Insider news & Analysis in Iran

By INU Staff
INU - On Thursday, Reuters reported that Iranian Foreign Minister Mohammad Javad Zarif had expressed hope that the pending deal between Boeing and Iran Air would help to speed up other deals made possible by the sanctions relief that came into effect as a result of the Joint Comprehensive Plan of Action. In particular, Zarif reportedly emphasized that the entrance of an American competitor into Iran’s commercial aviation market would help to move a previously negotiated deal with European manufacturer Airbus toward completion.

This week, it was widely reported that the American aviation giant Boeing had completed initial discussions with Iran regarding the sale of more than 100 planes for the Islamic Republic’s aging and sanctions-damaged fleet. The deal is worth an estimated 27 billion dollars, roughly matching the value of the Airbus deal, which was negotiated shortly after the JCPOA was initiated in January. The Boeing deal, however, still needs approval from both the Iranian and the US government, and there is some doubt about whether this will be forthcoming in light of traditional antagonism and the fact that the US still retains sanctions on the Islamic Republic, related to its terrorist financing, money-laundering, and violations of human rights.

Yet, in spite of these obstacles, there have also been indicators that the White House is committed to increasing opportunities for Western investment in Iran. Indeed, US Congressmen have accused the Obama administration of going far beyond the requirements of the JCPOA, not only telling European companies that trade with Iran was permitted, but also indicating that it is specifically encouraged.

As critics of this approach give scrutiny to the Boeing deal, information is beginning to emerge about the factors and influences that apparently went into clearing the way for such deals and for the JCPOA in general. The Daily Beast published a critical report on Thursday that described how a former Boeing employee and current consultant named Thomas Pickering had taken money from the American company for the express purpose of lobbying in favor of the nuclear agreement.

The Daily Beast goes on to criticize Pickering for apparently never revealing his financial interest in the passage of the JCPOA. This reportedly led to a situation in which various members of Congress who supported the deal cited Pickering’s supposed expertise as if it was objective evidence for the potential positive effects of the JCPOA. And while there may indeed be positive effects, the Daily Beast suggests that Pickering’s conflict of interest illustrates that those effects will be visited first and foremost upon entities like his former employer.

Meanwhile, if the Boeing deal does go forward, it is widely anticipated to have an impact on both the willingness and the ability of other companies to re-engage with Iran and secure support for ventures that could open up a new market and also enrich Iran’s state-affiliated business entities.

These prospects for enrichment were tangentially highlighted in a Los Angeles Times report also published on Thursday. It called attention to recent media coverage that had been presented inside Iran regarding executive pay for individuals linked to the Rouhani presidency. Although those domestic reports have largely been examples of propaganda by Rouhani’s political opponents, they have conveyed factual information about state-owned companies violating the law and courting civilian outrage with excessive compensation packages for high-level executives.

This compensation has been seen to exceed one hundred times the level offered to lowest level employees of the same companies. The LA Times indicates that this simultaneously flouts specific laws that hold that disparity to no more than seven times, as well as violating the general principles of egalitarianism that are supposedly embodied in the slogans of the 1979 Islamic Revolution. Furthermore, salaries that run well into six figures in American dollars come at a time when there is approximately 11 percent unemployment throughout the Islamic Republic, persistently high levels of inflation, and a rising number of dormant factories.

These reports have proven to be a source of frustration and outrage for ordinary Iranians. But from a Western perspective, the same reports could help the opponents of trade deals to make the case that improved economic outcomes for Iran would confer benefits on the Iranian government and its own business interests, but not on the Iranian people.

Already, there is substantial opposition to the Boeing deal and to the theoretical agreements that might emerge from its wake. The Daily Beast quotes Illinois Republican Representative Peter Roskam as saying that by following its European competitor into the Iranian market, Boeing would be “complicit in evil.” Meanwhile, the Daily Beast’s report indicates that Pickering’s perceived conflict of interest could be another argument against the deal’s approval. The LA Times discussion of apparent corruption could be yet another.

And corruption is indeed an area of concern for the US Treasury Department and other entities that would be responsible for approving specific agreements or generally opening up Iran to American and European businesses. This is especially true in light of the fact that numerous reports have indicated that the Islamic Republic has taken no serious steps to address the existing steps that foreign companies and international banking institutions have.

Consequently, Reuters reported on Thursday that the 37-member Financial Action Task Force, which monitors worldwide money laundering and is currently meeting in South Korea, has resolved to keep Iran on its blacklist of countries that represent high risks of terrorist financing and other dangers for foreign investors. If these risks are not addressed by Iran in the near term, they may very well constitute major obstacles to approval of the Boeing deal, and by extension, to the additional opportunities that Zarif and others expected to follow it.

A major gathering of Iranians and their international supporters in Paris on July 9, dubbed “Free Iran,” plans to put forward solutions to the various crises surrounding Iran.

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