Home News Economy Boeing Discount May Increase Opposition to Financial Dealings With Iran

Boeing Discount May Increase Opposition to Financial Dealings With Iran

The value of the aircraft had previously been estimated at $16.6 billion. Although it is the ordinary for the full value to be discounted in the case of such large-scale sales, this more than 50% discount is sure to intensify criticisms from Western commentators who are concerned about Iran’s increase in wealth and global influence. Boeing did not immediately comment upon whether the size of the discount was normal or upon how the new agreement had been arranged. 

But the news came after a firm contract was concluded last week between Iran and the European aviation giant Airbus. The USA Today reported that it hoped this agreement would be a signal for the international aviation industry, marking Iran’s return as a major player. Meanwhile critics of Iran and the US Congress have sought to forestall that return. The House of Representatives passed a bill preventing the US Treasury Department from allowing financing for sales of American aircraft or aircraft parts. However Congress adjourned before any action was taken in the Senate. 

United Press International indicated that the Airbus deal would also involve payments totaling to roughly half the estimated value of the aircraft. On one hand, this fact could suggest that the discount is genuinely acceptable to both manufacturers. On the other hand, it could be indicative of a run playing the two against each other and exploiting the Western desire for early adoption of investment opportunities in Iran. 

It bears mentioning, however, that such investment opportunities may not be available for very long. Another report published on Monday, this time by Reuters, pointed out that the value of the rial relative to the dollar has decreased significantly, apparently on fears of the effect of the Trump presidency on Iran’s economic recovery and reintegration into international markets. The Iranian government has put positive spin on the decline, denying that it has anything to do with the changing political circumstances in the United States. But these are the expected talking points of Iranian propaganda, and they may simply demonstrate the fears that Iran has for the potential loss of investment interest among Western partners. 

In light of Donald Trump’s longstanding tough talk on Iran and his business background, is highly possible that the Trump administration will try to discourage such investment interest. On the campaign trail, trump repeatedly promised to tear up the Iran nuclear deal, though it is no longer expected that he will go to such extremes. He may, however, seek to renegotiate the deal or to enforce existing sanctions much more stringently, thereby pushing Iran to cancel or violate it.  

If the still-Republican-dominated US Congress again takes up efforts to prevent financing of the Boeing deal once it starts its new session, it will have newfound support from the Trump administration. Furthermore, the diminished expectations regarding the value of the contract will bolster the argument against allowing it to go forward and will in fact specifically justify Mr. Trump’s claims that the US government and US entities are not getting enough out of the nuclear agreement or associated deals.