Huge deal would see Boeing supply 100 passenger jets to Iran

Huge deal would see Boeing supply 100 passenger jets to Iran

STEVEN MUFSON

Last updated 17:50, June 15 2016

Iran is set to unveil terms of a multibillion-dollar deal to purchase about 100 commercial passenger planes from Boeing, in what would be the biggest sale of US goods to Iran since the easing of economic sanctions last October, sources say.

Although financing arrangements are not complete, the historic agreement would likely cover deliveries and services over nearly a decade at a cost of more than US$17 billion (NZ$24b).

Word of an agreement emerged first on Iran's state news agency, which reported that Iran's minister of roads and urban planning, Abbas Ahmad Akhundi, told reporters that the purchase would be similar in scope to a US$27 billion accord to buy 118 planes from French-based Airbus Group.

He said the government would provide details "within upcoming days."

A Boeing official said a formal announcement was likely to come on Wednesday (Thursday, NZT).

Boeing still needs approval and a licence from the US Treasury Department.

But the sale would not have been possible prior to the easing of sanctions that took place under what is known as the Joint Comprehensive Plan of Action (JCPOA), adopted after an accord limiting Iran's nuclear programme.

"This would be the first time a US aviation company was having a discussion with Iranian purchasers of civilian airliners since the early '70s," said Richard Nephew, a sanctions expert who was on the State Department team negotiating with Iran and who now works at Columbia University's Center on Global Energy Policy.

"Based on my experiences in negotiations, the Iranians were clear that they liked Boeings and liked Airbuses and wanted a bit of both."

Financing negotiations are expected to continue over conventional terms as well as unusual political risks and disputes, including possible Iranian violations of the nuclear accord or a "snapback" of sanctions by the United States and its allies.
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The anti-American rhetoric common in Tehran and election-year politics in the United States makes this a sensitive time for this type of business deal.

Neither Boeing, which held an early round of talks with Iranian airline officials during a visit to Iran in April, nor the Obama administration would confirm the specifics.

People familiar with the terms spoke on the condition of anonymity because the deal has not been formally announced.

"We have been engaged in discussions with Iranian airlines approved by the [US government] about potential purchases of Boeing commercial passenger airplanes and services," the company said in an email.

"We do not discuss details of ongoing conversations we are having with customers, and our standard practice is to let customers announce any agreements that are reached."

A White House official said that "we are not going to stand in the way of permissible business under the JCPOA, and we will continue to meet our commitments, as long as Iran continues to meet their nuclear-related commitments."

Akhundi said that Iran hoped to become a major hub in the Middle East, adding that Iran's fleet of passenger jets should include 400 midrange and 100 short-range planes, requiring an investment of about US$50 billion, according to the Mehr News Agency, an Iranian organisation.

In the months since striking the nuclear deal, Iran has had trouble sealing deals with international companies, which have been wary of political instability, tensions over Syria, and tough commercial terms offered by prospective Iranian partners.

Iran has complained that the US government is slowing down trade agreements.

"The US has effectively removed sanctions only on paper, and the European companies would fear any opening of trade with Iran lest the US would punish them in the name of violating sanctions," Iran's foreign minister Mohammad Javad Zarif said at a news conference in Oslo on Tuesday.

He said that "the Iranian people await to see the impacts of removal of sanctions in practice."

Zarif added that he planned to talk to US Secretary of State John Kerry.

Opponents of the Iran nuclear deal were critical.

Mark Dubowitz, executive director of the Foundation for Defense of Democracies, said that if Boeing concluded a sale to Iran it would pose "a massive sanctions, money-laundering and corruption risk for Boeing and the banks doing the deal because of ongoing concerns that the American equipment will be used to ferry Revolutionary Guard troops, weapons and money to the Assad government as well as to other terrorist groups." He was referring to the Syrian regime of President Bashar Assad.

Others suggested the agreement could open the door to more deals.

"The Boeing deal, if it goes through, will embolden other American businesses to seek commercial ties with Iran," said Karim Sadjadpour, senior associate at the Carnegie Endowment for International Peace.

"If Boeing can sell airplanes to Iran, which could be used to transport arms to bad actors like Bashar Assad and Hezbollah, why shouldn't Proctor and Gamble be allowed to sell detergent to Iranians, or Nike be allowed to sell sneakers? Many American business are watching to see what happens."

But Nephew said the Boeing deal was just the sort of thing American negotiators had in mind.

"This deal would be in line with what we expected when we negotiated the deal," he said, "and it is what the Iranians were expecting when they paid in nuclear dollars for the sanctions relief they got."

- The Washington Post
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