Deal Maker or Deal Shredder: Billions Ride on Trump Iran Policy

  • President-elect criticized pact reopening Iran for investment
  • Iran market potential may appeal to Trump’s business instincts

Billions Ride on Trump's Iran Policy

A few days after Donald Trump’s shock election victory, U.S. aviation salesman Adam Meyer took the kind of call he knew was coming -- a small Iranian airline wanted to know if its plan to repair a fleet of aging American jets would still be possible.

“We have to wait and see,” Meyer, Middle East and Africa managing director for Minnesota-based Brite Air Parts Inc., recalled telling the concerned executive. “Trump can definitely make it difficult for us as an American company, but I’m trying to stay on the side of optimism.”

Brite Air is among scores of foreign and Iranian businesses, from oil majors to car makers, whose prospects were dented when Trump became president-elect. Plans are hinged on an Iran open for business after most sanctions were lifted by last year’s nuclear agreement, a deal attacked by Trump as ripe for renegotiation or shredding.

The Republican Party-controlled U.S. Congress, empowered by Trump’s victory, has already voted in favor of a bill that would effectively block Boeing Co. from selling or leasing planes to Iran. Though President Barack Obama has said he intends to veto the measure, it’s an indication of how much the landscape has changed.

Deals since the accord, which curbed Iran’s atomic program in exchange for sanctions relief, have included a $27 billion order for 118 Airbus Group SE planes and a contract with Boeing Co. worth $17.6 billion.

Restrictions

But progress has slowed, with major banks still wary of resuming ties for fear of flouting remaining U.S. sanctions that apply to Iran’s non-nuclear activities.

While Trump is unlikely to tear up the deal, Congress can “practically undo” it, Hossein Mousavian, a former Iranian diplomat and now a scholar at Princeton University’s Woodrow Wilson School of Public and International Affairs, said at a conference in Frankfurt last week.

Iranian President Hassan Rouhani has said the U.S. won’t be able to dismantle the agreement on its own, while European parties to the deal, including Germany and France, have said they will resist any efforts to change it.

“Peugeot, Renault, Mercedez-Benz -- many of these large global players have come into Iran, found their partners, and invested quite a bit,” said Reza Soltanzadeh, chief executive officer at Tehran-based Iran Industries Investment Co. “They want to make and sell things here.”

Meyer at Brite Air says Europeans businesses have forged ahead in Iran as U.S. firms await export licenses. He’s spent three years laying the groundwork to sell parts and engines to Iranian carriers, and was attending an international air show on Iran’s Kish Island -- a free-trade zone in the Persian Gulf -- at the time of the Congress vote.

‘Foolish’

“I’d be lying if I said I wasn’t a little bit concerned,” Meyer said of Trump. “But the guy is a businessman and he understands how to make money.”

In Tehran, some businesses have even cautiously welcomed Trump’s victory. Mona Hajialiasghar, deputy chief executive officer at Kian Capital Management, pointed to gains in commodity and mining shares as proof that some sectors see Trump as a positive.

“I don’t necessarily think that Trump is bad news for Iran’s capital markets,” she said, though she had hoped Hillary Clinton would win. “We really have to wait and see.”

The mood was bullish among the currency traders of Tehran’s Manouchehri street, who were passing quiet hours ahead of the weekend on Thursday playing backgammon.

Karim Hafezi, 68, made money from Trump’s win but was more circumspect about the future, predicting issues with the U.S. will become more pronounced and exaggerated. “If there’s war, then the war will be worse,” he said. “If there are economic problems, they will be heightened, too.”

In his March 21 speech to the American Israel Public Affairs Committee, the pro-Israel lobby in the U.S., Trump vowed to stand up to “Iran’s aggressive push to destabilize and dominate the region” and to “totally dismantle Iran’s global terror network.”

Traditional U.S. allies in the region, including Israel and Saudi Arabia, also opposed the deal.

Oil Resilience

Parviz Karimi, a marketing manager at Blue Gulf Shipping Services Ltd. in Tehran, said he sees little cause for alarm. Income in the shipping and tanker business has at least tripled since the implementation of the nuclear deal in January, and the prospects will improve further as more Asian countries return as buyers, he said.

Iran’s oil output has risen by almost a third in the 10 months since the deal, with exports more than doubling, driven largely by rekindled sales to Asia and the European Union -- Iran’s largest trading partner prior to sanctions.

Nevertheless, worried companies aren’t difficult to find.

“We all froze,” said Amir Rostambeigi, founder and managing director of tourism operator Tooran, who was on a business trip to a Caspian Sea resort in northern Iran when he heard the election result. “Who signed the nuclear deal? Obama. Who will continue its path? Hillary. So if we are to move away from this, well, it leads to disappointment,” he said.

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