United States (US)
The airplane manufacturer Boeing and multinational conglomerate General Electric (GE) received licenses from the US government to sell spare parts for commercial airplanes to Iran and conduct transactions with Iran’s aviation sector.
Boeing's licence is reportedly "very limited", allowing Boeing to sell and only supply spare parts to its airplanes purchased by Iran before the 1979 revolution. GE's permission involves servicing 18 engines sold to Iran in the late 1970's that will undergo technical service at facilities owned by GE or Germany's MTU Aero Engines in the EU.
These licenses come as a result of the Geneva interim agreement over Iran’s nuclear program (i.e. Joint Plan of Action), signed by Iran and the P5+1 powers (i.e. US, UK, France, Germany, Russia and China) that went into effect in January 2014. As part of the package of incentives, the P5+1 agreed to a suspension of some sanctions. With that regard, the U.S. Office of Foreign Assets Control (OFAC), which regulates sanction enforcement on Iran, announced a favourable licensing policy regime related to the engagement in transactions to ensure the safe operation of Iranian commercial passenger aircraft in a memo dated January 20, 2014. The memo states in specific that “licenses issued pursuant to this Statement of Licensing Policy will expire on July 20, 2014 and all activities undertaken pursuant to specific licenses issued (…) must be completed by July 20, 2014".
European Union (EU)
The EU's extensive trade and financial sanctions against Iran, in contrast, do not encompass sanction provisions and/or reliefs specifically related to civil aviation in Iran. The EU Iran sanction regime includes a single specific restriction regarding providing engineering and maintenance services on cargo aircraft owned or controlled, directly or indirectly, by an Iranian person. This entails that civil aviation in Iran is not specifically being captured by the scope of the EU Iran sanction regime making it permissible for EU economic operators to supply spare parts to civil aviation in Iran. This is indeed the case as long as the following provisions set by the EU Iran sanction regime are taken into account and complied with:
- prohibition to sell, supply, transfer or export, directly or indirectly, certain listed goods and technology, whether or not originating in the Union, to any Iranian person, entity or body or for use in Iran. Most of the listed goods and technology are dual-use items as listed in the EU Dual-use Regulation and also include specific navigation and avionics items;
- prohibition to provide, directly or indirectly, technical assistance and maintenance related to the aforementioned listed goods and technology to any Iranian person, entity or body or for use in Iran;
- prohibition to make available, directly or indirectly, funds or economic resources to or for the benefit of any of the listed natural or legal persons, entities or bodies by the EU Iran sanction regime. In that regard, "economic resources" are defined as assets of every kind, whether tangible or intangible, movable or immovable, which are not funds, but which may be used to obtain funds, goods or services.
The foregoing means that EU economic operators can supply spare parts to civil aviation in Iran as long as the spare part is not a listed item and is not being provided to a person, entity or body listed by the EU sanction regime. Moreover, EU economic operators must determine whether the concerned spare part contains any US content as this would make it subject to the US Iran sanction regime and licensing.
Finally, in practice, EU economic operators will face difficulties in relation to securing the financial transfer clearance for the underlying sale of the spare part as EU credit and financial institutions do not enter into or maintain business relationships or transactions with Iranian banks, including their branches and subsidiaries outside Iran, being listed by the EU Iran sanction regime.