Boeing could hardly step into a more sensitive, touchy deal than the imminent agreement to sell about 100 passenger jets to the Islamic Republic of Iran.
With the sale, Boeing faces unique political risks here in the United States – with potential blowback among Americans opposed to last year’s agreement to limit Iran’s nuclear program and possible snapback of international sanctions if Iran violates the nuclear pact.
Already, members of Congress are denouncing the deal. House Financial Services Committee Chairman Jeb Hensarling, R-Texas, said institutions that consider financing the sales “should ask whether it is in their long-term interests to profit from doing business with the world’s foremost state sponsor of terrorism. It’s not American jobs that are on the line, but potentially American lives.”
In Iran, feelings remain raw, too. Some Iranian leaders still complain about the “great Satan” and question the U.S. commitment to ease trade restrictions as promised under the nuclear accord.
Iran, meanwhile, shows little sign of once-hoped-for moderation and remains firmly on the opposite side of the United States in the civil war in Syria. In an example of how it can be deaf to American sensitivities, its government has filed a lawsuit with the International Court of Justice to recover $2 billion worth of frozen assets the U.S. Supreme Court awarded to victims of a 1983 bombing in Lebanon and other attacks linked to Iran.
“The risks are many,” said Cliff Kupchan, a Middle East analyst for the consulting firm Eurasia Group. “There is a post-deal, hard-line backlash in Iran. There has been no change in Iran’s foreign policy. And while Iranian non-nuclear-related behavior was not part of the deal … rewarding Iran while it is still repressive domestically and aggressive on the foreign policy front is bad optics.”
Yet for Boeing, the lure of Iran remains great. An Iranian minister told reporters this week that an accord would be announced within days. One person familiar with the details, who spoke on the condition of anonymity because the agreement is not yet public, said it could be worth more than $17 billion. And if Boeing obtains the licenses it still needs from the Treasury Department, it would crack open the door not only for itself but for hundreds of parts suppliers – all of whom will need licenses as well.
“It’s a massive deal and for a global company to secure a very large deal of this nature with any potential counterpart is potentially a great business investment due to the size of the deal,” said Elizabeth Rosenberg, senior fellow at the Center for a New American Security, a D.C.-based think tank that focuses on national security. “Not every airline is in the business of buying 100 planes at a go routinely. From Boeing’s perspective, they’re interested in the size of the market and they’re very keen not to be on the sidelines when competitors are interested in moving in.”
That competitor, in this case, is Airbus, the French aerospace company that agreed earlier this year to sell Iran 188 planes for about $27 billion.
For more than three decades, the United States has sought to keep American companies from selling goods to Iran – above all,replacement parts for Iran’s aging airplanes for fear that the parts would end up in military aircraft or that passenger planes would ferry troops ready to join battle in places like Syria.
Yet negotiators on the nuclear accord inserted a special carve-out in last year’s deal to make it easier for airplane makers to sell planes to Iran.
“If confirmed, Boeing’s deal with Iran would be historic and would lead to enhanced air safety for the Iranian people and for the thousands of Americans who travel to Iran each year and currently must travel on an aging, and potentially dangerous, aircraft fleet,” said Lawrence Ward, a partner at the international law firm Dorsey &Whitney.
Kupchan said U.S. strategy should not be based on depriving commercial airlines of parts.
“Making Iranians ride in unsafe planes for years because of sanctions was in my view a blight on U.S. policy,” he said. “Joining Airbus in providing relief, helping ensure the safety of Iranian air passengers is the right thing to do. It sends a message to Iran that despite differences we’re taking the moral high ground in this instance.”
Boeing is no novice at navigating partisan turbulence in Washington. The company played a key role in lobbying Congress not to kill the Export-Import Bank, which has backed a large share of Boeing sales abroad.
The company ran a full-page ad in Politico’s print edition on Tuesday with the words “safe and secure, as it should be” with a beautiful landscape of flowers in the foreground and snow-capped peaks in the distance. The ad describes the company’s a military defense system that is “on alert around the clock protecting the homeland.”
In an interview Wednesday, Dennis Muilenburg, Boeing’s chief executive, wouldn’t confirm the Iran deal but said the company has had discussions with Iranian purchasers that were “under the umbrella of the government-to-government agreements and following the licensing approval we have from the U.S. government. Those have been productive conversations. But we make it our policy not to comment on specific agreements, and let our customers take the lead on any announcements.”
He said any sales would be “very tightly controlled, from a regulatory and licensing standpoint,” and that the licenses would dictate the “specific types of airplanes” that it could sell and their uses.
Meanwhile, Iran has its own ambitions. It wants to improve the safety of its aging fleet of planes starved for parts. Its leading airlines — Iran Air, Mahan Air and Iran Aseman Airlines — aspire to be in the international category of United Arab Emirates’ or Qatar’s airlines. Iran’s domestic flights, meanwhile, are heavily used because fuel subsidies have kept ticket prices low.
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