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Boeing's $3bn deal with Iran presents dilemma for Trump

Analysts say deal puts Trump in tight spot - it spurs US job growth but also helps Iran
Iran's Aseman Airlines has signed a tentative deal to buy at least 30 Boeing 737 MAX jets (Reuters)

Iran's Aseman Airlines has signed a tentative deal on Tuesday to buy at least 30 Boeing 737 MAX jets, in the first new business with the US aerospace company since President Donald Trump took office.

Boeing described the deal as a "memorandum of agreement," meaning it is only an outline for the time being and subject to government approvals. It covers plans for Aseman to buy 30 aircraft with options for a further 30, it added.

Iran's official Islamic Republic News Agency said on Tuesday that representatives of Aseman and Boeing had signed a deal in Tehran after a year of negotiations.

If completed, the main part of the deal for 30 jets would be worth $3.4 billion at list prices, though airlines typically pay around half of that amount.

Between a rock and a hard place

Trump has said he opposes the nuclear sanctions pact, but has not stated a public view on the aircraft deals reached under the accord, which the US aerospace industry says would support his agenda for protecting US manufacturing jobs.

If Trump decides to nix the deal, it could cost “approximately 18,000 jobs in the United States," according to a Boeing statement that cited US Department of Commerce data.

Aviation analysts told the New York Times that the tentative deal puts Trump in a tough position.

“Trump campaigned on getting tough with Iran,” Richard Aboulafia, vice president of aviation consultancy company Teal Group, told the Times. “At the end of the day, these are manufacturing jobs. It’s really hard to say, ‘Yes, we are giving this work to the Europeans.’”

According to Cliff Kupchan, chairman of the political risk consultancy Eurasia Group, “this deal presents Trump with the mother of all dilemmas”.

“It would create a lot of jobs - he’s all about that,” Kupchan told the Times. “But planes are inherently dual-use, can ferry troops around, and Trump is dug in on curbing Iranian influence in the region. It’s a big bet by Boeing, and the firm probably has an uphill fight on its hands.”

Politics at play

The Boeing deal already has some political opposition in Washington. Republican representative Peter Roskam called the deal “outrageous” and asked Trump’s administration to do “everything within its power” to reject it.

"Boeing continues to follow the lead of the US government with regards to working with Iran’s airlines and any and all contracts with Iran’s airlines are contingent upon US government approval," Boeing said in a statement.

Boeing deliveries to Aseman would start in 2022, although the US planemaker must first apply for licences from the US Treasury allowing it to proceed with the sale.

The aerospace company has already agreed to sell 80 aircraft to flag carrier IranAir after a deal between Tehran and major powers that led to the lifting of most sanctions in return for curbs on its nuclear technology development activities.

Washington last month imposed separate sanctions on 25 Iranian individuals and entities following a ballistic missile test. Iran retaliated with its own sanctions.

The latest deal comes as Iranian President Hassan Rouhani's government strives to highlight improvements resulting from the nuclear pact in the run-up to May presidential elections. So far IranAir has received three new Airbus jets under the agreement.

Rouhani is likely to run a campaign highlighting economic benefits of the nuclear deal, which opened Iran to foreign investment. But Supreme Leader Ayatollah Ali Khamenei has said Rouhani must do more to improve the economy.

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