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Boeing and Iran: Boeing’s Quest to Give the Iran Deal a Soft Landing

In the present-day United States, no landmark political decision is insulated from commercial interests: The Joint Comprehensive Plan of Action (JCPOA), better known as the Iran Nuclear Deal, not only reflects the cautious diplomacy between the United States and one of its foremost international rivals, but also the powerful influence of corporate lobbyists in pushing the deal forward or holding it back. Boeing, the world’s largest aerospace company, spent millions on lobbying and was instrumental in getting the US government to sign the agreement. As a result, the company itself was able to sign $20 billion in contracts with Iranian airlines. However, with President Trump’s decertification of the Iran deal in early October, Congress could choose to re-impose sanctions.

Doing so would cost Boeing its multibillion-dollar deals, a critical setback to one of the largest manufacturers in the country. This would also deal a blow to politicians who benefit or are influenced by Boeing’s lobbying and campaign financing activities. But there are also political implications of taking Boeing’s side: By choosing not to re-impose sanctions, Republicans in Congress who have built their careers on being tough on Iran risk losing that reputation. Hence, Trump’s refusal to certify the deal has created a political conundrum for much of his party, opening a critical vulnerability that its opponents can leverage heading into the 2018 elections.

Boeing’s interest in Iranian carriers must be contextualized by its business troubles in the last decade and a half. Though Boeing has been a successful Air Force contractor, the company became the subject of intense scrutiny after news broke that it colluded with the Air Force to discourage competition and criticism in the early 2000s. Since then, Boeing has also lost considerable market share to Airbus, its European competitor, especially in marketing its superjumbo jets. Furthermore, the company suffered a hit in early 2016 when the Securities and Exchange Commission opened an investigation into its accounting of Dreamliner and 747 sales. In the face of these obstacles, Iran’s long-isolated airlines offer a tantalizing chunk of market share. Accordingly, Boeing spent millions of dollars stateside in an extensive campaign to persuade diplomats to sign off on the Iran deal. These efforts paid off: In December 2016, the company inked a $16.6 billion deal with Iran Air and a $3 billion deal with domestic Iranian carrier Aseman. Though Airbus also signed a deal with Iran Air, the transaction was a big victory for Boeing and was followed by a substantial rise in the company’s stock price.

However, with American participation in the JCPOA in jeopardy, Boeing could stand to lose billions. For one, re-imposing sanctions would strike out any possibility of deals in Iran. If the JCPOA were to fall through, the Treasury’s Office of Foreign Assets Control, which handles Boeing’s license to sell aircraft to Iran, could revoke the license and prohibit Boeing from going forward with the deal. On the other hand, Airbus, despite sourcing many of its parts from the United States, can better shield itself from this problem by leveraging the precedent of past European business plans in Iran, expanding its grasp over the market. This poses a substantial problem for the company: While Boeing’s 2018 inventory is oversold, it has only signed contracts for 90 percent of its 2019 fleet, and profits could plummet if it can’t find a way to contract its leftover planes.

On a larger scale, the company has stated that the deal supports nearly 100,000 jobs domestically between its employees and subcontractors, all of which could be eliminated by a cancellation of the deal. Companies such as General Electric, which supply the planes’ engines, and Securaplane, which produces batteries, could also see their profits take a hit. With $94 billion in annual revenue and 150,000 employees, Boeing is the largest aerospace and defense company in the US, the best performing stock on the Dow Jones Industrial Average, and a donor of upwards of $2 million each congressional election cycle—in other words, not a corporation that any politician wants to antagonize.

The potential collapse of the Boeing deals will have startling economic consequences. But perhaps more concerning to Congress is the possible political fallout from balancing the contradiction between bolstering American manufacturing jobs and maintaining a hostile stance toward Iran, both of which have been critical aspects of the Republican platform in recent years. In 2016, the GOP promoted policies that encouraged American manufacturing as part of their “Restoring the American Dream” plan, while also issuing damning criticism of Iran and even threatening to torpedo the Iran deal for its perceived leniency. From Senator Marco Rubio to Donald Trump, many Republicans have advocated for strengthening domestic manufacturing, on the one hand, while expounding being “tough on Iran” on the other. Ironically, these two seemingly unrelated pieces of the Republican platform have come into conflict, creating a blatant vulnerability.

This Achilles’ heel in the Republican platform could have gone unnoticed if President Trump had simply neglected his campaign promises. Instead, Trump chose to decertify the JCPOA through the Iran Nuclear Agreement Review Act (INARA). Congress now has three options: re-impose sanctions, amend INARA and renegotiate the terms of the JCPOA, or do nothing and wait 120 more days until Trump once again has to choose to certify Iranian compliance.

While restoring sanctions would have obvious consequences for Boeing and American manufacturing more broadly, the decision would also require lobbying power equal to or greater than that of Boeing. Additionally, those voting to re-impose sanctions could find themselves stiffed by Boeing in the upcoming midterms; the company’s political action committee gives out roughly $2 million to members of Congress, split equally to Democrats and Republicans, during each election cycle. However, the company might consider withholding funds for those who can’t find reason in their conscience, or in their campaign’s coffers, to vote in Boeing’s interest. Meanwhile, fear that amending INARA could cause the Iranians to walk away from the JCPOA makes that route equally undesirable.

Perhaps the more policy-smart but politically dangerous move would be to do nothing, leaving Trump to choose to certify the deal in a few months’ time. Internationally, there is a broad consensus that the deal has been effective in its goal of preventing a nuclear-armed Iran, a sentiment that is also held among many in the US government. Though it did not halt Iranian support of terrorist organizations such as Hezbollah or oppressive governments like the Assad regime in Syria, most in the international community acknowledge its strength in achieving what it set out to do. An American decision to attempt to renegotiate the deal or re-impose sanctions could easily prompt an Iranian departure from the negotiating table, jeopardizing the stable if fragile policy that is vital to global security. Choosing not to amend the INARA or re-impose sanctions is good policy. It rejects an aggressive provocation and shows American support for international cooperation. However, it would also mean that Republicans who campaigned on neutralizing Iran may be lampooned for reversing on a critical campaign promise either by the media or by a president who has shown little hesitation toward openly criticizing members of his own party.

Congressional Republicans have boxed themselves in by trying to fulfill promises from both their campaigns and President Trump’s. No matter how they vote, Republicans up for reëlection provide easy talking points for their opponents and risk losing the support of Boeing, a company with considerable financial and lobbying clout. Middle Eastern policy has always been a dangerous chess game, but members of Congress who have been vocal about both manufacturing and foreign policy find themselves more than ever in a political zugzwang, where the best move would be to not make a decision at all. Yet Trump’s refusal to recertify the Iran deal has left Republicans with nothing to do but vote and hope that they don’t find themselves in checkmate come midterms.