Boeing Can Sell Iran Parts, But for Briefest of Windows

The airplane manufacturer Boeing received approval from the U.S. government earlier this month to export limited spare parts for commercial airplanes to Iran.  

The license comes as a result of the Geneva interim agreement over Iran’s nuclear program, signed by Iran and the P5+1 powers– the United States, the United Kingdom, France, Germany, Russia and China–that went into effect in January. As part of the package of incentives Iran received in exchange for agreeing to slow its nuclear program, the P5+1 agreed to a suspension of some sanctions. Iran was also granted access to spare parts for civilian aircraft. 

Multinational conglomerate General Electric (GE) also received permission to conduct business with Iran’s aviation sector as part of the agreement. GE spokesman Rick Kennedy said, “the Treasury had approved the company's application to service 18 engines sold to Iran in the late 1970s. They will be serviced at facilities owned by GE or Germany's MTU Aero Engines, which is licensed to do the work.” According to Kennedy, GE officials will be meeting with officials from Iran flag carrier Iran Air in mid-April. 

Though the spare parts exemption is one of the key features of the package Iran negotiated in Geneva, in practice the license’s short duration and the complicated procedures involved in ordering the parts and securing government clearance for their sale makes the Boeing approval more a symbolic gesture than a meaningful opportunity for Iran to revamp its aging fleet. 

“Although limited in scope, this is a positive first step,” says Haleh Esfandiari, director of the Middle East Program at the Woodrow Wilson Center. “It sends the message that the US is honoring its side of the bargain. It is also a test as to how Congress will react to major American companies doing business with Iran.” 

Boeing's last airplane delivery to Iran was a 747-100 jumbo jet in August 1979, three months prior to the November seizure of the U.S. embassy in Tehran. Iran’s national airline carrier Iran Air owns 51 planes, including 16 Fokker-100s that went out of production in 1997; three Boeing 727s that went out of production in 1984; and nine older models of the 747. The airline also owns 23 planes of older vintage from Airbus.

The poor safety record of Iran's civil aviation industry has been a multifaceted problem for decades. Iranian officials have long blamed sanctions, arguing they impede Iranian aircrafts from receiving upgrades and causing the country’s unusually high number of airplane crashes and deaths. 

But in 2009 an airline industry official, who asked that his name and his company not be published out of fear for his personal and job security told the Los Angeles Times that "it is apparent that many of our safety concerns and problems are due to U.S. sanctions. But when you look closer, you will note that mismanagement on behalf of the Iran civil aviation authorities is to blame for a majority of what is so sadly taking place."

Although Iran’s aviation regulators do not publish reliable statistics on the number of flight-related casualties, it is clear that the combination of sanctions and negligence has made flying in Iran profoundly unsafe. An unofficial estimate published this month in the Iranian press stated that “from 1990 over 200 planes have crashed and over 2000 people have died.”  

The U.S. Office of Foreign Assets Control (OFAC), which regulates sanction enforcement on Iran, announced the renewal of the Boeing license in a memo dated January 20, 2014. But Boeing was not informed publicly that it could in fact sell Iran’s airline industry spare parts until April 14, 2014. The memo also states that “specific licenses issued pursuant to this Statement of Licensing Policy will expire on July 20, 2014.” It goes on to say that all scheduled activities must be completed by July 20, 2014. 

According to this time frame, Iran’s aviation industry has three months to communicate and order the necessary spare parts from Boeing, allowing time for both companies to invoice OFAC for final approval. One last hurdle will be the fact that, to date, Boeing has no plans to send its field-service technicians to Iran. 

Boeing spokesperson Tim Neale in Chicago declined to clarify the terms of the license, saying only that “[it] has been granted to us to provide spare parts to Iranian commercial airlines for safety of flight purposes. The license was granted under the terms of the agreement Secretary Kerry negotiated last November, which opened a window for such transactions that currently is scheduled to close on July 20.”

John Limbert, former deputy assistant secretary of state for Iran, told Iranwire: “There was always an exception to sanctions for aircraft parts essential for ‘safety of flight.’ Perhaps that exception was interpreted very narrowly by the U.S.”

Because of the limitations, technicians will not travel to Iran to complete the necessary repairs; all work will be carried out in Europe. For those critical of the Geneva interim deal inside Iran, this is seen as yet another broken promise on behalf of Western powers. A website associated with former president Mahmoud Ahmadinejad claimed the only reason the repairs have to be completed abroad is because having them done domestically would “reveal how easy it is to circumvent the (aviation) sanctions.”

An official in Iran’s Foreign Ministry said last week that “aircraft engines and certain spare parts that are in need of maintenance will soon be heading to Europe for repairs.” In addition, on April 8th, during the last round of nuclear negotiations in Vienna, the Managing Director of Iran Air, Farhad Parvaresh, arrived in Vienna to discuss sanctions on Iran’s aviation sector. 

Erich C. Ferrari, a lawyer who has worked extensively on issues pertaining to OFAC sanctions, said he didn’t view the Boeing license as a major breakthrough, and that in fact, the authority to grant such licenses has been available since before 2012. 

“It is my understanding that the current licensing policy, as updated by the Joint Plan of Action, also extends to aircraft beyond just those that are of U.S. origin,” he said. “Nevertheless, I don't see this as a major step in relations, as this type of activity could have been engaged in even prior to the nuclear talks and the Joint Plan of Action.”

He said he believes the provision has sound intentions. “[It] allows Iran Air and others to make sure their planes are flying safely, without affording Iran the ability to upgrade its fleet there by maintaining the integrity of the sanctions program,” he said. “I believe this positive humanitarian impact is within the stated foreign policy interests of the United States, as I do not believe the U.S. wishes to harm Iranian people and others who may be traveling on older aircraft,” said Ferrari. 

He cautioned against viewing the license as the prelude to a wholesale shift in America’s policy of preventing Iran from owning a fleet of modern, safe aircraft. 

“The sanctions are still intended to prohibit exports of most U.S. goods, services, and technology. They are predicated on foreign policy issues more varied than just the dispute over Iran's nuclear program,” he said. “As such, I can't see the U.S. allowing the sales of entire aircraft any time soon, even if a comprehensive deal is struck. If they do, I believe it will only be for a limited number, and type, of aircraft, and not a wholesale general authorization or licensing policy in favor of such exports.”