The situation in Cuba is rapidly deteriorating, with the country completely running out of fuel reserves as the U.S. continues to impose a blockade on the island. Extensive blackouts have plunged the nation into darkness, while water shortages are impacting many areas due to the lack of power for pumping equipment. Demonstrations also continue to spread, as well as the nightly cacerolazos (banging of pots and pans).

Diplomatic shift: CIA Director John Ratcliffe flew to Havana on Thursday for a meeting with Cuban officials from the interior ministry and intelligence services. Reports suggest that the U.S. would "seriously engage" with the island's government "only if it makes fundamental changes," but there will be a limited window to open its communist economy and hold "free and fair" elections. Trump has repeatedly warned that Cuba "will be next" in his campaign against hostile regimes in the Western Hemisphere, and leaders don't have to look far to see what happened to Nicolás Maduro in Venezuela.

The "hard power" pivot contrasts significantly with the U.S. approach seen only a decade ago. In 2016, President Obama became the first American president to visit Cuba in nearly a century after normalizing relations with the country and waiving its designation as a state sponsor of terrorism, allowing commercial flights and cruise ships to return to Cuba. However, the newly coined "Donroe Doctrine" has led to a "maximum pressure" campaign based on security threats and human rights, while expanding America's sphere of influence for regional dominance.

Investing angle: There's no better way to see this progression than the Herzfeld Credit Income Fund (HERZ). Formerly known as the Herzfeld Caribbean Basin Fund, trading under ticker CUBA, the investment vehicle officially abandoned its decades-long focus on Caribbean equities in July 2025 to pivot toward U.S. credit markets and collateralized loan obligations. It was a major signal that Wall Street has stopped waiting for the next thaw in relations and is now bracing for a total systemic reset.