Despite a host of unanswered questions, national security concerns and political barriers, Boeing announced on June 22, 2016 that it has signed a Memorandum of Agreement (MOA) with state-owned Iran Air. If finalized, the agreement would mean that Boeing could sell up to 100 commercial aircraft to Iran, at a cost of roughly $25 billion.

Boeing reportedly obtained a license from the U.S. Department of Treasury, Office of Foreign Assets Control (OFAC) to execute the MOA and engage in the negotiations that led to its signing. (OFAC is the U.S. government agency that administers most U.S. economic sanctions on Iran.) That authorization was made possible due to a new licensing policy relating to commercial passenger aircraft that OFAC issued in January 2016, following the July 2015 Joint Comprehensive Plan of Action (JCPOA) between the United States and its allies and Iran. The JCPOA significantly scaled back sanctions against Iran.

Boeing is not the first aircraft manufacturer to target Iran’s aviation market: Airbus, Bombardier (from Canada) and ATR (a French-Italian venture), among others, are capitalizing on the opportunity to update Iran’s outdated commercial aircraft fleet. Iran has been working with Airbus to finalize a contract for 118 new jets (at an estimated cost of $27 billion), and has a deal with ATR for another 20 planes.

While the MOA appears to be a meaningful step towards a final agreement between Iran Air and Boeing, the specifics of the deal remain vague. Less vague is the political backlash. On June 16, Congressmen Jeb Hensarling and Peter Roskam issued a public letter to Boeing requesting answers to questions relating to national security. The Congressmen asserted that Iran remains the “foremost state sponsor of terrorism” and could potentially use Boeing’s planes to transport weapons and otherwise provide support to terrorist organizations. The letter asks for Boeing to provide assurances that the planes will not be used to aid terrorist groups, nor be re-sold to entities that remain sanctioned. The Congressmen, who instructed Boeing to respond by July 1, also asked whether Boeing plans to involve the Export-Import Bank of the United States in the transaction.

In addition to political hurdles, Boeing will need further U.S. government authorization if it hopes to bring this deal to fruition. Boeing has confirmed that “any and all contracts with Iran’s airlines will be contingent upon U.S. government approval.” But, even if Boeing obtains specific authorization from OFAC, the company could face practical difficulties in executing the deal. For example, it may be challenging to identify a bank that is both able to handle this type of major international financing and willing to do business directly with the government of Iran. It is also possible that Boeing will have to obtain separate authorization for any subsequent deliveries of parts and services for the jets. And, of course, there is the risk that, in the midst of the transaction, the U.S. government could snap-back sanctions on Iran and render the deal illegal.

For all these reasons, while the Boeing deal is eye-catching, we do not think it heralds the march of U.S. businesses back to Tehran just yet. There is still a lot of ground to cover – as is evident from the multi-step process Boeing will have to go through to make the deal work. Certain types of transactions involving U.S. interests, especially non-U.S. subsidiaries of U.S. companies that deal in non-U.S. goods, may have it a bit easier with respect to Iran. We tend to think it will be transactions that are less glamorous, but easier to execute, that will pave the road for U.S. businesses looking to make the trek into Iran.