which regulation will apply to it tomorrow, who will enforce it, or who it can turn to if it disagrees. That uncertainty, for any serious political risk analyst, is equivalent to a permanently red traffic light.

Pillar II: Protection against Expropriation — The Hull Formula

The international standard for compensation in cases of expropriation —known as the "Hull formula"— requires that compensation be prompt (paid before the transfer is finalized), adequate (equivalent to the fair market value determined by independent appraisal, not by state valuation), and effective (in freely convertible currency, not in Cuban sovereign debt or in blocked accounts).

The law approved in December 2022 incorporates positive procedural elements, but it has three critical gaps: the concept of "public utility or social interest" is not defined with precise and closed criteria; the valuation of the property can be made according to state parameters; and the judicial appeal is processed within the Cuban judicial system, which is subordinate to the Communist Party by constitutional mandate. In March 2026, El Toque documented how expropriation remains an active tool of the regime.

Comment: For a diaspora investor —many of whose own family members lost properties without real compensation after 1959— the question is not whether the expropriation law has improved on paper. The question is: do you trust that this paper will be worth something the day the regime decides your business is inconvenient? The history of six decades answers that question clearly.

Pillar III: Free Capital Transfer

Almost all modern TBIs ensure that the investor has the right to freely move invested capital, profits, dividends, and settlement payments. The guarantee must be effective in freely convertible currency and without undue delays—comparable emerging markets typically range from 30 to 60 business days.

The Law 118 of 2014 formally recognized the free transfer of profits. In practice, the Cuban banking system lacks access to international correspondents with real transfer capabilities. And in 2025, the State directly blocked the foreign currency accounts of already operating foreign companies, without any published regulation to justify it. In November 2025, that control was further tightened.

Comment: This point is the most revealing of all. We are not discussing a legal loophole or a historical shortcoming: we are talking about something the regime did in 2025, during the supposed process of "opening up." Freezing the foreign currency accounts of foreign companies that had already taken the risk to invest is the clearest possible signal that the rules of the game can change at any moment, without warning and without consequence for the State. No responsible investment fund can ignore this precedent.

Pillar IV: Dispute Resolution — Genuine Access to ICSID

The ICSID (Washington Convention, 1965) is the arbitration institution specifically designed for disputes between investors and States. It manages over 70% of all known investor-State arbitration cases. Its key advantage: ICSID awards are directly enforceable in the 158 member countries without going through local courts. As a transitional alternative, arbitration clauses in recognized centers are accepted: ICC Paris, LCIA London, AAA/ICDR Miami, with the express waiver of the State's sovereign immunity against the enforcement of the award.

Cuba is not part of the ICSID Convention. Cuban APPRIs often refer disputes to UNCITRAL or to ad hoc arbitration, which are less accessible and more costly mechanisms. The Decree-Law No. 87 on International Commercial Arbitration and Mediation does not address the underlying issue: the Cuban Arbitration Court does not provide the independence guarantees that the standard requires.

Comment: The fact that Cuba is not a member of the ICSID is not an administrative accident. It is a political decision consistent with a system that does not accept that an external party can compel it to comply with anything. For the investor, this means that if there is a dispute — and given Cuba's history, the odds are high — the ultimate arbitrator will, in one way or another, be the Cuban state itself. It's like signing a contract where the judge in case of conflict is the counterparty.

Pillar V: Judicial Independence and Rule of Law

International investment law does not require democracy, but it does demand a minimum degree of independence for the judiciary from the executive, making it reliable for resolving disputes in which the state is a party. Vietnam and China maintain single-party systems, but they have developed frameworks for commercial dispute resolution with a degree of technical autonomy, supported by international arbitration.

In Cuba, the 2019 Constitution expressly subordinates all state organs —including the judiciary— to the Communist Party. The courts are appointed by the National Assembly, which in turn is accountable to the PCC. Specialized lawyers consulted in March 2026 confirmed that the confiscation of businesses has been used as a tool for political and economic control. El Toque documented in March 2026 the structural contradiction between the regime's promises and the lack of real guarantees.

Comment: This is the most difficult pillar to reform, and the regime knows it. To make real changes, it would be necessary to amend the Constitution, reconfigure the judiciary, and accept that a judge can rule against the State. That is not a technical reform: it is a structural power reform. The Havana regime has shown no indication of being willing to go in that direction. Everything announced in March 2026 carefully skirts this point. And it is precisely the most important issue for any investor who has lost money— or who knows someone who has lost money— in Cuba.

Pillar VI: Full Private Property, Registerable and Enforceable Internationally

In all markets competing for foreign direct investment, the private ownership of a foreign investor is recorded in a public commercial registry, is freely transferable, and can serve as a real guarantee for credits enforceable both domestically and internationally. The Viet Kieu enjoy the same rights as local citizens to acquire properties and business stakes since the reform of the 2024 Land Law, with public registration and full enforceability.

Cuba requires prior authorization from the Council of Ministers for foreign investment forms to be able to "secure their assets and rights," which makes it impossible to use Cuban assets as collateral with external banks or investment funds. There is no digital, public, and interoperable commercial registry. Shares are not freely transferable or mortgageable. The country lacks legal guarantees for Cubans abroad to invest with true security.

