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Europe tiptoes around U.S. sanctions on Iran with new trade system

A closer look at the day's most notable stories with The National's Jonathon Gatehouse: France, Germany and Britain are setting out to help European businesses skirt U.S. sanctions on Iran; Jaskirat Singh Sidhu sentencing; Ottawa tries to get relations with China back on track.

Newsletter: A closer look at the day's most notable stories

An Iranian protester burns a U.S. banknote during a demonstration outside the former U.S. Embassy in Tehran on Nov. 4, 2018, the eve of renewed sanctions by Washington. The INSTEX system announced Thursday will allow Iran to sidestep direct banking transactions when trading with European nations. (Atta Kenare/AFP/Getty Images)

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  • France, Germany and Britain are trying to help European businesses skirt U.S. sanctions on Iran by launching a workaround payment mechanism.
  • At the sentencing hearing in Melfort, Sask., for Jaskirat Singh Sidhu, the driver of the truck that crashed into the Humboldt Broncos team bus last year, forgiveness has sprouted for some.
  • With the firing of John McCallum, questions remain about how Ottawa will get relations with China back on track.
  • Missed The National last night? Watch it here.

Iran sanctions

France, Germany and Britain are setting out to help European businesses skirt U.S. sanctions on Iran by launching a workaround payment mechanism.

The new company, called INSTEX — short for Instrument In Support Of Trade Exchanges — was formally unveiled this morning. It will function as a financial instrument, specifically designed to allow the bartering of goods between Iran and Europe without direct banking transactions.

The scheme has the backing of the European Union. It's the biggest challenge to date to Donald Trump's unilateral efforts to choke off the Iranian economy via strict sanctions and threats of punitive action against nations and corporations that don't respect America's wishes.

A worker rides a bicycle in front of the reactor building of the Bushehr nuclear power plant in this October 2010 file photo. U.S. spy chiefs told Congress on Tuesday that Iran is abiding by the terms of the 2015 nuclear deal and not engaging in prohibited 'key activities' that might help the country produce atomic weapons. (Majid Asgaripour/Associated Press)

Initially, the instrument will facilitate trade in food, pharmaceuticals and medical goods — all exempt from Washington's restrictions.

But the plan is to gingerly expand into other areas, striking balance between Europe's need to appease the U.S. president and its desire to keep the Iran nuclear deal alive.

Many observers doubt that it will work, given the obvious legal and financial risks.

A statement released today by the U.S. Embassy in Berlin tried to drive home that point: "Entities that continue to engage in sanctionable activity involving Iran risk severe consequences that could include losing access to the U.S. financial system and the ability to do business with the United States or U.S. companies," it warned.

The Iranians, on the other hand, hailed the mechanism as a diplomatic victory for Tehran.

Abbas Araqchi, Iran's Deputy Foreign Minister, called it a "first step" in an interview with state television, expressing hopes that it will be "fully implemented."

Iran's Deputy Foreign Minister Abbas Araqchi speaks at the Chatham House think tank in London on Feb. 22, 2018. On Thursday he said he hopes the INSTEX trade system with the U.K., Germany and France will be 'fully implemented.' (Bozorgmehr Sharafedi/Reuters)

The European challenge comes just two days after U.S. spy chiefs told Congress that Iran is abiding by the terms of the 2015 nuclear deal and not engaging in prohibited "key activities" that might help the country produce nuclear bombs.

Trump responded with a trademark Twitter outburst, calling his intelligence officials "extremely passive and naive" about the dangers Iran poses and suggesting that they "go back to school."

Justified or not, the sanctions appear to be biting.

Yesterday, Iranian President Hassan Rouhani called them the "biggest pressure" that the country has faced in the past four decades. And he argued that his government doesn't deserve the blame for the consequences, which include 35 per cent inflation, meat shortages, and a currency that has lost more than 70 per cent of its value against the U.S. dollar.

Iran's President Hassan Rouhani speaks during his visit to the shrine of Ayatollah Ruhollah Khomeini on Wednesday. In an address Thursday, he said the nation's economic woes are due primarily to 'pressure from America and its followers.' (Reuters)

"Today our problems are primarily because of pressure from America and its followers," Rouhani said in a national address marking the 40th anniversary of the Iranian revolution.

