US President Trump announced yesterday that he was unilaterally pulling the US out of the so-called Iran Deal, an international agreement that lifted sanctions on Iran in exchange for the cessation of Iran's nuclear weapons program. But now that the sanctions are being reinstated, some American companies stand to lose a lot of money. Boeing alone is losing about $US20 billion ($27 billion) in contracts.
Photo: Endless whining (Getty)
After the Iran Deal was finalised in the winter of 2015, American companies such as Boeing were allowed to do business with Iran again. Boeing made a deal with Iran Air to deliver 80 aircraft for about $US17 billion ($23 billion), and another deal with Aseman Airlines for 30 planes worth about $US3 billion ($4 billion). Iran's fleet of passenger aircraft are some of the oldest in the world, thanks largely to tough sanctions. And it looks as though it might stay that way.
"We will consult with the US Government on next steps. As we have throughout this process, we'll continue to follow the US Government's lead," Gordon Johndroe, VP of Boeing's Government Operations Communications, told Gizmodo in an emailed statement.
The American defence industry has been doing pretty well overall under President Trump, so it makes sense that Boeing wouldn't be too angry with the American regime for violating the Iran Deal. But still, $27 billion is $27 billion.
Airbus is also expected to lose a large contract it has with Iran Air for 100 planes worth about $US19 billion ($25 billion). Airbus, unlike Boeing, had already delivered a few planes to Iran before President Trump's announcement yesterday. Together, American-based Boeing and French-based Airbus control virtually the entire commercial airline manufacturing industry around the world. And despite being based in France, Airbus will be bound by US sanctions against Iran because it has facilities in the US.
The Iran Deal, formally known as the Joint Comprehensive Plan of Action (JCPOA), wasn't just an agreement between the US and Iran. The UK, France, Germany, Russia and China were all part of negotiating the delicate deal in 2015. And most of the signatories are disappointed that the US has decided to break the deal for no good reason whatsoever.
The UK, France and Germany issued a rare joint statement expressing displeasure with America's violation of the deal.
"It is with regret and concern that we, the leaders of France, Germany and the United Kingdom, take note of President Trump's decision to withdraw the United States of America from the Joint Comprehensive Plan of Action," the statement said. "Together, we emphasise our continuing commitment to the JCPOA. This agreement remains important for our shared security."
"We recall that the JCPOA was unanimously endorsed by the UN Security Council in resolution 2231," the statement continued. "This resolution remains the binding international legal framework for the resolution of the dispute about the Iranian nuclear program. We urge all sides to remain committed to its full implementation and to act in a spirit of responsibility."
The US government plans to give a three to six month window for companies that are currently doing business with Iran to pull out of their deals.
"To implement the President's direction, the Departments of State and of the Treasury will take steps necessary to establish a 90-day and a 180-day wind-down period for activities involving Iran that were consistent with the US sanctions relief provided for under the JCPOA," the US Treasury Department said in a statement yesterday.
The reimposition of sanctions was a huge win for Iran's most anti-American hardliners, providing an opportunity to say that nobody should trust any deal made with America. The Iranian government reacted to President Trump's announcement yesterday with anger towards the US, but said that the deal might be able to remain intact with the remaining countries.
"From now on, this is an agreement between Iran and five countries [...] we have to wait and see how others react," Iranian president Hassan Rouhani said on TV yesterday. "If we come to the conclusion that with cooperation with the five countries we can keep what we wanted despite Israeli and American efforts, [it] can survive."
The Iranian government's optimism in keeping the deal with other countries is an effort to isolate the US on the world stage, but the fact that so many European companies have operations in the US will likely complicate that particular strategy. Huge corporations such as France's Airbus must abide by sanctions imposed against Iran by the US even if France wants to keep the deal.
If Europe and Iran give up on the deal the most likely outcome is the resumption of Iran's nuclear weapons program and a more dangerous world for us all. Thanks, Mr President.