Airplane and oil deals at risk in Donald Trump pullout of Iran deal

May 06, 2018, 20:17 IST | AP

Regardless of where they are headquartered, virtually all multinational corporations do business or banking in the U.S., meaning any return to pre-deal sanctions could torpedo deals made after the 2015 agreement came into force

Donald Trump
Donald Trump

From airplanes to oilfields, billions of dollars are on the line for international corporations as President Donald Trump weighs whether to pull America out of Iran's nuclear deal with world powers.

Regardless of where they are headquartered, virtually all multinational corporations do business or banking in the U.S., meaning any return to pre-deal sanctions could torpedo deals made after the 2015 agreement came into force.

That threat alone has been enough to scare risk-averse firms, like Boeing Co., into slow-walking deals agreed to months ago. A complete pullout by the U.S. would wreak further havoc and likely frighten off those considering making the plunge.

"I absolutely think those on the fence will not jump in," said Richard Nephew, a former sanctions expert at the U.S. State Department who worked on the nuclear deal and now is at New York's Columbia University.

"The only ones who will, will be those who see tremendous monetary benefit and no US risk." The 2015 Iran nuclear deal lifted crippling economic sanctions that had locked Iran out of international banking and the global oil trade. In return, Tehran limited its enrichment of uranium, reconfigured a heavy-water reactor so it couldn't produce plutonium and reduced its uranium stockpile and supply of centrifuges.

For Western businesses, the deal meant access to Iran's largely untapped market of 80 million people. Most prominently, airplane manufacturers rushed in to replace the country's dangerously dilapidated civilian fleet.

In December 2016, Airbus Group signed a deal with Iran's national carrier, IranAir, to sell it 100 airplanes for around $19 billion at list prices. Boeing later struck its own deal with IranAir for 80 aircraft with a list price of some $17 billion, promising that deliveries would begin in 2017 and run until 2025. Boeing separately struck another 30-airplane deal with Iran's Aseman Airlines for $3 billion at list prices.

But Boeing has yet to deliver a single aircraft to Iran. The Chicago-based company's CEO recently stressed it understands the "risks and implications around the Iranian aircraft deal," which would be the biggest business agreement between an American company and Iran since the 1979 Islamic Revolution and US Embassy takeover.

"We continue to follow the US government's lead here and everything is being done per that process," Dennis Muilenburg said during a quarterly earnings conference call on April 25. "We have no Iranian deliveries that are scheduled or part of the skyline this year, so those have been deferred again in line with the US government process." Airbus, a European airline consortium based in Toulouse, France, likewise continues its sales at the discretion of the American government. At least 10 percent of its aircraft components are of American origin, meaning it requires permission from the U.S. Treasury for its sales to Iran. Airbus has already delivered two A330-200s and one A321 to Iran.

Airbus declined to comment when asked by The Associated Press about its possible plans ahead of Trump's decision.
European airplane manufacturer ATR struck a $536-million deal with IranAir for at least 20 aircraft last year. It's already has delivered eight of its twin-engine turboprops to Tehran after earlier winning permission from the US Treasury.

"To date, we are on track to deliver the remaining ATR aircraft in due time, before the end of the year," ATR spokesman David Vargas told the AP.

The speed at which Western airplane manufacturers went into Iran is contrasted by a slow start by Western energy firms despite the country's vast oil and gas wealth. The exception is French oil giant Total SA, which in July signed a $5 billion, 20-year agreement with Iran and a Chinese oil company to develop the country's massive South Pars offshore natural gas field. The natural gas pumped by the deal will go toward Iran's domestic market.

Catch up on all the latest Crime, National, International and Hatke news here. Also download the new mid-day Android and iOS apps to get latest updates

This story has been sourced from a third party syndicated feed, agencies. Mid-day accepts no responsibility or liability for its dependability, trustworthiness, reliability and data of the text. Mid-day management/mid-day.com reserves the sole right to alter, delete or remove (without notice) the content in its absolute discretion for any reason whatsoever

Atal Bihari Vajpayee's daughter, granddaughter arrive at Smriti Sthal to collect ashes

This website uses cookie or similar technologies, to enhance your browsing experience and provide personalised recommendations. By continuing to use our website, you agree to our Privacy Policy and Cookie Policy. OK