Economy, Domestic Economy

US Bill Requires Reporting on Iran Plane Sales Finance

Iran Air has ordered 80 airplanes from Boeing.Iran Air has ordered 80 airplanes from Boeing.

The United States House of Representatives passed legislation on Thursday, which would require Treasury Department officials to report to the congress on Iranian purchases of US aircraft and how those sales are financed.

It passed 252-167—all but four Republicans supported it, and they were joined by 23 Democrats, The Washington Examiner reported.

But the debate over the bill reflected dueling views of whether the legislation would break US commitments under the Iran nuclear deal, also known as the Joint Comprehensive Plan of Action.

Republicans emphasized that the legislation does not bar any aircraft sales to Iran. Instead, it requires the Treasury Department to notify congress about the activities of the Iranian company that purchases the planes, as well as the financing used for the deal.

The bill does not create a mechanism for blocking the sales, lawmakers emphasized.

 The most immediate practical effect of the legislation might be felt in the courts rather than the national security arena, according to one observer. 

House Democrats maintained that the bill might provoke Iran to abandon the nuclear agreement, however, by interfering with their ability to work with US corporations as promised under the pact.

“[This bill] would impose a new condition,” Rep. Jim Himes, D-Conn., said on the House floor. “A new condition which would require certification by [the executive branch] and all of the process which would ensue. It is not a stretch, in fact it is fairly clear, that if [this bill] were to pass, the Iranians and others could credibly claim that we have violated our obligations under the JCPOA.”

House Republicans derided those concerns, calling the bill a mere “reporting requirement” that would not halt the deals.

“If my friends who oppose this bill don’t care enough to even request the information from the executive branch ... that is a sad day for congressional oversight and a sad day for the United States Congress,” said House Financial Services Chairman Jeb Hensarling, R-Texas, who shepherded the bill through the floor debate.

Iran Air has said the Boeing deal won’t be affected, if the United Sates chooses to walk out of Iran’s nuclear deal.

“OFAC [US Treasury Department’s Office of Foreign Assets Control] licenses for Iran Air’s [Boeing] planes have been issued. If the US pulls out of the JCPOA, this will not affect the OFAC licenses … This will not affect Boeing’s contract with us,” Iran Air CEO Farzaneh Sharafbafi told Financial Tribune in an interview late in September.

  Shift to Domestic Financial Sources

Executives from Boeing as well as those from European rival Airbus are due to arrive in Tehran this week to negotiate and decide on the financing of Iran’s newly-purchased passenger airplanes.

According to Massoumeh Asgharzadeh, the head of Iran Air Public Relations Office, the airline has reached promising conclusions regarding the financiers of the plane deals.

“Our preference is to use domestic financial resources, but we also have the option to finance the purchases through Airbus and Boeing themselves,” she was quoted as saying by ILNA.

Asgharzadeh said the result of negotiations will soon be publicized. 

Some Iranian carriers had previously pursued financing deals through international leasing firms to support the purchase of up to 77 planes from the European and US manufacturers. 

It is not yet clear if those efforts have succeeded but what is apparent is that, with international banking ties between Iran and the rest of the world still severely curtailed as a result of lingering US sanctions–and the threat of more to come from a White House deeply hostile to Tehran–the country’s airlines are being forced to continue exploring other options, according to Forbes.

In December 2016, Iran Air agreed separate contracts to buy 100 Airbus aircraft worth an estimated $27 billion and 80 Boeing jets valued at $16.6 billion. 

Earlier that year, in February, it signed a deal to buy up to 20 ATR turboprop passenger planes (with the option of adding 20 more in the future). The Iranian flag carrier has received 3 Airbus and 6 ATRs so far. The first Boeing aircraft are not scheduled to be handed over until sometime in 2018. 

Iran Air is just one of several airlines in the country to have made significant orders for new aircraft since the lifting of many (if not all) international sanctions on the country in January 2016. In total, local carriers have placed orders for more than 300 new aircraft and options for a further 50. These orders are twice as large as the collective existing fleet of the country’s 17 commercial carriers. 

Boeing has said its agreements to sell 110 aircraft for nearly $20 billion to two Iranian carriers would support nearly 120,000 jobs.

Add new comment

Read our comment policy before posting your viewpoints