The art of the Boeing deal
A President Trump could cost Boeing a lot more than Air force One
Consider President-elect Donald Trump’s tweet threatening to cancel Boeing’s contract for Air Force One the first a shot across the bow in an upcoming battle with the aerospace company. If Mr. Trump is serious about dismantling President Barack Obama’s Iranian nuclear deal — which by all indications he is — then Boeing is going to become a central player in doing so. And it’s going to cost them. Bigly.
In June, Iran announced it had reached a $25 billion agreement to buy or lease more than 100 aircraft from Chicago-based Boeing — the biggest U.S. business deal with Iran since Washington cut diplomatic ties with Tehran in 1979.
It was all made possible under Mr. Obama’s nuclear deal, where Iran agreed to limit its enrichment of uranium in exchange for the lifting of some international sanctions, with commercial airliners specifically exempted.
Call it crony capitalism.
While Boeing was lobbying Congress to keep its U.S. Export-Import bank subsidies — and publicly threatening to move jobs abroad if their corporate welfare wasn’t maintained — it was also seeking favors from the Obama administration to do more business with Iran.
According to a report from the Daily Beast, Boeing paid a lobbying firm to “monitor” the nuclear agreement, and had on its payroll a former top Clinton administration official,
Thomas Pickering, who threw his support behind the Iran deal, by testifying before Congress, writing letters to high-level officials, and penning op-eds in support of the deal.
Now all bets are off.
Mr. Trump has called the Iran deal “incompetently negotiated” led by “stupid people,” where Iran can “rip us off... take our money… make us look like fools.” He suggested he would tear it up and “double up and triple sanctions.”
Of Mr. Trump’s national security picks — retired Marine Gen. James Mattis, Rep. Mike Pompeo, Lt.
Gen Michael T. Flynn, retired Gen. John Kelly, and South Carolina Gov. Nikki Haley — all are united in their enmity toward Iran and are fierce critics of the U.S. nuclear deal.
Therefore, Boeing’s naturally in their cross-hairs.
In October, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) cleared Boeing to deliver commercial aircraft to Iran Air as part of the nuclear agreement. A month later, the Republicancontrolled House of Representatives passed a bill blocking the sale. The legislation has yet to be picked up by the Senate, but Mr. Obama vowed to veto it, if it ever became law.
That’s because Boeing is holding his nuclear deal together.
The Boeing airliners are symbolically important for Iranian President Hassan Rouhani to deliver. Mr. Rouhani is expected to seek reelection next year in part by arguing that he has improved Iran’s relations with the West, according to a September report from The New York Times.
It will also help repair and make safe Iranian’s dilapidated fleet — a visual and actual accomplishment for the Iranian people, and a win for President Rouhani. Not to mention Iran Air has been used to smuggle weapons into Syria, and has been taken over by members of Iran’s Revolutionary Guards when it was carrying sensitive cargo. Have it being reliable, is a bonus.
If Boeing sales are delayed or prohibited — well, Iran will cite it as evidence that the U.S. isn’t living up to its end of the nuclear pact, and give the hardliners, an excuse to exit it.
“It is certainly a violation of [the agreement] and we will confront it,” Iran’s nuclear negotiator, Hamid Baeidinejad, said in July about any possible delay in the Boeing deal.
Boeing, for its part, has defended its deal with Iran (its $25 billion in sales after-all).
In June, Tim Keating, vice president of government operations for Boeing, told lawmakers the corporation had “a vigorous compliance mechanism at Boeing with regard to the screening of all parties with which we do business,” and had strictly adhered to dealings with Iranian entities approved by U.S. sanctions monitors.
But none of that matters anymore.
It’s now all up for a Trump negotiation, where Boeing will have to be at the table. That’s not Mr. Trump picking corporate winners or losers — it’s him living up to a campaign promise he made to the American people regarding international relations.
Boeing willfully injected itself into the U.S. Iranian drama because it thought it could payoff or control Washington politicians (who posed the risk with their policy decisions) all the while reaping the reward of added sales. Not anymore.
Now everything’s up for grabs — Air Force One, the conditions of the Ex-Im Bank, the Iran Air deal — and Boeing is going to have to choose what they find most dear.
Because Mr. Trump will be pulling all the levers he can, to get what he wants. It’s the art of the deal, after all.