In the July 2015 Joint Comprehensive Plan of Action (JCPOA), the United States committed to “allow for the sale of commercial passenger aircraft and related parts and services to Iran by licensing the (i) export, re-export, sale, lease or transfer to Iran of commercial passenger aircraft for exclusively civil aviation end-use.” Since the nuclear deal took effect, Chicago-based aircraft manufacturer Boeing entered into a December 2016 contract with Iran’s national airline, the government-owned Iran Air, for 80 civilian airliners valued at $16.6 billion. In June 2017, Boeing inked another deal with Iran’s third largest airline, Aseman Air, for 30 Boeing aircraft. Aseman’s CEO, Hossein Alaei, has longstanding ties to the Islamic Revolutionary Guard Corps (IRGC).
Boeing’s attempts to enter the Iranian civilian aviation market expose the company to serious legal, political, financial, and reputational risks associated with doing business in Iran, where much of the economy is dominated by the IRGC. The IRGC is sanctioned by the U.S. Government and the international community of nations as a terrorist organization, and was designated in its entirety by the U.S. in October 2017. The IRGC has entered virtually every sector of the Iranian economy, and experts peg its share of Iran’s overall economy at around 15% to 30% of Iran’s legitimate GDP. Furthermore, the IRGC has an outsize role in Iran’s underground economy, which includes funds from smuggling, drug trafficking, and related criminal ventures.
Iran’s civil aviation industry in particular has a sordid and ongoing history of partnering with the IRGC in exploiting civilian airliners in order to obtain proscribed ballistic missile components and to supply weapons and military personnel to its terrorist proxies, Hezbollah and Syria’s Assad regime. Through its role in these malign activities, Iran’s civil aviation industry is a complicit partner in ballistic missile proliferation, terrorism and human rights abuses. Surely, Boeing would not wish for planes it delivers to be associated with restocking Assad’s weaponry to use against his own citizenry, the provision of advanced weaponry to Hezbollah, or the transport of ballistic missile components or even nuclear materials on the Pyongyang-Tehran route.
Given Iran’s history, and the history of Iran Air itself, it strains credibility to believe that passenger aircraft delivered to Iran can be guaranteed to be for “exclusively civil aviation end-use,” as required under the JCPOA. Indeed, in a June 2016 press briefing, former State Department Spokesman John Kirby was unwilling or unable to confirm that Iran Air had taken any action to merit the lifting of sanctions against it or that it was no longer engaged in sanctionable activities. Ultimately, if Iran Air or Aseman Air are proven to partake in sanctionable activities or the resale or transfer of aircraft to currently-designated individuals or entities, such as Mahan Air, then they could face new sanctions and the revocation of the licenses for aircraft sales that were granted by the Treasury Department’s Office of Financial Asset Control (OFAC), potentially leaving Boeing holding the tab.
Iran Air’s aircraft buying spree raises red flags that it is not the final destination for all the aircraft it is seeking to acquire. Tehran is reportedly seeking to purchase 500 civilian airliners over the next decade, a massive expansion considering that Iran Air and its subsidiary currently operate around 50 aircraft. With no clear need for the number of planes it is seeking, there is a high likelihood that some of the planes delivered will be resold or transferred to the Iranian air force, or to other Iranian air carriers still under sanctions such as Mahan Air and Pouya Air (formerly Yas Air, a long sanctioned airline operated by the IRGC and its Pars Aviation Company).
Iran’s civil aviation industry’s troubling and ongoing history of abuses and exploitation, chronicled below, underscore the immense risks of entering into the Iranian market. The hazards of conducting business with Iran Air, an entity implicated in the provision of material support to the terrorism and human rights abuses of the IRGC-Quds Force, Hezbollah, and Assad, far outweigh any theoretical benefit of commercial engagement in the Iranian civil aviation market.