Comment: If you cannot use your assets in Cuba as collateral, you cannot finance your investment through external credit. This means that the investor must provide all the capital from day one, with no possibility of leveraging. In any other emerging market, the combination of equity and credit secured by local assets is the foundation of business growth. In Cuba, that option simply does not exist. The diaspora is invited to invest, but with their hands tied.

Pillar VII: Codified Tax Regime and Double Taxation Agreement

A serious investor cannot calculate the expected return on an investment if the tax regime is discretionary and negotiated on a case-by-case basis. The international standard requires: published tax rates in law, time-limited exemptions and objective criteria, stabilization clauses in investment contracts, and a double taxation agreement with the investor's country of residence.

Most of the Cuban diaspora with investment capacity resides in the United States. Without a Double Taxation Agreement between Cuba and the U.S., any dividends earned in Cuba could be taxed twice—both in Cuba and in the U.S.—eroding the return to the point of making it non-competitive. Additionally, there is no guaranteed tax stabilization clause: the government can change tax rates at any time. CafeFuerte analyzed in March 2026 the gaps that make the regime's proposal for the emigrated community unviable.

Comment: This is a problem that does not even require bad faith on the part of the regime to undermine the value of an investment: it is enough that the U.S. and Cuba do not sign a tax agreement for the math to not work out. For the Cuban-American diaspora in Florida —the largest and most capable of making investments— investing in Cuba under the current conditions entails taking on a very high political risk while also having to pay taxes twice. The equation just doesn't add up.

Pillar VIII: Monetary Convertibility and Unified Exchange Rate

The international standard requires a foreign exchange market with transparent rules, non-discriminatory access, and guaranteed convertibility for legitimate capital transactions, with the daily publication of the exchange rate by the central bank based on technical, not political, criteria.

Although Cuba formally eliminated the CUC in 2021, the monetary system remains de facto fragmented. There is an official exchange rate, a much higher informal one, and a Free Convertible Currency (MLC) market with selective access. For an investor, the question is straightforward: what exchange rate can I convert my Cuban pesos into dollars or euros when repatriating profits? The answer is ambiguous and reliant on channels that the State can close at any time. 

Comment: The monetary fragmentation in Cuba is not a technical inefficiency waiting to be resolved: it is a control mechanism. By controlling access to foreign currency, the regime dictates who can trade, who can grow, and who can leave. The announcement in March 2026 does not address this issue. An investor able to generate profits in Cuba might find that they cannot convert or repatriate them at a reasonable exchange rate. Money may come in, but the exit would be at the discretion of the regime.

The table that says it all: Cuba vs. Vietnam

ElementoVietnam (tras reformas 2024)Cuba (2026)

Propiedad diáspora	Mismos derechos que ciudadanos locales desde 2024	No reconocida en MiPyMEs; solo bajo Ley 118 con patrocinador estatal
Arbitraje internacional	ICC, UNCITRAL, centros regionales accesibles	Solo Corte Cubana (adscrita al Estado); Cuba no es miembro CIADI
Tipo de cambio	Unificado, mercado abierto	Fragmentado de facto, acceso discrecional
Registro mercantil	Digital, público, ejecutable internacionalmente	Sujeto a autorización previa del Consejo de Ministros
Libre transferencia	Garantizada por ley, sistema bancario con corresponsales	Bloqueada de facto en 2025 sin norma publicada
Estabilidad normativa	Ley de Inversiones con disposiciones transitorias explícitas	Sin cláusulas de estabilización; historial de reversiones
Expropiación	Indemnización a valor de mercado, plazo definido	Ley 2022 con valoración estatal y sin arbitraje externo
Convenio doble imposición	Acuerdos con 80+ países, incluyendo EE.UU.	Ninguno con EE.UU.

The external obstacle: the embargo and the Helms-Burton Act

It would be dishonest to ignore the external factor. Even if Cuba were to fully implement the eight pillars, Cuban-Americans residing in the U.S. would still need a license from the OFAC (Office of Foreign Assets Control) to invest legally. The Helms-Burton Act of 1996 codified the embargo and made its lifting contingent upon political conditions that the Cuban regime is unwilling to meet.

Conclusion: what is lacking is not technical will, but political will

The gap between what Cuba announced in March 2026 and full international standards is still wide. What was announced addresses the issue of having a legal channel. International standards require that this channel be reliable.

And here lies the underlying problem that no technical analysis can bypass: the eight pillars that the markets demand are not neutral reforms. Each one implies that the Cuban state must relinquish a tool of control. Regulatory transparency means that the regime cannot change the rules quietly. Independent arbitration means that a third party can compel the Cuban state to pay. Free capital transfer means that money can leave without the party's permission. Judicial independence means that a judge can rule against the government.

None of those things are compatible with the model of total control that has been the essence of the Cuban dictatorship since 1959. It's not that the regime has not yet reached the standard: it's that the standard, by its very nature, threatens the system.

Confidence in investment matters is not built through ministerial statements: it is built through enforceable treaties, independent arbitrators, and a demonstrable track record of compliance. Cuba, in 2026, has none of the three.