Boeing’s agreement to sell planes to Iran forces Trump to choose between two campaign promises.
- By Jessica HolzerJessica Holzer is an editor at Foreign Policy. She previously covered financial regulation for The Wall Street Journal.
Boeing’s planned multibillion-dollar aircraft sales to Iran are facing a growing backlash from Republicans in Washington, but one key politician has stayed silent: Donald Trump.
The proposed sales have put the U.S. president in a tough spot, pitting his hostility to Iran and the recent nuclear deal against his ambition to boost American factory jobs.
If he blocks the plane sales, Trump could undercut that second goal. Boeing said its agreements to sell 110 aircraft for nearly $20 billion to two Iranian carriers would support nearly 120,000 jobs.
Yet if he lets the sales proceed, Trump will anger Republicans in Congress and buttress a nuclear deal he detests by signaling to Western companies that America’s arch enemy is a good place to do business.
“The decision wheel that he’s got in front of him is pretty complex,” Richard Nephew, who served as the lead U.S. sanctions negotiator on the nuclear deal, said. “It’s everything from the jobs issue to his inability to come up with something better that doesn’t restart the nuclear program and cause a great rift between us and the Europeans” who were party to the deal.
The nuclear accord between Iran and six world powers lifted international sanctions in exchange for verifiable steps by Iran to abandon some of its nuclear activities. The United States also agreed to allow plane makers to sell aircraft to Iran. But the sales require export licenses, and the Treasury Department has broad leeway to cancel or deny them if there’s evidence Iran isn’t using the aircraft for civil aviation purposes.
In September, the Obama administration issued licenses for Boeing and its European rival Airbus to sell up to 200 planes to state-run IranAir. Airbus requires a license because it uses more than 40 percent American parts in its planes. Last month, Boeing applied for another license as part of a tentative deal to sell 30 planes to Iran Aseman Airlines.
The Boeing sales, which are still pending, are “absolutely the big bellwether” that will send a signal to Western companies standing on the sidelines of the Iranian market that the administration will support the nuclear deal, Trita Parsi, the president of the National Iranian American Council, argued. Many such companies have been hesitant to enter Iran for fear the Trump administration will reimpose sanctions it lifted under the nuclear agreement.
The administration says it has launched a review of its Iran policy and the nuclear deal. And at a House hearing Wednesday, Treasury Secretary Steve Mnuchin said his department was reviewing the Boeing and Airbus licenses.
Since he took office, Trump has stayed mum on the aircraft sales despite intensifying calls from Republicans for him to block the deals over what they say is clear evidence Iran uses commercial planes to ferry troops and weapons to terrorist groups and Syria’s Assad regime.
Yet during the campaign, he appeared sensitive to the fact that the Iran agreement allowed foreign companies, including Airbus, to enter the Iranian market while American companies continued to be shut out.
“They are now rich, and did you notice they’re buying from everybody but the United States? They’re buying planes, they’re buying everything, they’re buying from everybody but the United States,” he told the New York Times in March 2016. The comments were made after Airbus agreed to sell planes to IranAir and before Boeing’s plane deals were announced.
Speaking at a Boeing plant in South Carolina in February, Trump vowed to protect American jobs but didn’t comment on Boeing’s deal to sell up to 80 aircraft to IranAir.
“If I was one of those who wanted to kill this deal, I would be very frustrated at this point that Trump has said so much on Iran but he’s kept silent on the Boeing deal,” said Parsi, the author of the new book Losing An Enemy: Obama, Iran and the Triumph of Diplomacy.
The White House declined to comment on the licenses. “Boeing will continue to follow the lead of the U.S. government in all our dealings with approved Iranian airlines,” company spokesman Marc Sklar said.
The plane sales are key, observers said, because the nuclear deal requires continued action to prevent it from dying on the vine. At a minimum, the administration must renew waivers of sanctions on foreign companies’ dealings in Iran. But it also must work to ensure the economic benefits of the deal for Iran materialize, observers said.
The Obama administration was eager to encourage non-U.S. companies to enter the Iranian market and clear the way for the aircraft sales. But so far, the Trump administration appears to only grudgingly adhere to the framework of the deal while it ratchets up of hostilities with Iran over its ballistic missile tests and support for terrorist groups and the Assad regime.
In April, the administration certified to Congress that Iran was living up to its obligations under the accord, and last week it renewed waivers of sanctions agreed to under the agreement.
Proponents of the Iran accord see the aircraft sales as crucial. “I don’t think the Iranians can accept not getting those planes,” Nephew, the former sanctions negotiator, said. Meanwhile, the deal’s critics aren’t buying it.
“I believe the United States should call Iran’s bluff on that,” Behnam Taleblu, an Iran expert at the Foundation for the Defense of Democracies, said. “Iran gets a lot in the nuclear realm. This deal legitimizes what was once an illicit program.” His group says its examination of flight logs clearly shows that IranAir is transporting weapons and fighters to the Assad regime.
A decision by the Trump administration to scotch the plane sales would have to be based on substantial evidence that can be presented publicly in order to avoid accusations from Iran and European allies that the administration sabotaged the nuclear deal, several experts said. “If there were very clear unambiguous evidence involving Iran and Syria, that would simplify their case,” Nephew said.
Iran hasn’t bought a new Boeing since 1977 and is desperate to upgrade its aging fleet, which is often blamed for its terrible safety record. Iran has had 42 civilian aircraft crashes resulting in a total of 950 deaths since 1979, the year of its revolution, according to the Flight Safety Foundation.
Still, there are doubts about whether the orders represent real need. IranAir’s growth prospects and finances don’t seem to support the 200 planes it ordered from Boeing and Airbus, Richard Aboulafia, an aerospace analyst at Teal Group, said. Iran is likely inflating the orders to pressure the administration to support the nuclear deal, he argued.
“It looks like they are trying to dangle it in front of Trump and Congress. It’s all they got,” he said. He predicted Iranian carriers would ultimately buy only about dozen aircraft if the sales are allowed to proceed.
Even if the sales fall far short of the orders, Boeing would still be motivated to pursue them because it doesn’t want to concede the Iranian market to Airbus, Richard Safran of Buckingham Research argued. “They care because they don’t want Airbus to get the order,” he said.
Some experts argued the plane sales aren’t merely about creating jobs in the near-term, but about maintaining U.S. aviation’s dominance in the face of emerging competition from China and Russia and forging economic ties with Tehran that undercut the country’s ruling Islamic clerics.
The jobs impact of the Boeing sales is “about 25 percent of the problem,” Anthony Cordesman, an expert at the Washington-based Center for Strategic and International Studies, argued. “It’s strategic in the sense of security and the sense of the future of aviation sales.”
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