Page 38 - The Economist

38 The Americas The Economist December 9th 2017
2 Mr Trudeau is not the first Canadian was superseded by NAFTA. face harder times. Mr Trump is using pro-
leader to deal with disappointments in Last year the United States bought tectionist threats to grab jobs and invest-
trading relationships by seeking out new three-quarters of Canada’s goods exports. ment back from Canada and Mexico. Al-
ones. When Britain removed preferential It will remain Canada’s main trading berta’s oil, which is costly to produce, faces
treatmentforexportsfrom coloniesin 1846, partner, admits François-Philippe Cham- growing competition from gas and renew-
Canada sought a deal with the United pagne, Canada’s trade minister. But, with able energy. The industries of the future
States. Mr Trudeau’s father, Pierre Trudeau, “the most protectionist government since probably include food, hydro-electricity
who was prime minister on and off from the 1930s” in Washington, “there has never and artificial intelligence, but none match-
the 1960s to the 1980s, pursued a “third op- been a bettertime to diversify.” es the importance ofcars and oil.
tion” to supplement trade with the United Changes in Canada’s economy make Freer trade would help. But Mr Trudeau
States, which had raised tariffs, and Britain, that more urgent. Things look good for the finds himself chasing deals with big coun-
which had entered Europe’scommon mar- moment: GDP is expected to grow by 3% tries like China, which reject labour and
ket. Canada ended up doubling down on thisyearand unemploymentis5.9%, neara environmental add-ons that would make
trade with the United States. A bilateral ten-year low. But oil and cars, which have such pacts acceptable to Canadians. He
trade agreement, which took effect in 1989, sustained growth for more than a decade, may remain a disappointed suitor. 7

Bello A year without Fidel

Cuba’s leaders are trapped between the need forchange and the fearofit
OR decades Cuban exiles in Miami Since the 1980s the Cuban economy has
Fdreamed of the day that Fidel Castro steadily lost ground in relation to those of
would die. They imagined that Cubans other Latin American countries, as a
would then rise up against the commu- study published last month by the Inter-
nist dictatorship that he imposed. Yet American Development Bank shows. Its
when, a yearago thisweek, Castro’sashes author, Pavel Vidal, was one of Raúl’s
were interred in hismausoleum, itwas an team of reformist economic advisers and
anticlimax. His brother, Raúl, who is now is now at the Javeriana University in Cali,
86, has been in charge since 2006. For a Colombia. He has devised hitherto un-
while, he seemed to offer the prospect of available internationally comparable es-
far-reaching economic reform. Now, as he timates for Cuba’s GDP since 1970 by cal-
prepares to step down as Cuba’s presi- culating an average exchange rate which
dent in February, he is bequeathing mere- takes into account the weight of the va-
ly stability and quiescence. rious rates in the economy.
Raúl’s planned retirement is not to- Mr Vidal finds that GDP per person in
tal—he will stay on as first secretary ofthe Cuba in 2014 wasjust$3,016 atthe average
ruling Communist Party for a further exchange rate, barely halfthe officially re-
three years. He is due to leave the presi- which has now fallen to halfits peak level, ported figure and only a third of the Latin
dency as Cuba is grappling with two new Cuba remains unable to produce much of American average. This includes the val-
problems. The first is the partial reversal the food it consumes or pay its people ue of free social services (such as health,
by Donald Trump of Barack Obama’s his- more than miserable wages. That is why education and housing) that Cubans re-
toricdiplomaticand commercial opening Raúl embraced market reforms, albeit far ceive. Taking into account purchasing
to the island, which will cut tourist rev- more timid ones than those in China or power, GDP per person was $6,205 in
enues. The second is the aftermath of Vietnam. More than 500,000 Cubans now 2014, or 35% below its level of1985. Mr Vi-
Hurricane Irma, which in Septemberdev- workin an incipient private sectorof small dal goes on to compare Cuba with ten
astated much ofthe north coastand sever- and micro businesses orco-operatives. other Latin American countries whose
al touristresorts. Thathasprompted spec- But these reforms bring inequality and populations are similar in size. Whereas
ulation in Miami that Raúl may stay on. a loss of state control. When Mr Obama in 1970 Cuba was the second-richest, be-
That is to misread the man. In his de- visited Cuba in 2016, offering support for hind only Uruguay, in 2011(the latest year
cade in power Raúl has striven above all entrepreneurs and calling on live televi- for which data are available) it was in
to institutionalise the Cuban communist sion forfree elections, the regime appeared sixth place in income per person, having
regime, replacing the wayward charisma to panic. Since then, the government has been overtaken by Panama, Costa Rica,
ofFidel with orderlyadministration and a placed some curbs on small business to the Dominican Republic and Ecuador.
collective leadership. He has groomed as stop what Raúl called “illegalities and oth- Cuba’s decline is above all because of
his successor Miguel Díaz-Canel, a 57- er transgressions”. In other words, the gov- lack of investment, says Mr Vidal. But a
year-old engineer who has already as- ernment wants a market economy with- shrinking and ageing population plays a
sumed many public duties. Yet, as presi- outcapitalistsorbusinessesthatthrive and part, too. He finds that the reforms have
dent, Mr Díaz-Canel’s autonomy will be grow. It seems nowhere near tackling the brought about a modest increase in in-
limited. He is just one of a group of party multiple exchange rates (ranging from one come and even in productivity. They “go
bureaucrats and generals who are the real peso to the dollar for official imports to 25 in the right direction but have fallen
powerin Cuba, steadilyreplacingthe gen- formostwagesand prices) thatludicrously short”, he concludes.
eración histórica (those who fought in the distort the economy. For Mr Díaz-Canel and his reformist
1959 revolution), who are dyingoff. Stalling may leave intact the regime’s colleagues the message is clear: speeding
The new generation faces an acute di- political control—its overriding priority. up change carries political risks, but not
lemma. Despite aid from Venezuela, But this ignores a fundamental problem. doingso involves economic ones.