Iran Sanctions Hopes Fly on Possible Delivery of Eight ATR Aircraft

In a recent interview, French Economy Minister Bruno Le Maire expressed optimism for the delivery of eight ATR turboprops to Iran as part of a contract with Iran Air, the country’s national airline.

The encouraging comments come after Le Maire disclosed two weeks ago that the United States had rejected a joint European letter requesting a broad range of waivers and exemptions that had been sent to Secretary of Treasury Steve Mnuchin and Secretary of State Mike Pompeo in June.

In a change of tone, Le Maire spoke of being “hopeful that the United States will provide authorization to deliver these aircraft.” The ATR deliveries, like the three Airbus deliveries made prior to President Trump’s withdrawal from the Iran nuclear deal, are highly symbolic of the hope and expectations for increased trade and investment following the implementation of the Joint Comprehensive Plan of Action (JCPOA).

Le Maire described the intention for ATR to deliver eight aircraft prior to the August 6 sanctions deadline. At least four ATR 72-600 aircraft have been registered to Iran Air. A further four aircraft have been photographed in Iran Air livery, but have not yet had their registrations altered. These eight aircraft can be identified as follows:

• F-WWEP (now EP-ITI)
• F-WWEU (now EP-ITJ)
• F-WWEF (now EP-ITK)
• F-WWEG (now EP-ITL)
• F-WWEC
• F-WWED
• F-WWEE
• F-WWEX

To date, Iran Air has received an initial eight ATR aircraft, having signed a contract in April 2017 for 20 planes. Iran Air is using these planes as part of a new regional service. 

The ATR contract, like so many others, was immediately put in doubt following President Trump's withdrawal from the nuclear deal on May 8 and the announcement that the US would be reimposing secondary sanctions that had been removed as part of the JCPOA. Having already manufactured the aircraft on specification for Iran Air, only to see delivery delayed by financing issues related to sanctions concerns, ATR announced it would seek a new license from the US Treasury to permit the delivery of the aircraft following the US withdrawal form the nuclear deal. 

In July, US Department of Treasury assistant secretary of terrorist financing Marshall Billingslea downplayed the likeliness of any such licenses being granted, telling FlightGlobal, "At this stage, I think we are not in a position to suggest we would be issuing such licenses.” Billingslea cited an inability to “show flexibility on transactions.”

But Le Maire’s comments will give rise to new hope that the US authorities may be adopting a more flexible stance. The French minister disclosed that he has been “negotiating for weeks” with his counterpart, Mnuchin, “fighting so that in the health sector, in the agri-food sector, which are now sanctions exempt, there may be funding channels that remain open."

In the context of this fight, the delivery of the ATR aircraft will prove the most clear indication of US flexibility. There are three reasons US authorities might decide to issue a waiver. First, ATR’s smaller aircraft are used for regional routes. This limits concerns of possible “dual use” of the aircraft for military applications. US authorities have sanctioned Iranian airlines and aircraft for conducting “resupply” flights to the conflict in Syria. Such concerns clouded the Airbus and Boeing contracts for larger commercial aircraft.

Second, unlike Airbus aircraft, ATR turboprops, manufactured under a joint venture between Airbus and Italian aerospace company Leonardo, have limited US parts content. According to ATR executives, US components account for “slightly over 10%” of total parts content, or just above the sanctions threshold. Additionally, the aircraft are already manufactured, meaning that there is no further activities necessary with US entities along the supply chain.

Finally, there is a clear humanitarian justification. As shown by the tragic crash of an Aseman Airlines ATR 72 in February, smaller aircraft are especially vulnerable to accidents caused by aging and poor maintenance. Improving air safety has been a primary consideration for Iranian authorities as they sought to acquire new aircraft following the lifting of sanctions.

A focus on delivering eight turboprops and protecting banking channels for sanctions exempt sectors does not equate to a full-defense of French business interests in Iran. It is clear that Iran contracts of leading French enterprises such as Total, Peugeot, Alstom, and Airbus remain outside the scope of compromise with the US Treasury.

However, even a small victory would be important for Le Maire, as it would push the Trump administration into a mindset of negotiated compromise rather than blanket rejection. The Trump administration is unlikely to announce any softening in their position. So the clearest indicator will be whether the eight ATR aircraft make their long-awaited flights to Tehran. The eyes of a nation will be watching.

Photo Credit: ATR

Hold on Iran: Regime Change is Coming to Washington

With last week's announcement that John Bolton will soon be joining Mike Pompeo in the Trump administration, US adherence to the Iran nuclear deal looks doomed.

