Tuesday, 25 April, 2017

Trump faces test as Boeing signs $3 billion deal with Iran

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By Rick Gladstone

The Boeing Company announced a tentative agreement on Tuesday to sell up to 60 737s to an Iranian airline, a transaction valued at $6 billion that angered American critics of Iran and appeared likely to test the Trump administration’s avowed hostility toward that country.

Boeing, a leading commercial aerospace company and a top American exporter, said in a statement that the agreement, which requires United States government approval, would create about 18,000 American jobs.

The company’s agreement with Aseman Airlines, an Iranian carrier described as the nation’s third largest, is the first to be announced by any big American business with Iran since President Trump took office in January.

Boeing announced an agreement last December to sell 80 commercial aircraft to Iran Air, the national carrier, a deal valued at $16.6 billion.

Commercial aircraft sales to Iran are permitted under the nuclear agreement reached in 2015 involving Iran and major global powers, including the United States. The agreement relaxed many economic sanctions against Iran in return for the country’s verifiable pledges that its nuclear work would be peaceful in nature.

Mr. Trump has repeatedly denounced the nuclear agreement, describing it as a giveaway to a country that he and his aides have called a leading state sponsor of terrorism and a destabilizing force in the Middle East. But Mr. Trump also has vowed to protect American industries and workers from foreign competition.

Aerospace analysts said that together, Boeing’s deals with Iran amount to a test of the Trump administration’s priorities. If Boeing is forbidden to sell the aircraft to Iran, plane makers in other countries might fill the gap.

“There was always going to be a clash over this issue,” said Richard Aboulafia, vice president of analysis at the Teal Group, an aviation research consultancy in Fairfax, Va.

“Trump campaigned on getting tough with Iran,” Mr. Aboulafia said, but “at the end of the day, these are manufacturing jobs. It’s really hard to say, ‘Yes, we are giving this work to the Europeans.’”

The Boeing announcement contrasted with other signs of growing hostility between the Trump administration and Iran. Last month, the United States imposed sanctions on 25 Iranian entities and individuals over what the White House called illegal Iranian missile tests. Mr. Trump included Iran on the blacklist of Muslim-majority countries subject to his proposed visa ban, which is currently blocked in the courts.

It was not clear from the Boeing announcement whether the tentative deal with Aseman Airlines had been negotiated under President Trump or under President Barack Obama. Boeing officials did not immediately return emailed requests for comment.

The announcement, posted on Boeing’s website, said Aseman intended to buy 30 Boeing 737 MAX aircraft valued at $3 billion, with rights to purchase an additional 30. Deliveries would be scheduled to start in 2022.

Aseman currently has a fleet of 31 aircraft, a mixture of Boeing, Airbus and Fokker models with an average age of 25 years, according to the website Planespotters.net.

The Boeing deal requires permission from the Office of Foreign Assets Control of the Treasury Department, which has regulatory authority over such transactions with Iran.

Not mentioned in the Boeing announcement, but still a significant hurdle for both sides, is how the company would be paid for the aircraft. Under sanctions that are still in place against Iran, the country cannot use the American banking system, so transactions must be conducted overseas in currencies other than the dollar.

Iran has one of the oldest commercial aircraft fleets in the world, a legacy of the prolonged estrangement with the United States that blocked the Iranians from refurbishing or replacing many of their American-built planes.

American critics of Iran in Congress and elsewhere have repeatedly objected to Boeing’s plans to sell new aircraft to Iran, arguing that at least some of the planes could be diverted for illicit military use.

Representative Peter Roskam of Illinois, an influential Republican who has long opposed Boeing’s intentions in Iran, called the tentative deal announced on Tuesday “outrageous” and observed that it had coincided with reports that President Bashar al-Assad of Syria, Iran’s Middle East ally, was responsible for a deadly chemical weapons attack in his war-ravaged country.

“On the same day Bashar al-Assad’s air force dropped chemical weapons onto children, an American company announced its intent to sell airplanes to Assad’s patrons in Tehran,” Mr. Roskam said in a statement. He expressed hope that the Trump administration would “everything within its power” to stop the sale.

Boeing says that there are sufficient safeguards in place to prevent Iranian misuse of the aircraft, and that the tentative deal announced on Tuesday is legal under the nuclear agreement.

“This deal presents Trump with the mother of all dilemmas,” said Cliff Kupchan, chairman of the Eurasia Group, a political risk consultancy based in Washington.

“It would create a lot of jobs — he’s all about that,” Mr. Kupchan said. “But planes are inherently dual-use, can ferry troops around, and Trump is dug in on curbing Iranian influence in the region. It’s a big bet by Boeing, and the firm probably has an uphill fight on its hands.”

NY Times

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