If Canada wants to retain its advantaged position in Cuba, it has to move fast

by Eric Miller

National Post
February 9, 2015

On Dec. 17, 2014, Cuba and the United States ended their five-decade old confrontation. Canada had long worked to facilitate a rapprochement between Washington and Havana and again made an important diplomatic contribution to the December agreement.

As the initial euphoria of success passes, Canada must urgently confront the question of its place in a post-Dec. 17 Cuba. The restoration of relations with the United States is likely to accelerate economic changes on the island and its full entry into the world economy. Without a fundamental re-thinking of its strategy, Canada could face a loss of its privileged position in the pantheon of Cuba’s economic and foreign relations.

It used to be easy. During the Cold War, Canada could get credit in Havana just for showing up. The Cubans were grateful that Canada never broke diplomatic relations after the 1959 Revolution. Engagement with Havana also provided an easy way for Canada to demonstrate its foreign policy independence. Pierre Trudeau maintained such close relations with Fidel Castro that the Cuban President served as an honorary pallbearer at the late prime minister’s funeral.

The loss of its main patron, the Soviet Union, in 1991 pushed Cuba into a slow re-thinking of its economic policies. Canadian resource multinational Sherritt invested in Cuba in the early 1990s and has built successful mining and petroleum businesses over the past two decades. The reforms also opened the Cuban tourist industry. Canada now supplies 1 million visitors per year. Still, over the past decade, Canada’s official relations with the Cuban government have been relatively cool. In the current political context, Havana’s statist economic model and relatively dim human rights record have hardly been an attractive combination.

Now that the Dec. 17 agreement has re-set the table, Canada will have to pivot if it is to protect and advance its interests in Cuba. So what should Canada do to up its game?

A good place to start would be for the Canadian government and private sector to work collaboratively on a Cuba strategy. It should include an export promotion component that seeks to protect Canada’s leadership in key market segments, such as foodstuffs and machinery, while growing trade and investment in other areas.

It should address financing options. Cuba, for example, needs a lot of infrastructure. Export Development Canada or one of the pension funds could provide low-cost funding in exchange for using Canadian products and service providers. It should also address the building of Canada’s brand on the island. To be successful, Ottawa may need to reallocate human and financial resources from other regions to Canada Mission in Havana.

Luckily, we have a little time to get this right. Because Congress legally codified the Cuba embargo in the 1996 Helms-Burton Act, it will formally have to remove it. What President Obama did on Dec. 17 was use his executive authority to blow large holes in this restrictive edifice. The transition period to full normalization of relations provides Canada with a window of opportunity to recalibrate its approach. This should not be wasted.

The U.S. government is implementing the Dec. 17 changes. U.S. businesses are making their first trips the Havana. Bipartisan bills have been introduced to remove the remaining restrictions. Each month, more American business, brands and financial institutions will enter the market and competition will steadily grow. Cuba is also changing. In March 2014, its government passed a law to significantly strengthen its foreign investment regime and make its economy more business-friendly.

The changes that will unfold in Cuba over the next five to 10 years offer great opportunities for Canada. Yet, the new era requires new responses. If Canada does not take the initiative, its interests will be eroded and its brand will come to look as outdated as those pictures of young Fidel and Che.

Eric Miller is a fellow at the Canadian Defence and Foreign Affairs Institute.