Both Bolton, who is to become national security adviser, and Pompeo, the new Secretary of State-designate, have forcefully opposed the Joint Comprehensive Plan of Action (JCPOA) and are likely to recommend that the US stop waiving nuclear-related sanctions when the next deadline arrives on May 12.

But officials in Tehran who may be arguing that Iran should also quit the JCPOA if the US does, should hold onto their centrifuges. The Trump administration is in trouble and the Republican majorities on which it depends in Congress are looking almost as endangered as the Iran nuclear deal.

Along with hundreds of thousands of other Americans, this writer took part on March 24 in a historic demonstration in Washington, D.C. against gun violence. The “March for our Lives” was focused on achieving common-sense laws that would make it much harder for people who should not have guns to get them. Assault-style weapons and large capacity magazines would also be banned for civilians. But the chief slogan at the rally had a much broader if unstated target, the Republican Party, which has aligned itself with the gun-loving National Rifle Association.

“Vote them out!” the marchers yelled, looking toward November midterm elections. The speakers, all teenage survivors of gun violence, vowed to register to vote upon turning 18 and to mobilize their peers to do the same.

A wave is coming in November that will likely shift the House of Representatives and possibly the Senate, too, to Democratic control. Even if only the House flips, the prospects for Trump’s removal rise. Special counsel Robert Mueller is assembling a mountain of evidence implicating the president for obstruction of justice at a minimum as well as possible coordination with Russia and other crimes. Meanwhile, former Trump paramours and alleged victims of sexual harassment are also bringing cases against him that could require him to testify and possibly perjure himself as Bill Clinton once did.

These threats to Trump are mounting at a time when his popularity remains stuck at about 40 percent. Younger voters are overwhelmingly turned off by him and by his party. According to a recent poll, 67 percent of voters aged 18-34 want to see the Senate switch to Democratic control. Another survey showed that liberals in this cohort outnumber conservatives by 57 to 12 percent. Without drastic change by Republicans, the party’s future looks bleak.

In terms of foreign policy, the US consensus among both Republicans and Democrats favors diplomacy over military action and rejects views put forward by unrelenting hawks such as Bolton. A veteran of three previous Republican administrations, Bolton strongly advocated for the Iraq war on what turned out to be false accusations that Iraq possessed weapons of mass destruction. He has also called for bombing both North Korea and Iran. But Americans are tired of the wars we are still in—in Afghanistan, Syria and Iraq as well as parts of North Africa. The last thing they want is another conflict in the Middle East.

Even if the Trump administration walks out of the Iran deal, it is not a foregone conclusion that it will seek to enforce renewed sanctions against foreign companies that continue to do business with Iran. Twenty years ago, Congress passed similar secondary sanctions—the Iran-Libya Sanctions Act—threatening penalties against foreign companies investing in Iran’s oil and gas sector. Europe cried foul and the sanctions were never implemented. That could well be the outcome in May.

For the past few months, Britain, France and Germany have been negotiating with Washington a package of sanctions on non-nuclear matters such as Iran’s missile program and regional interventions. The E3 should now put all of its diplomatic energy into a plan to combat a unilateral US abrogation of the JCPOA and to encourage Iran to stay within the agreement.

In its bullying attitude toward the rest of the world, the Trump administration is isolating the US and alienating a majority of Americans. This is an increasingly interconnected globe where cooperation, engagement, diplomacy and commerce are the keys to lifting all peoples.  The US president and his incoming advisers, in their “America first” and zero sum mentality, are out of step and on the wrong side of history.

Iranians, who have suffered a great deal at the hands of the United States and its allies as well as their own government, should be patient and stick with the JCPOA even if the US pulls out. Regime change is coming in Washington—probably sooner than in Tehran. And the outcome should benefit people in both countries.

Photo Credit: Wikicommons

The Iran Deal is Dead, Long Live the Iran Deal

This article was originally published in LobeLog. 

With the news that John Bolton will be Trump’s new national security advisor, the death of the Iran Deal is all but assured. Bolton has vocally advocated for war with Iran, which he sees not as an option of last resort but as the only appropriate course of action.

Add to Bolton’s hiring the impending arrival of Mike Pompeo as Trump’s new secretary of state and it is clear that the president will have no shortage of cheerleaders for his more destructive impulses. It is almost impossible to see how Trump would do anything other than fail to renew sanctions waivers and effectively withdraw from the Iran Deal on May 12.

