Military
Will a Sale to Iran Be Easier for Boeing Than It Has Been for Airbus?
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Back in January, Airbus announced an agreement with Iran’s flag carrier, Iran Air, for 118 new aircraft at a list price total of around $27 billion. Because more than 10% of the parts used on the new airplanes are sourced from the United States, an obscure office within the U.S. Department of the Treasury must approve the deal.
The U.S. Office of Foreign Assets Control (OFAC) “administers and enforces economic and trade sanctions based on US foreign policy and national security goals against targeted foreign countries and regimes, terrorists, international narcotics traffickers, those engaged in activities related to the proliferation of weapons of mass destruction, and other threats to the national security, foreign policy or economy of the United States.” Without OFAC permission, Airbus can’t sell those 118 jets to Iran.
The Wall Street Journal reported last week:
Even as the U.S. and European governments are now looking to foster transactions, banks remain reluctant to do deals after facing fines imposed by U.S. regulators on lenders when Western sanctions on Tehran were in place.
Boeing Co. (NYSE: BA) earlier this year received OFAC permission to negotiate sales of new aircraft to Iran now that sanctions against the country have been lifted. Those negotiations are ongoing, and Reuters reported Monday that some industry sources expect Boeing to strike a deal with Iran Air “fairly soon” for 100 new Boeing jets.
Even with OFAC permission, however, the deal between Iran and Airbus must find financing from non-U.S. sources. U.S. Secretary of State John Kerry has said the United States has no issues with foreign banks doing business with Iran, but the details of how that might work are still unclear. The U.S. maintains restrictions on Iranian banking due to Iran’s ballistic missile program and the country’s alleged support for terrorism.
How Iran could finance a purchase of 100 or so Boeing jets may also be problematic. The Chicago-based company must also get OFAC’s permission to do business with Iran and then help the country come up with financing for the sale.
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