Iran sanctions lifted by Canada, but Justin Trudeau still faces 'delicate dance'

Prime Minister Justin Trudeau's sweeping sanctions relief for Iran will be a boon for Canadian businesses, but thawing relations between the two countries is not without risks for the Liberal government, say experts.

Stphane Dion, Canada's foreign affairs minister, lifted virtually all sanctions against Iran last week, paving the way for non-military exports to acountry that has long been seen by the West asa pariah state.

The minister endorsed the nuclear agreement hashed out last year between Iran and the P5+1 countries the U.S., the U.K., France, China, Russia and Germanya deal that faced deep opposition from the former Harper government.

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Now, with most of the world's sanctions againstIrandismantled, the country will be able torepatriate more than $100 billion in assets held abroadincluding funds inCanada that were frozen in an effort to punish Iranfor pushing to expand its nuclear capacity.

There are fears that some of that money could be used by the regimeto prop up its interests in the region, includingelements deemed by Canada to be unsavoury at best and terrorist organizations at worst: Hezbollah in Lebanon, the Bashar al-Assad regime in Syria and Shiamilitias in Iraq.

Conservativeforeign affairs criticTony Clementhas called the government's move "irresponsible" and "disappointing."

"We all knowIran's record of support for Hezbollah and Hamas, its constant agitation in the Gulf region, especially in Bahrain, Yemen and Saudi Arabia, as well as the continuing calls for the destruction of the state of Israel, and its denial of the Holocaust by the supreme leader," Clement said after Dion's announcement.

Canada lifts some sanctions on Iran

9 years ago

Duration 2:34

Foreign Affairs Minister Stephane Dion describes what sanctions will be lifted against Iran.

'Talk to the bad guys'

But the warmer stance the Trudeau government hastaken toward Iran is being welcomed by somewho see it asintegral tobolstering Canada's role in the region.

"I think [lifting sanctions] is absolutely the right move," said Thomas Juneau,an associate professorat the University of Ottawa and a formerMiddle East analyst forthe Canadian ArmedForces,in an interview with CBC News.

"I'm of the school of thought that youtalk to bad guys," Juneau said."It's completely in Canada's interests to have diplomatic relations with Iran, all our European partners do.

"There is no logical or strategic ordiplomatic reason not to open an embassy over there in Tehran," he said, pointing to the relations Canada maintained with the Soviet Union during theCold War.

Juneau said some of the Conservative concerns are likely overblown, as the new government's outreach to Iran is not"a grand reconciliation."

"We'restill not friends, we'renot allies. Everything that wasa sticking point still holds including human rights, and Israel."

Dion has said Canada "still hasa lot of suspicions" about Iran and is re-engaging withits "eyes open."

"Canada is finally joining the rest of the international community," saidNader Hashemi, a Canadian expert on Iran and a professor at the University of Denver.

"We were out of step with Western public opinion on this topic largely because the Harper government was so beholden and enamoured by right-wing Israeli policy.

"It was an embarrassment for Canada because we were even more hawkish than [Israeli Prime Minister] Benjamin Netanyahu," Hashemi said.

Untapped market for businesses

Canadian businesses are pushing ahead with plans of their own in a post-sanctions era.

"Iran is one of those untapped markets in the Middle East where foreign businesses are eager to swoop in and take advantage of a market of some 80 million people," Hashemi said. "Canadian companies stand to benefit with this new opportunity."

Hashemisaid that it's likely corporate interests played a big role behind the scenesin shifting Canadian policy towardIran.

"They have been firmly lobbying the Canadian government saying, 'Let's restore relations,' because there is this huge potential," he said.

The Canadian Chamber of Commerce, the country's largest business group, has already lauded the changeas a "good move for the economy."

"Now that we have confirmation by the International Atomic Energy Agency that Iran has fulfilled all necessary commitments, it is only normal that we should move in the same direction as our allies and lift these economic sanctions," saidPerrin Beatty, the president of the group.

And the fearthat Iran could flood the global market with more oil and gas, and further sink already battered oil prices, is likely premature.

More than a decade of international sanctions has left the oil and gasindustry "crippled," Juneau said, and it will requirebillions of dollars in investmentto get it up to speed.

Some of the money that will be repatriated amid the sanctions reliefwill be used for that very purpose.Beattysaidthat's where Canada can play a role.

"The oilfield service and equipment companies that are suffering in Western Canada will welcome this change," Beatty said.

Canada-Iran relations 'booby trapped'

And yet thegovernment's commitment to improve relationswith the Islamicrepublicwill be sticky because of moves Harper made while in government.

"You can't just knock on their door and say, 'Let's shake hands and forget about everything,'" Juneau said.

If Trudeau formally restores relations andreopens theembassy in Tehranas he has said he wants to do,he will have to reconcile that position with Canadianlawsthat are designed to prevent that very thing from happening.

The Harper government left Canada-Iran relations "booby trapped," Juneau said, because it branded Iran the greatest threat to world peace, formally declared the country a state supporter of terrorism and drafted legislation allowing Canadians to sue Iran for compensation for terrorist acts.

Canada broke off ties with Iran in September2012 andclosedthe embassy in Tehran, citing concern for the safety of Canadian diplomats and staff. Iranian diplomats in Canada were alsoexpelled from Ottawa.

Trudeau's cabinet can remove Iran from the list of state sponsors of terrorism with the stroke of a pen, but it will face political pushback tosuch a move, because, as Juneau putit, "that would be factually inaccurate" given Tehran's ties to Hezbollah.

It's unlikely Iran would be open to restoring diplomatic relationswith Canada unless it takes some of its anti-Iran laws off the books.

"The Harper government'slegacy is still a dark cloud hanging over Canada-Iran relations,"Hashemiadded, saying a Canadian embassy in Tehran is still at least two years away given the currentbad blood.