The sudden ascendency of Bolton and Pompeo has also exposed how poorly the governments of France, Germany, and the United Kingdom have handled their negotiations with the Trump administration on a “fix” for the Iran deal. By seeking to appease Trump by extracting greater concessions from the Iranians on security matters clearly outside the bounds of the Joint Comprehensive Plan of Action (JCPOA), the Europeans have exposed their weakness, degraded trust with the Iranians, and wasted valuable time negotiating with administration officials who have since left their positions.

Even if by some miracle Trump were to once again waive sanctions in May, the politicization of the Iran deal is so complete that the waivers themselves will cease to have real meaning. The evidence is clear that the current posture of the Trump administration towards Iran, now turning towards an even more hostile stance, has been sufficient to dissuade the majority of possible trade and investment in Iran.

Moreover, Trump’s Treasury Department has failed to issue a single new license for commercial activities in Iran to date. Sanctions attorneys note that even applications that would have been “no-brainers” in the Obama years are currently being denied under Trump. The Office of Foreign Assets Control (OFAC) has long been staffed by pragmatic civil servants whose commitment to sanctions enforcement was based on the creation of a predictable and clear regulatory environment. Today, however, the letter of the regulations no longer suffices to determine the permissibility of commercial activities in Iran.

By any conventional assessment, then, the Iran deal is dead. But what conventional analysis fails to recognize is that the Iran deal cannot be killed. The JCPOA is not merely an arms control agreement or a pact that sought to deliver sanctions relief. It is a historic acknowledgement of several undeniable truths about Iran and its place in the world.

The first truth is that Iran is a mighty geopolitical actor. Despite the recent claims of Saudi Crown Prince Mohammad bin Salman to the contrary, Iran does not need a large military force or diplomatic clout to carry weight in the international system. Accidents of geography (such as the keystone position between Europe, Russia, and China) and accidents of history (such as the legacy of the Iraq war) have only served to increase the strategic position of Iran in the Middle East and within the larger Eurasian landmass. The collapse of the Iran deal will do nothing to change these geopolitical realities, and the necessity for Europe, Russia, and China to continue to engage Iran may even be heightened should the United States return to a pronounced confrontational stance.

The second truth is that an increase in Iran’s international engagement is a reliable bet. Demographic and economic factors are necessarily pushing Iran towards greater diplomatic and economic outreach. Whereas a foreign policy of engagement was once the begrudging choice of a revolutionary government, today engagement is a political necessity driven by structural factors. The eighteenth largest economy in the world cannot grow larger in any manner other than through greater international trade and investment. Cognizant of this, Iranians overwhelmingly support greater engagement with the international community because they believe such trade and investment will improve their livelihoods.

Moreover, the Iranian people are now their own ambassadors to the world, linked to the international community in the digital domain. Although the nuclear deal may seem like the creation of the Rouhani administration, and in particular the brainchild of Javad Zarif, the impulse that drove Iran’s government to seek a win-win agreement at the negotiating table derives from the aspirations and ambitions of the Iranian people, whose resilience will outlast the collapse of this particular agreement. Washington may sow uncertainty, but in the inertia of these forces a kind of certitude will persist. These forces will outlast Trump, as they will outlast their opponents in Iran as well.

The third truth is that the United States has little leverage over Iran. The debate over the viability of the Iran deal in the face of a U.S. withdrawal overstates the importance of American policy as a strategic consideration for Iran. On one hand, the deal’s collapse, and the costly snapback of sanctions, precipitated by the U.S., would suggest that Trump retains great power to constrain Iran. But seen another way, the debate around the deal shows that the JCPOA is the sole mechanism through which the United States currently enjoys substantial leverage over Iran. The U.S. had so successfully isolated Iran in the sanctions period that the creation of the JCPOA represented a rare instance in which it increased its leverage. When Trump withdraws from the agreement, he will remove his only “free” means to seek changes in Iranian behavior. The remaining options, mostly military options, will come at a great toll to the United States.

Trump is old and has a few years left in his term. The forces that brought the JCPOA to fruition may have been interrupted by his erratic governance and distorted worldview, but those forces will certainly outlast him. The imminent demise of the Iran deal should not obscure the fundamental reality of what the JCPOA was—a reminder to the international community that it must deal with Iran and that dialogue can be fruitful if conducted on the basis of trust and mutual goals. Even if the JCPOA falls apart, the lesson cannot be dismissed.

There remain reasonable actors in Europe, Russia, China and the wider international community who understand that they will need to continue constructively dealing with Iran in many arenas. There are many more “Iran deals” to be struck, in politics and commerce, both big and small. For the many hundreds of potential deals Trump will scupper with his actions, thousands more wait to be concluded as a matter of political and economic necessity and through the endeavors of those who still believe in the promise of diplomacy.

Photo Credit: Wikicommons