• About
    • Mission
    • Biographical Information
    • Contact Us
  • Defense
  • Energy
  • Logistics
  • Innovation
  • In the News
  • Follow
  • Like
  • Linkedin
  • Youtube
August 9, 2016August 9, 2016Danny Lessig

← Back
← Previous Post
Next Post →

The Iran Nuclear Deal’s Uncertain Future Impedes Business Ties

August 9, 2016August 9, 2016Danny Lessig

A year has passed since the Joint Comprehensive Plan of Action (JCPOA) was signed, and economic partnerships between Iran and the P5 + 1 (permanent members of the United Nations Security Council, United States, United Kingdom, France, Russia, China, and Germany) are developing.  Even though the White House has announced its dedication to the deal and Iran has not violated the agreement so far, opponents challenge upholding the agreement. As a result, American and partner nation businesses are at risk.

The U.S., European Union, and the United Nations lifted sanctions on Iran in exchange for some limitations on its nuclear program.  According to proponents of the agreement, the time it will take Iran to build a weapon was increased from several months to one year, centrifuges were reduced by two-thirds, and enriched uranium was decreased by 98%. Iran will not be able to produce enriched uranium for ten years and its stockpile of enriched uranium is capped for fifteen years, but there is no telling what will result after that time.

Some members of Congress fear the deal’s insufficient guidelines for nuclear inspections and lack of restrictions when it comes to Iranian ballistic missiles.  These worries coupled with increased economic growth have heightened concerns that Tehran will embolden its support of terrorism and remain a security threat in the region.  As a result, Congress recently voted on two amendments to block U.S. aircraft manufacturer Boeing’s proposed sale of aircraft to Iran.  Congressman Peter Roskam proposed amendments to ban sales from Boeing and Airbus amid concerns that the aircraft could be put to military use.

Despite this opposition, Boeing recently inked a deal to sell commercial airliners to Iran, worth about $17.6 billion, the first major economic engagement between Washington and Tehran since the implementation of the deal.  Similarly, companies headquartered in P5+1 countries are proceeding with business accords.  European conglomerate Airbus plans to sell over a hundred commercial aircraft to Iran for nearly $25 billion and French automaker Peugeot signed a $435 million joint venture to produce passenger cars in Tehran with Iranian manufacturer Khodro over the course of five years.

While economic cooperation may lead to better relationships with Iran in the future, these business deals are risky because either the U.S. or Iran could breach the agreement.  For instance, Congress’ attempt to block the sale of Boeing’s 737s and 777s to Tehran is viewed by Iran as inconsistent with the JCPOA.  Boeing explained in a statement that it has been following the U.S. guidelines and if Boeing cannot move forward with the deal then no other U.S. company should be able to work with Iran. The White House is trying to make the Boeing and Iran Air agreement an example of American commitment to the nuclear deal, but supporters must be wary because the next president could very well seek to undo the agreement.

Presidential nominees Donald Trump and Hillary Clinton both take harsh stances on Iran. Trump’s policies on Iran are unknown as yet, but he has frequently spoken against the nuclear deal and claimed that the United States gave “billions” to Iran and received nothing in return. Clinton’s policies likely would be more in line with those of the Obama administration with a “distrust and verify” stance. Clinton has said that she will enforce the JCPOA to confront Iran’s negative actions in the region while standing with Israel and Arab allies.

Sanctions could be implemented if Iran violates the nuclear deal.  That means Tehran would likely lose its newly acquired economic opportunities that are needed in its struggling economy. If sanctions return, companies would have to choose between honoring contracts with Iran and risking legal and financial penalties or comply with international sanctions and face a financial loss.

Should the next administration decide to not uphold the deal, business opportunities could be lost. If this happens, dealing with Iran would surely become complicated and Tehran would likely continue its nuclear program.  Iran would ascend as a security threat and western companies seeking to do business in that new market would suffer. These companies must be cautious as economic ties with Iran grow because there is no telling how quickly they may be permanently interrupted.

 

Print | PDF | EMail

Find Archived Articles:

This entry was posted in Defense. Bookmark the permalink.
Sign Up For
LexNext Emails
1600 Wilson Boulevard - Suite 203
Arlington, VA 22209 USA
Phone: 703.522.5828
Fax: 703.522.5837
© 2023 Lexington Institute

Sign Up for LexNext Emails

  • This field is for validation purposes and should be left unchanged.

Sign Up for LexNext Emails

  • This field is for validation purposes and should be left unchanged.