Iran deal: Who loses as United States sanctions return

Eileen GuzmanMay 10, 2018

Following President Donald Trump's scrapping of the Iran nuclear deal Tuesday and his imposition of what he called "powerful" sanctions, Boeing's prospective sale to Iran of jets worth $9.5 billion is effectively dead for the foreseeable future. Despite being a foreign company, Airbus is also at risk of losing revenue as a result of Trump's decision because its planes are composed of more than 10% of American-made parts, meaning it must receive permission from the U.S. Treasury Department to sell products to Iran.

European airplane maker Airbus was among the early beneficiaries and seized the opportunity to strike a 22.8 billion euros (US$25 billion) deal for 118 new aircraft to Iran in late January 2016, along with involvement in other operational and support activities locally.

Peugeot-manufacturer PSA PEUP.PA , one of the big European businesses with operations in the country, said it hoped the European Union would adopt a common position on Iran.

However, the analysts expect that the impact on Boeing would be a modest one because of a backlog of orders for 737 aircraft, the stock of Boeing slided down by 0.6 percent and had closed at $338.37 per share.

New sanctions on Iranian oil exports would put a dent in global supply and could cause prices to spike.

Carl Bildt, the former prime minister of Sweden who is now co-chair of the European Council on Foreign Relations, complained that new sanctions "are hardly hitting any USA companies, but aim primarily at European ones".

By contrast, Boeing Chief Executive Dennis Muilenburg signalled last month that his company was no longer as dependent on the Iran orders as it had been, following an aggressive effort to improve sales of its current-generation 777-300ER wide-body jets which were part of the Iran deal.

And in 2017, Germany's Volkswagen announced that it will sell cars in Iran for the first time in 17 years.

Airbus said it will "carefully analyze" the implications of the USA withdrawal from the nuclear deal with the Islamic Republic before deciding how to proceed.

"That's something we'll consider on a case-by-case basis, but as an overview, I would say that the goal is to broadly enforce the sanctions", he said, adding the administration's objective was to deny Iran access to the USA financial system.

Meanwhile, Boeing said the company would consult with the government on next steps.

"We will consult with the USA government on next steps". A Chinese oil company also has a deal to develop the country's massive South Pars offshore natural gas field. At the conclusion of the wind-down periods, the applicable sanctions will come back into full effect.

Valiollah Seif, the governor of Iran's central bank, says the country has enough foreign currency on hand to fund purchases of basic commodities and raw materials.

"Higher fuel prices could mean more buying power for Middle Eastern customers", he said.

Mnuchin said it may be possible for some companies over the next three months to seek waivers from the sanctions or new licenses to do business with Iran, but he did not identify which companies. It's also possible that nixing the deal pushes up oil prices, padding coffers in countries like Saudi Arabia, Qatar and Kuwait. PSA Peugeot Citroen, for example, sold more than 3.6 million vehicles worldwide a year ago.

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