Clipping Iran's Wings - Winners & Losers From Congress' New Sanctions

Authored by James Durso via RealClearDefense.com,

 

Iran’s aviation sector will spend much more time taxiing before takeoff if the Countering Iran’s Destabilizing Activities Act Of 2017 becomes law. The bill enjoys bipartisan support in the U.S. Senate, and the House of Representatives is considering a companion bill, the Iran Ballistic Missiles and International Sanctions Enforcement Act, which also enjoys bipartisan support. 

The Senate bill has three primary provisions: (1) Imposing mandatory sanctions on persons involved with Iran’s ballistic missile program; (2) Applies terrorism sanctions to the Islamic Revolutionary Guard Corps (IRGC); Requires the President to block the property of any person or entity involved in specific activities related to the supply, sale, or transfer of prohibited arms and related material to or from Iran.  The House bill primarily focuses on throttling the supply chain that supports Iran’s ballistic missile program. 

The Senate and House bills have the support of Iran-wary groups, such as The American Israel Public Affairs Committee  and the Foundation for Defense of Democracies who feel the bills do not violate the letter or spirit of the “nuclear deal,” the Joint Comprehensive Plan of Action (JCPOA), as they do not target Iran’s nuclear program.  In his Senate testimony in support of the JCPOA, then-Secretary of State John Kerry stated: “We’re not going to come back and just slap [sanctions] on again, but that absolutely does not mean that we are precluded from sanctioning Iranian actors, sectors, as any actions or circumstances warrant.”  The bills face opposition by JCPOA supporters, such as the National Iranian American Council, and the Public Affairs Alliance of Iranian Americans who feel additional sanctions for any reason will derail the JCPOA. (Sanctions levied by the U.S., the European Union, and the United Nations are usually for the proliferation of nuclear weapons or ballistic missile technology, support of terrorism, or egregious human rights violations.)

In March 2016, the U.S. Treasury Department sanctioned Iranian airline Mahan Air for supporting Iran’s ballistic missile program.  Making Mahan Air a two-time loser, as it was sanctioned in 2011 “for providing financial, material, and technological support” to the Quds Force of the Islamic Revolutionary Guards Corps (IRGC).  Iran Air was also sanctioned in 2011, primarily for transporting goods prohibited under United Nations Security Council Resolution 1803, which required Iran to “cease and desist from any and all uranium enrichment,” and any research and development associated with centrifuges and uranium enrichment. The Iran Air sanctions were lifted to secure Iran’s assent to the JCPOA, but Iran Air and Mahan Air have been active in supporting the Assad regime in Syria, leaving Iran Air vulnerable to non-nuclear-related sanctions in the future.

Iran has no strategic airlift capability, so it has pressed into service its private and state-owned air carriers, Iran Air, Mahan Air, and Yas Air (formerly Pars Air; sanctioned by the UN, the EU, and the U.S.). These carriers make up Iran’s airbridge to Syria and its allies, the Bashar Assad regime, and Lebanese Hezbollah, a creature of the IRGC.  The Mahan Air fleet and the Iran Air fleet are mostly Airbus airframes; Yas Air’s fleet is mostly Russian aircraft

In February 2016, Iran Air agreed to purchase 118 Airbus commercial aircraft worth an estimated $27 billion.  In July 2016, Iran Air and Boeing agreed to the sale of 80, and leasing of 29, passenger aircraft worth an estimated $16 billion, with the first deliveries scheduled for 2018.

Congressional opponents of Iran want to cancel Boeing’s agreement with Iran, but it will be more practical to allow the executive branch sanction the buyer, Iran Air, which will be possible under the Iran Terror-Free Skies Act of 2017.  Thus, Boeing can declare force majeure to avoid contract penalties, and Members of Congress can avoid the bad optics of voting against a large export contract and all those jobs.

How can the U.S. ensure Iran Air is eliminated as a tool of Iran’s apparat of subversion in Syria?

  • When Iran Air flights make their next appearance in the Syrian theatre of operations in support of the Assad regime or Hezbollah, the U.S. sanctions the airline under the authority of Executive Order 13572, Blocking Property of Certain Persons With Respect to Human Rights Abuses in Syria Or, if the IRGC is designated a terrorist organization, apply sanctions to Iran Air as a confederate of the IRGC. The U.S. may prefer to wait until it has achieved its goals vis-à-vis the Islamic State before acting.
  • Boeing regretfully suspends its dealings with Iran Air.
  • Because the U.S. is concerned about the safety of civil aviation, it reminds interested parties that it did issue a license for the inspection and repair of Iran’s civilian aircraft “so long as those services were performed outside Iran so the parts and services could not be misdirected to Iran’s military aircraft.” Iran refused to take advantage of the license, but it will be useful to remind Iran and its surrogates of this when they wave the bloody shirt when tragedy strikes, which is likely given Iran’s poor aviation safety record.
  • The U.S. refuses export licenses for U.S-made components bound for Airbus aircraft to be sold to Iran Air.
  • If Airbus decides to install substitute components, the U.S. places the type certificates for those models, the narrow-body A320, the long-haul A321, and the long-range A350, under review. (The “type certificate” is issued by a regulating body, such as the American Federal Aviation Administration or the European Aviation Safety Agency, to signify the airworthiness of an aircraft manufacturing design or "type." Once the certificate is issued the design cannot be changed, at least not without significant time and expense.)
  • Once the type certificates are under review, the U.S. approaches the countries that are Iran Air destinations and requests that, due to the now-nonconforming aircraft configurations, the countries withdraw landing privileges for those aircraft. A similar approach will be made to countries along those routes with the request that they deny flight permits to those Iran Air aircraft until the type certificate review is completed  (A “flight permit” is the “permission required by an aircraft to overfly, land, or make a technical stop [a stop for refueling or essential repairs] in any country's airspace.”
  • If the Airbus and Boeing options are off the table, Iran Air may have to turn to Russia and China for aircraft. The U.S. does not have much leverage here, but China and Russia will be dealing with a desperate buyer and will act accordingly.  Russia and China are wise enough to know dealing with a terrorist-designated IRGC is what’s commonly known as a “bad idea” and will pile on restrictions regarding the use of the aircraft to give them an excuse when the aircraft turn up in Syria. However, by then they will have been paid.
  • The clandestine sellers of parts for Iran’s remaining U.S.-origin aircraft will price their wares accordingly.

Other considerations

  • Boeing will have to be made whole, as the sale has been factored into its stock price, but President Trump’s suggested “big order” of stealthy F/A-18 Super Hornets may do nicely, thank you. Utilization of the Export- Import Bank of the United States (EXIM) would greatly aid in the facilitation of the sale, and perhaps resuscitating the Overseas Private Investment Corporation (OPIC). 
  • The U.S. should re-issue the license for inspection and repair of Iran’s Boeing aircraft at a location outside Iran. America will do this for its own satisfaction as Iran will ignore the offer as it did before.  
  • Iran Air will be unable to compete with the rival carriers from Gulf countries, which the U.S. can trade for something, maybe in the dispute between U.S. and Gulf airlines over government subsidies.

The winners and losers

  • Winners: Syrian citizens on the receiving end of Iranian guns; Israel, which will get a breather if Hezbollah is hobbled; Lebanese citizens, who will get a breather if Hezbollah is hobbled; Boeing
  • Losers: Airbus; any IRGC smuggling scheme that is using the flights to and from Syria; Iranian citizens, who will lose the chance to travel safely from their prison republic.