However, this does not mean that that agreement is ready to go forward immediately. It remains for the Iranian and US governments to approve the deals and grant relevant licenses to the companies on both sides of the would-be transaction. This may still be a difficult prospect, as there is some opposition to such expanded trade relations coming both from Iranian hardliners and from the US Congress.
American businesses are still largely banned from doing business with Iran, due to sanctions relating to Iran’s money laundering, support of terrorism, and human rights abuses. Nuclear-related sanctions were lifted in January under the Joint Comprehensive Plan of Action, but Iranian officials including Supreme Leader Ali Khamenei have been complaining that the lingering American restrictions have severely limited Iran’s recovery.
On the other hand, some have speculated that Khamenei’s commentary may be aimed at undermining the agreement and justifying the cancelation of the JCPOA, because hardliners are wary of the economic and cultural “infiltration” that could emerge from expanded trade relations with the US and its closest allies. This interpretation of the situation is arguably supported by Western commentators who note that there are several measures the Islamic Republic could take to alleviate the effects of existing sanctions, such as providing international with assurances that they are safeguarded against the risks of money laundering and financial crimes.
Within this context, the emerging Boeing deal has been described as a fundamental testing ground for US re-engagement in the Iranian market. If the aircraft manufacturer is able to overcome the various obstacles to that reengagement, and if it does not appear to open itself up to US sanctions enforcement, other companies might follow suit. In fact, this is true not only of American companies but also of European companies and international banks that remain wary of the possible effects of US restrictions.
This is not the only factor that constrains foreign investor interests in the Islamic Republic, but it is the most discussed, and any sign of improvement in that regard may provide a general boost to investor confidence.
Recent reports about the Boeing agreement indicate that if it goes forward it will likely involve approximately 100 aircraft at a cost of roughly 25 billion dollars. It will also be the first instance of a major American company reentering the Iranian market in the post-nuclear-sanctions era, although it will not be the first such example for Western companies in general. Boeing was preceded – and arguably motivated – by an agreement between Iran Air and the France-based European manufacturer Airbus, which has arranged to sell 118 planes, also at a cost of 25 billion dollars.
This deal was named alongside five others by the Associated Press on Tuesday, as examples of the foreign investment that has already been pursued in the wake of the January implementation of the JCPOA. The others include a memorandum of understanding with German company Siemens, promising the sale of 1.6 billion dollars in transportation equipment and services to Iran, as well as a joint venture agreement whereby French carmaker Peugeot-Citroen will invest 450 million dollars over five years.
Reports on Tuesday pointed out that Peugeot and its Iranian partner Iran Khodro have aimed to produce 200,000 vehicles per year via their joint venture by the year 2018. The article also states that more joint ventures of this sort can be expected in the coming years, and that they will emerge even in spite of persistent criticism from hardliners regarding the prospect of Western entities profiting from the Iranian market.
Meanwhile, Bloomberg reports that additional agreements can be expected along the lines of the Siemens agreement, because Iran has now paid off its outstanding export-credit debts to Germany, which it had resolved to hold back during the period that sanctions were in effect. This reportedly removes a key obstacle to hoped-for expansions in trade between the two countries, thereby opening the door to more German exports and additional general investment in Iran.
Each of these actual and prospective agreements can be expected to contribute to the argument that last summer’s nuclear deal is serving its intended purpose. However, resistance to those agreements on both the Iranian and the Western side highlights the fact that this purpose is primarily economic and comes at the expense of some political objectives.
In fact, despite the success of the JCPOA in fostering new trade relations between Iran and the West, an editorial in the Pittsburgh Post-Gazette by US Congressman Keith Rothfus insisted that “the Iran deal is failing,” in the sense that it has provided noticeable benefits to Iran without constraining the Islamic Republic’s behavior, especially in areas of foreign policy including its long-range weapons development and its threats to the state of Israel.
Such criticisms could still help to create circumstances in which the Iran deal fails economically, as well, provided that critics such as Rothfus are able to exert enough pressure on the US Treasury Department and individual American companies to obstruct deals like the one currently being finalized between Iran and Boeing.