President Donald Trump’s decision to leave the Iran deal will have negative long-term consequences, but the short-term consequences are just as bad. Take Boeing, for example. The American company is set to lose $20 billion in contracts thanks to Trump.
After the deal was reached in 2015, many sanctions on Iran were lifted. In exchange, the country brought any ongoing nuclear weapons program to an end. Companies like Boeing were quick to tap into the unexplored potential shortly after, and in no time, Boeing made a deal with Iran Air and Aseman Airlines.
To Iran Air, Boeing had sold 80 aircrafts for $17 billion, while Aseman Airlines had closed a deal for 30 planes for $3 billion. Now that sanctions should be reinstated thanks to Trump, Boeing will no longer be able to see these deals through.
Another company that had done business with Iran Air, French-based Airbus, also had agreed to sell 100 planes to the company for $19 billion. But unlike Boeing, Airbus had already delivered some of the planes prior to this week’s announcement. Still, the fact that Airbus has facilities in the United States forces the company to bow to U.S. law, making it impossible for the firm to complete the deal without facing penalties.
When asked about this loss, Gordon Johndroe, Boeing’s vice president of Government Operations Communications, simply said that the firm was going to comply with the law.
“We will consult with the U.S. Government on next steps. As we have throughout this process, we’ll continue to follow the U.S. Government’s lead,” he told reporters.
In a statement, the U.S. Treasury Department said that it will be giving companies a few months to pull out of their deals with Iranian firms.
“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 U.S. sanctions relief provided for under the JCPOA,” the statement said.
Following Trump’s announcement, the United Kingdom, France, and Germany, three of the five remaining countries following the deal, issued a combined statement explaining that while they are disappointed, they expect that all remaining participating countries stay firm.
“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 read. “Together, we emphasize our continuing commitment to the JCPOA. This agreement remains important for our shared security. ... 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.”
Iran President Hassan Rouhani mirrored the sentiment, saying he was happy to do business with the other partnering countries.
“From now on, this is an agreement between Iran and five countries...,” he said on TV. “If we come to the conclusion that with cooperation with the five countries we can keep what we wanted despite Israeli and American efforts, [the deal] can survive.”
Unfortunately, many European companies that were willing to do business with Iran also have facilities in the U.S., making it impossible for them to ignore America’s laws.
Hopefully, companies in other countries can pick up the slack. Iran’s plane fleet, for instance, is one of the oldest in the world due to the crippling sanctions imposed on the country for years. And just a couple of years before the deal was reached, the country was in such a bad shape because of the sanctions that many Iranian middle-class families couldn’t even afford to buy meat.
As you can see, sanctions hurt the people the most. And what Trump is doing is just that: making common Iranians bitter at America.
What he doesn’t seem to realize is that, whether he wants it or not, Iranians will continue to close deals with companies from other countries. The ones that will end up losing are American firms (as we’re seeing with Boeing), which will lose the opportunity to employ more people at home and grow the U.S. economy.
Banner/Thumbnail Credits: Reuters/Lucy Nicholson