Cold War Economics: The Interesting Case of Canada and Cuba

This past year Clio’s Current examined Canada’s role in the Cold War which lasted roughly from 1945 to 1991. Throughout that time the United States combated the spread of communist ideology, and as a close North American partner Canada certainly did its part. Our examination of Canada in the Cold War thus focused on the evolution and development of bilateral relations between Canada and the US. Seldom in our five-part series did we stray far from that narrative, and so to not suggest that Canada’s Cold War was predicated solely by its relationship to the US, in today’s post we examine Canada’s economic policy towards Latin America with a particular focus on Cuba.

Canada and Cuba have shared a long history of international cooperation that predates the Cold War, with direct economic relations dating back to the early eighteenth century when east coast schooners sent salt cod and potatoes to the Caribbean in exchange for rum and sugar. Because relations between the two regions focused primarily on trade, the first Cuban emissary in Canada was stationed in Yarmouth, Nova Scotia in 1903. Economic activity between the two nations continued to grow well into and throughout the twentieth century, so much so that Canadian businesses even opened up shop on the Caribbean island in the interwar period. The Bank of Nova Scotia became the first bank in Cuba, followed shortly after by the Royal Bank which had opened 65 branches by 1923. For their part, the Cubans have been openly receptive to Canadian needs and have allowed for the growth of Canadian industry so long as dividends prove mutually beneficial. Accordingly, a unique bilateral relationship formed out of economic purposes to benefit both Canada and Cuba in the twentieth century.

Using the island as an economic entry point to the Caribbean and Latin America, successive Canadian governments in the postwar period bolstered trade with Cuba despite external pressure from the United States. Disapproval by the US towards Cuba dates back to the 1950s when Fidel Castro successfully led the revolutionary overthrow of Cuban dictator Fulgencio Batista. The US government backed Batista and was understandably disappointed, to say the least, when Castro and his fellow revolutionaries completed the overthrow of Batista’s regime in January of 1959. As far as the Americans were concerned, the success of Castro and his fellow revolutionaries meant the Caribbean and Latin America had been opened to communist influence. Making it a top priority to monitor Cuba during and after the Revolution, American President Dwight Eisenhower decided to allow Canadian businessmen to conduct trade in Cuba for surveillance purposes. The Canadian prime minister at the time was John Diefenbaker, and he agreed to take part even though Canadian trade in Cuba would be limited. Unaware that Diefenbaker had coordinated a plan with Eisenhower, the Cubans celebrated Canada for refusing to join an economic embargo that the US had implemented against trade with the island.

Eisenhower’s surveillance turned into an advantageous economic situation for both Cuba and Canada. All foreign banks in Cuba were nationalized in October 1960, and Canadian businesses and private property soon followed. The Royal Bank, among others, which had increased its number of branches in Cuba considerably since the turn of the twentieth century, became the property of the Cuban government. The arrangement was equally beneficial for Canada, because it set the benchmark for Ottawa’s international activity in the Caribbean as well as Latin America as a whole. The arrangement with Cuba afforded Ottawa the opportunity to separate (at least in part) from Washington. While Canada’s economic relationship with Cuba was relatively small in comparison to that of others nations, it set an example for both Havana and Ottawa on the international economic stage.

International relations between Cuba and Canada survived between 1959 and 1979 because Ottawa did not equate foreign economic trade with the spread of communist ideology. The relationship was so unique and beneficial that it was often referred to by Castro as a model for countries of differing political systems to emulate. Canadian governments often felt the same, as Pierre Trudeau became the first leader of a foreign nation to visit Cuba following the revolution which saw Castro come to power. Personal relations between Castro and Trudeau flourished in the face of American opposition to benefit both Canada and Cuba economically. Their relationship was so unique that Castro was a pallbearer at Trudeau’s funeral when the former Canadian prime minister died in 2000.  

Unlike the United States, Canada did not let political ideology interfere with economic endeavours in the Caribbean and Latin America through Cuba. Today Canada seems inclined to follow a similar course in that relations with its closest allies do not preclude the development and implementation of an independent and largely unabated foreign economic policy. Contemporary international politics have certainly been removed from the Cold War context which fostered extremely unique Canada-Cuba relations, but globalization will continue to introduce challenges as well as opportunities that may be well worth exploration. For Canada, a nation whose economic prowess is yet to be determined, acting in some disregard to Uncle Sam may not necessarily be a poor decision – no pun intended.