Saturday, December 16, 2017

Boeing, Airbus Sales Imperiled as Trump Administration Formulates Iran Plan: White House’s new approach to 2015 nuclear accord could impact plane makers and stoke tension with Europe

One option the Trump administration is considering, a senior diplomat familiar with the discussions said, is allowing a slow delivery of planes by Boeing Co. and Airbus SE to Iran, to ensure the planes aren’t being used for illicit purposes, or that the old aircraft, parts and maintenance aren’t being used for other airlines such as Mahan Air, the firm sanctioned by the U.S. Treasury for its support of terrorism.

The Wall Street Journal
By Felicia Schwartz and  Ian Talley
Updated Dec. 15, 2017 4:01 p.m. ET

WASHINGTON—The Trump administration is advancing a strategy that could derail efforts by Boeing Co. and Airbus SE to sell hundreds of jetliners to Iranian airlines, U.S. officials said.

The two aerospace giants have lined up deals over the past 15 months that have been left in limbo as the White House reassessed its Iran policy and has threatened to walk away from an international nuclear deal if Congress and European partners don’t address concerns, with only a handful of Airbus planes so far delivered.

Any effort to scuttle these deals, by accident or design, could have far-reaching consequences, both for the nuclear accord and the jet makers. Under the 2015 nuclear deal, Iran agreed to curb its nuclear program in exchange for significant sanctions relief, and supporters of the accord fear it would fall apart if Iran doesn’t see the benefits it was promised.

President Donald Trump’s team hasn’t yet presented him with options for addressing the sales, but months of interagency discussions have grown out of administration concerns that Iranian airlines could use the new jets, or old ones, to ferry weapons and military personnel into Syria, the U.S. officials said.

Boeing and engine maker General Electric Co. are the only major U.S. companies to pursue Iranian business.

The options to be presented to Mr. Trump include banning sales, imposing stringent conditions that could halt any aircraft deliveries, or slow-walking approvals, according to the U.S. officials and other people familiar with the matter.

Since the deal took effect in 2016, Airbus, based in Toulouse, France, has delivered three jets to Iran Air but could be restricted by any U.S. ban because of the large U.S. content on its aircraft.

Boeing and Airbus have announced deals to sell almost 300 planes to Iranian airlines valued at $40 billion altogether before industry discounts. Boeing signed a proposed sale to privately owned Iran Aseman Airlines in April, the only proposed deal since Mr. Trump took office. Boeing, unlike Airbus, hasn’t added Iranian deals to its official order book.

The 2015 nuclear deal between Iran and world powers allowed for the aviation sales by both companies to go ahead, pending approval from the U.S. Treasury’s Office of Foreign Assets Control. Those approvals to export planes were granted by the Obama administration.

Mr. Trump in October refused to certify to Congress that Iran was complying with the deal, but the administration remains a party to it. Mr. Trump faces a mid-January deadline to extend sanctions relief to Iran and is expected to again tell Congress he won’t certify Iran’s compliance with the deal. The Treasury hasn’t issued any Iran-related aviation licenses under the Trump administration.

A spokesman for the White House National Security Council declined to comment on individual licenses issued by the Treasury Department, but said, “The administration’s position is clear: We will not issue export licenses unless we are convinced the aircraft will be used exclusively for commercial passenger aviation.”

A Boeing spokesman said, “We are authorized to deliver [aircraft], but we will continue to follow our government’s lead with regards to all of our activities with Iran.” Airbus had no comment but previously said it had U.S. approvals to deliver the plane and would fully comply with U.S. and other regulatory requirements. The U.S. Treasury didn’t respond to a request for comment.

The scrutiny of the planned jet sales is emblematic of the broader concerns about Iran from Trump administration officials and some lawmakers, over the country’s support of terrorism and wider conflicts in the region such as in Syria, Yemen and Lebanon.

The U.S. “should not be in the business of selling aircraft to the world’s leading state sponsor of terrorism,” said Rep. Roger Williams (R., Texas), vice chairman of the House Financial Services subcommittee on trade. He sponsored legislation that requires more stringent scrutiny of aircraft sales to Iran before Treasury certifies any deals. The House on Thursday approved the bill, which has backing in the Senate.

Administration officials said they were unsure what Mr. Trump would decide when presented with options. Mr. Trump has forged close ties with Boeing, championing its role as America’s largest exporter. While Boeing wants to tap Iran’s thirst to replace its aging jetliners and not cede the market to Airbus, the urgency has been tempered by its recent success in finding other buyers for its twin-aisle 777 jet. Iran Air wants to buy 15 of the planes.

Losing the Iranian plane deals wouldn’t be financially crippling to either Boeing or Airbus, but both are eager to build a relationship in a country with a large population underpinning potentially major demand for travel. Years of sanctions have left Iran with one of the world’s oldest airliner fleets.

Former officials and supporters of the Iran deal pointed to a January 2016 tweet by Mr. Trump, a day after the nuclear deal was enacted, in which he faulted the deal for disadvantaging American companies, citing the planned Airbus sale.

Any move against the airline deals might also drive a wedge between the Trump administration and Europe if Airbus plane sales don’t proceed. European officials have frequently complained that Europe took more of a hit from sanctions levied on Iran before the deal was reached, because Americans were doing very limited business at that time.

“We were the ones who took all the pain of all the sanctions,” said David O’Sullivan, the European Union’s U.S. ambassador. “We took the pain on Iran... We didn’t do this deal in order to get rid of the sanctions. We held the sanctions until we could all agree we had a good deal.” He also warned that the U.S. risked blowing up the nuclear deal. “Nothing should be done that negates that because clearly you cannot expect Iran to stick to the deal if you take away with the left hand what is given on the right hand on the lifting of the sanctions,” Mr. O’Sullivan said.

A senior diplomat familiar with Trump administration discussions said one consideration is allowing a slow delivery to ensure Iran isn’t using the planes for illicit purposes, or that the old aircraft, parts and maintenance aren’t being used for other airlines such as Mahan Air, the firm sanctioned by the U.S. Treasury for its support of terrorism. Iran Air had also been sanctioned by the U.S. for its support of the Islamic Revolutionary Guard Corps, but was delisted as part of the nuclear agreement. Mahan Air couldn’t be immediately reached for comment.

Eric Lorber, a senior adviser to the U.S. Treasury’s Undersecretary for Terrorism and Financial Intelligence, suggested this year before he joined the administration that the Boeing and Airbus sales could be structured in a way to keep pressure on Iran, even as many sanctions are lifted under the nuclear deal.

Mr. Lorber, then at the Foundation for Defense of Democracies, said at a public event on sanctions that Tehran could be required to fund aircraft sales via an escrow account, with the delivery of the vehicles over an agreed period. If the U.S. found any evidence Iran Air wasn’t using the planes commercially, the U.S. could cut off the delivery of the aircraft and potentially confiscate funds held in escrow.

—Doug Cameron, Robert Wall and Asa Fitch contributed to this article.

Original article can be found here ➤

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