US paves way for Iran to buy passenger jets

The United States has finally allowed Iran to buy passenger aircraft from western manufacturers, a move being seen as a major leap in implementation of last year's nuclear sanctions deal.

Europe's Airbus said on Wednesday it had received US Treasury approval to begin exporting jets to Iran.

Hours later, its US rival Boeing said it had received a sales licence and remained in talks with Iran Air.

The two manufacturers plan to sell over 200 jets to Iran, which for years has been using aging planes because of sanctions. It has seen fatal accidents in which nearly two thousand people have lost their lives.

The multibillion dollar deals to buy the aircraft is the biggest commercial outcome of last year's agreement between Tehran and foreign powers to open up trade in exchange for curbs on the country's nuclear activities.

But questions remain over how Iran is going to come up with all the money. The Boeing deal alone is worth $25 billion.

"This sends a strong signal but it resolves only half the problem. The challenge to raise financing remains," Bertrand Grabowski, a managing director at German's DVB Bank, said.

Foreign banks are reluctant to finance, fearing they could fall foul of remaining US sanctions that still prohibit the use of its financial system for Iranian business, something difficult to avoid in a complex global supply chain.

Also, US Republican presidential candidate Donald Trump is strongly critical of the rapprochement, making some banks fear they could be left with no insurance if Iran sanctions "snap back," according to Reuters.

What makes the situation complex is the skepticism of some Republican lawmakers who say Iran uses its commercial aviation to transport weapons and soldiers to terrorist organisations.

Two Republican lawmakers even wrote a letter to Boeing in June to raise their concern on subjects like how the plane maker would ensure that its jets are not used to help Bashar al Assad's regime in Syria.

Iran Air's desire to buy so many aircraft at the same time has also given its detractors a point to ponder upon.

As The Washington Institute, a policy think-tank, noted: "To put the sale in perspective, Air France has fewer planes than what Iran Air proposes to purchase, so it is not at all clear why the company thinks it can find enough passengers for them."

Others like Michael Rubin of the American Enterprise Institute believe the deals would allow Revolutionary Guard Corps to get its hands on hundreds of millions of dollars and "it will not help civilians an iota."

But then there is another side to the story.

Since 1979 Islamic revolution which pitted Iran against the west, the country has found it difficult to buy aircraft and spares.

According to Aviation Safety Network more than 1600 people have been killed in dozens of accidents in last three decades, most of them in the 1990s.

That was the time when Iran was dependent on Russian-made aircraft like Ilyushin and Tupolev.

Airbus said it had been granted an initial licence to supply 17 A320 or A330 jets that are slated for early delivery, and that it expected a second licence for remaining jets in weeks.

Iran has also ordered up to 40 Franco-Italian ATR turboprop planes needing US approval.