IN A NEAR-clinical experiment, Canada set out to test the possibilities of using its foreign policy to alter the interior environment in Fidel Castro's Cuba. Convinced that the longtime American policy of pressure and embargo was ineffective and counterproductive, the Canadians undertook with openness, aid and investment to induce Fidel Castro to improve his record on human rights and democracy. Prime Minister Jean Chretien personnaly intervened in the case of four prominent Cuban dissidents who had been arrested for sedition for criticizing the ruling Communist Party.

The results are now pretty much in, and they do not prove the Canadians' case. Quite the contrary: Far from loosening, Mr. Castro has visibly tightened his internal grip in recent months. His kangaroo court system convicted the four dissidents. Given a stage on which to show the hemisphere that he is capable of moderation if properly stroked, he blew it.

To its credit, the Canadian government, which means to be taken seriously, now is suspending new programs that do not clearly further the protection of human rights in Cuba and otherwise is reviewing a policy of "constructive engagement" meant to nudge Cuba toward democracy. We choose to hope that other countries will learn from the Canadian experience that, whatever the limits of a hard policy on Cuba, a soft line will be taken in Havana as a sign of weakness and treated with contempt.

Why would Fidel Castro pass up such a splendid opportunity to show his readiness for cautious liberalization and to stick a thumb in Uncle Sam's eye at the same time? Mr. Castro always has been the best judge of his own political circumstances. If he now says, by his deeds, that his regime is menaced by the pronouncements of a few marginal intellectuals, then who will doubt that he is right? Some of his apologists may claim that he is truly popular, especially for his social programs for the poor, and that he could win a fair election. Who knows? The spectacle of his cowering before a handful of dissidents indicates just the reverse.

Other partisans identify Mr. Castro as a proud nationalist who will bend no more to Ottawa than to Washington. But what he really is is an old-line communist of the Stalinist stripe who understands that his power is based finally on his police and propaganda.

He is not a threat, anymore, except to his own people. Because he is not an international threat, some business can and should be done with him: humanitarian and family contacts, immigration, drugs and the like. The American embargo should be relaxed to permit the export of food and medicine and the encouragement of private-sector activity. Information programs that actually reach the Cuban people have a special value.

These projects should be sustained not in the unrealistic expectation of ousting Fidel Castro, who has survived and even exploited 40 years of worse, but in the more plausible expectation of easing some of his burdens on the Cuban people and of finally outlasting him.