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September 7, 2017

Oppose Amendments to Bar Aircraft Sales to Iran Under JCPOA

Two amendments made in order to the House Appropriations package, H.R. 3354, risk pushing the U.S. into violation of its commitments under the Joint Comprehensive Plan of Action (JCPOA) by blocking the sale of civilian aircraft to Iran. In so doing, these amendments would cost the U.S. economy tens of billions of dollars and up to a hundred thousand jobs while depriving ordinary Iranians of safer air travel. Particularly in light of the Trump administration’s repeated and escalating threats to unravel the JCPOA, NIAC Action urges Representatives to reject these foolhardy and self-damaging amendments.

Violations of the JCPOA

Amendment 36
, from Reps. Peter Roskam (R-IL), Lee Zeldin (R-NY) and Doug Lamborn (R-CO), would bar the U.S. Treasury Department from licensing the sale of aircraft to Iran under the JCPOA, thus pushing the U.S. into violation of its commitments to enable such sales under the JCPOA. Specifically, the amendment prohibits the use of funds made available to the Treasury Department to issue a license pursuant to any licensing policy promulgated in accordance with § 5.1.1 of Annex II of the JCPOA. This section of the JCPOA commits the United States to allow for (i.e., license) the sale of commercial passenger aircraft and related parts and services to Iran. This would be a clear violation of the JCPOA and threaten Iran’s continued adherence to its nuclear commitments.

Amendment 37, also from Rep. Roskam, would further threaten U.S. compliance under the JCPOA by barring U.S. financial institutions from engaging in licensed aircraft sales to Iran. The amendment prohibits the United States Department of the Treasury from using the funds made available to it to authorize a transaction by a U.S. financial institution that is ordinarily incident to the export or re-export of a commercial passenger aircraft to Iran.  Such an amendment could risk derailing the licensed sale of commercial passenger aircraft and related parts and services to Iran – particularly insofar as U.S. companies, such as Boeing, are engaged in such sales and require receipt of the proceeds of such sales in their U.S. bank accounts – and upending U.S. commitments under the JCPOA.  Under the JCPOA, the United States is obligated to “refrain from imposing exceptional…regulatory and procedural requirements in lieu of the sanctions” lifted under the nuclear agreement.  Prohibiting U.S. banks from being engaged in the licensed sale of aircraft to Iran – despite the fact that such engagement would be “ordinarily incident” to a given transaction – would risk violating this provision – amongst others – of the JCPOA.   

The Obama administration, which was committed to sustaining the JCPOA, threatened to veto similar legislation to Amendment 37  – H.R. 5711 – which passed the House in a largely partisan vote in November of 2016. According to the administration’s veto threat:

The bill (H.R. 5711) prohibits the U.S. government from authorizing transactions by U.S. financial institutions in connection with the export or re-export of commercial passenger aircraft to the Government of Iran or Iranian entities and mandates the revocation of any such licenses already issued.  Without the ability to license these transactions, the United States will be unable to fulfill one of its JCPOA commitments to the detriment of U.S. companies, foreign partners, and the world.  The commitment to license these transactions, clearly outlined in the JCPOA text, has been clear since the conclusion of the JCPOA in July 2015 and as briefed publicly by this Administration, including during the robust congressional debate on the JCPOA.  Attempts at this juncture to preclude implementation of U.S. commitments are in bad faith.

Costing the U.S. Economy

In obstructing the Boeing deal with Iran, the Roskam-Zeldin-Lamborn amendments would cancel a sale that would inject tens of billions of dollars into the U.S. economy, which Boeing estimates would support nearly 100,000 new jobs.   

Iran Air has agreed to purchase 80 aircraft from Boeing for a list price of $16.6 billion, in addition to leasing 29 additional aircraft that could be worth tens of billions of dollars more, with deliveries running from 2018 through 2025. Boeing also has a tentative agreement with Iran’s Aseman airlines to sell additional aircraft that would be worth roughly $3 billion.

By blocking Iran from paying American companies for civilian aircraft, costing billions in lost economic opportunities and tens of thousands of jobs, the Roskam-Zeldin-Lamborn amendments would needlessly cut off the nose to spite the face.

Harming Humanitarian Interests in Iran

Part of the reason the JCPOA permitted the sale of U.S. aircraft to Iran was humanitarian need, as sanctions have barred Iran from updating its aging and unsafe air fleet. The Roskam-Zeldin-Lamborn amendments would unravel this needed humanitarian gesture.

There have been over 200 accidents involving Iranian aircraft over the past 25 years, leading to more than 2,000 deaths. Many in Iran, who generally hold positive views of the United States, blame U.S. sanctions for the country’s notoriously unsafe civilian aviation sector.

Iran Air’s fleet age is twice the international average, with an average fleet age of 26.3 years. By comparison, Virgin America has an average fleet age of 6.3 years, JetBlue has an average age of 8.7 years, American Airlines has an average age of 10.9 years, and Southwest has an average age of 12.3 years.

In 2010, State Department spokesman PJ Crowley stated, “We want to see the Iranian people have the same opportunities to travel, to engage as others in the region and around the world have. And the only thing that’s impeding Iran from having that kind of relationship with the United States and the rest of the world is the government and policies of Iran. If they change their policies, if they meet their obligations then certainly, as we continue to offer the prospect of engagement and a different kind of relationship, that depends squarely on what Iran does and what policies it chooses to pursue.” With the completion of the JCPOA, and Iran’s implementation of constraints on its nuclear program under the agreement, it is essential that the U.S. make good on its promise to allow the sale of civilian aircraft to Iran.

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