The sanction-busting charges laid by the U.S. against Chinese telecom giant Huawei's CFO Meng Wanzhou this week certainly seem to have Beijing's attention.

Iranian authorities are complaining that China is now reneging on a promise to help redesign the country's Arak heavy water reactor, despite the facility being exempt from sanctions.  

And Iranian oil exports have now fallen to about 1 million barrels a day, down from a post-nuclear-deal peak of 2.7 million barrels a year ago.

Earlier this month, Trump administration officials confidently predicted that they will soon reach their goal of "zeroing out" Iran's foreign petroleum sales, cutting off Tehran's biggest external source of income.

A gas flare on an oil production platform in the Soroush oil fields is seen alongside an Iranian flag in the Persian Gulf. Iranian oil exports have fallen to about 1 million barrels a day, down from a post-nuclear-deal peak of 2.7 million barrels a year ago. (Raheb Homavandi/Reuters)

But there are already indications that the White House will soon have to ease the pressure.

Import waivers that were granted to eight Asian and European countries come up for renewal in May, and most of those customers haven't yet figured out how to replace the Iranian oil. India, which took in 300,000 barrels a day in December, is already in talks to extend its exemption.

And the sanctions that Trump imposed on Venezuelan oil this week may end up providing a lifeline to Tehran. If world prices rise because of the disrupted supply, the White House will face considerable pressure to let countries like Greece, Turkey, China and Japan keep buying cheap Iranian oil.

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The power of connection

Susan Ormiston is in Melfort, Sask., covering the sentencing hearing of Jaskirat Singh Sidhu, the driver of the truck that crashed into the Humboldt Broncos team bus last year near Tisdale.

Quietly this week, I watched Scott Thomas walk up to the Sidhu family in a Melfort court and speak with them for several minutes.

His son Evan was on the Humboldt Broncos team bus when it T-boned a truck driven by Jaskirat Singh Sidhu, who'd barreled through a stop sign. Evan was one of 16 people killed in the crash.

During that brief conversation with Sidhu's family at the sentencing hearing, Scott Thomas agreed to meet the driver, and he followed the family to a small room adjacent to the court.

Scott Thomas, seen Tuesday at the sentencing hearing of Jaskirat Singh Sidhu. (Ryan Remiorz/The Canadian Press)

They met for about 15 minutes. Each of them spoke. Thomas said he asked Sidhu direct questions, but those "would remain private."

Thomas described the meeting to me as being intensely emotional. I asked him if he felt better for it – "oh yes," he nodded with tears in his eyes.

The first time I met Scott Thomas was in Saskatoon, just 72 hours after his son was killed. Even then, he was able to articulate how he came to learn his son was gone.

He'd arrived near the scene with Dr. Paul Labelle, another father, about 45 minutes after the crash, but was barred from going closer by police. He knew, though, that the front of the bus was gone. He also knew that rookies like his son Evan usually sat in the front.

Evan Thomas on the ice with the Humboldt Broncos. (Thomas family)

For the past 10 months Thomas has spoken openly and candidly about the tragedy, keeping his son's memory close. In his victim impact statement earlier this week in court he addressed a letter to Evan, talking directly to his son and revealing that forgiveness might mean taking another difficult step — that is, to meet the driver personally.

That may have set the stage for his conversation with Sidhu.

Of the more than 90 people here who've shared their stories of pain and loss in statements to the court, there has been a wide range of emotion — anger, frustration, helplessness, and the sad, desperate feeling of finality; nothing can turn back the calendar.

Forgiveness has sprouted for some – for others not yet, and maybe never.

Jaskirat Singh Sidhu arrives for the fourth day of his sentencing hearing in Melfort, Sask., on Thursday. (Susan Ormiston/CBC)

The legal teams begin their sentencing arguments today, describing to Judge Inez Cardinal any aggravating or mitigating factors surrounding Sidhu's fateful drive on April 6, 2018.

She will then have to determine the penalty for his dangerous driving, which caused so much loss.

  • WATCH: Susan Ormiston's coverage of Jaskirat Singh Sidhu's sentencing hearing, tonight on The National on CBC Television and streamed online

At Issue

Tonight's At Issue looks at the firing of John McCallum and how Ottawa will get relations with China back on track, writes The National's co-host Rosemary Barton.

The first question from Andrew Scheer when the House returned this week from its Christmas break was, not surprisingly, about China. He called the government's foreign policy a "disaster" following the firing of John McCallum last weekend.

The reason why the government dumped McCallum was left to Foreign Affairs Minister Chrystia Freeland to articulate.

She said McCallum's message about the extradition case of Meng Wanzhou was "inconsistent" with what the government said and believed.

John McCallum, at the time Canada's ambassador to China, arrives to brief members of the Foreign Affairs committee in Ottawa regarding China on Jan. 18. (Sean Kilpatrick/Canadian Press)

McCallum may have been a victim of his own words, which were retracted and then repeated, but the incident does beg questions about foreign policy that the official opposition tried to get at, albeit with a strictly partisan bent.

China is hard for all governments to manage. Stephen Harper didn't have an easy time of it either.

Canada's former Ambassador to China, David Mulroney, writes in his book Middle Power, Middle Kingdom: "The hard truth is that we need to step up our foreign policy game to engage a rising China. We need to invest the kind of time and attention in the relationship that we have rarely devoted to any relationship ..."

How quickly will the government move to replace McCallum? Will it follow its allies and decide to ban Chinese tech company Huawei entirely form Canada? How does it get our relationship with China back on track?

We'll tackle some of this on At Issue with Chantal Hébert, Althia Raj and Paul Wells.

See you all tonight.

- Rosemary Barton

  • WATCH: The National's At Issue panel tonight on CBC Television and streamed online

A few words on ... 

Memories and forgiveness.

Quote of the moment

"They may say I left for a more lucrative deal, but this is not the case. Their offer and lack of transparency is a clear message. It seems management prefers to focus on things other than the pure desire to win."

- MLS Soccer star Sebastian Giovinco reacts to Toronto FC's decision to sell him to Saudi Arabia's Al-Hilal FC after a breakdown in talks for a new contract.

Former Toronto FC striker Sebastian Giovinco turned to Instagram within hours of his sale to Saudi Arabia club Al-Hilal FC on Wednesday to criticize the MLS club's handling of his contract impasse. (Nick Turchiaro/Reuters)

What The National is reading

  • Elizabeth Wettlaufer confessed to attacking 15th patient; the public was never told (CBC)
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  • 29 kids, including babies, die from bitter cold at Syria camp, WHO says (CBC)
  • European colonizers killed so many people that they cooled the climate (BBC)
  • U.S. Immigration officials force-feed detainees on hunger strike (Associated Press)
  • India's jobless rate hits 45-year high (Reuters)
  • Ostend's bid for 'Brexual Healing' (Politico EU)
  • Florida sinkhole is tunnel leading to bank, says FBI (Guardian)
  • Mystery mould is eating an 800-year-old cathedral (Mysterious Universe)

Today in history

Jan. 31, 1954: Anti-communism a hot issue for Victoria public library

McCarthyism struck British Columbia's capital in the winter of 1954, when the Victoria Public Library fired John Marshall, its recently hired director of bookmobile services, over whispers that he had "communist-tinged associations." Mayor Claude Harrison then upped the ante, calling for any Red-linked books in the city's collection to be burned. The controversy went on for months, and six of the 11 full-time librarians eventually resigned in protest. No books were torched in the end. And Marshall, who went on to a long career in Toronto, finally received an overdue public apology in 1998.

Anti-communism a hot issue for Victoria public library

2 years ago
A bookmobile manager is fired for "communist associations" and the mayor suggests burning objectionable books in 1954. 2:13

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Jonathon Gatehouse

CBC Investigative Journalist

Jonathon Gatehouse has covered news and politics at home and abroad, reporting from dozens of countries. He has also written extensively about sports, covering seven Olympic Games and authoring a best-selling book on the business of pro-hockey. He works for the national investigative unit in Toronto.