One of the Export-Import Bank’s biggest beneficiaries is working to solidify a deal to sell airplanes to Iran. Unrelatedly, Boeing is also asking for more than $200 million in financing from the bank for exports to China.
“These two deals reflect the problematic nature of so many of Ex-Im’s deals,” said Diane Katz, a research fellow on regulatory policy at The Heritage Foundation. “Not only are some of America’s largest corporations the biggest beneficiaries of the bank’s taxpayer subsidies, but so, too, are some of the worst political regimes in the world. Both deals strengthen the case for simply allowing the Ex-Im charter to expire.”
As first reported by CQ, Boeing “entered into an agreement and engaged in related discussions with Iran Air pursuant to a license from the U.S. Office of Foreign Assets Control (‘OFAC’).” The potential agreement, which is with Iran’s national airline, was disclosed in filings with the Securities and Exchange Commission this week.
According to the filing, Boeing’s deal with Air Iran defines terms and conditions “with respect to the potential sale of certain goods and services related to the safety of flight, including airplane parts, manuals, drawings, service bulletins, and navigation charts and data.” The plane manufacturing company also held discussions with Iran Air Tours, a subsidiary of Iran Air.
Boeing’s deal with Iran is the first between U.S. aerospace companies and Iran since the Iran hostage crisis in 1979, Reuters reported. Sanctions were put in place after the hostage crisis and were strengthened as countries like the United States became concerned with Iran’s nuclear program.
In November, Iran agreed to stop its nuclear program for six months starting Jan. 20. In exchange, six world powers including the United States and Russia offered relief from the sanctions. This month, Iran and the six countries agreed to an extension of sanctions relief. Because the sanctions against Iran are still lifted, Boeing’s dealings are allowed.
Tim Neale, a spokesman for Boeing, told CQ the deal with Iran does not involve financing from the Export-Import Bank, which provides taxpayer-backed loans and loan guarantees to foreign companies and countries. “There would not be any Ex-Im involvement in any transactions we might do with Iran’s commercial airlines under the terms of the OFAC license,” Neale said.
Boeing is one of the biggest beneficiaries of Export-Import financing, and critics have referred to the agency as the “Bank of Boeing.”
From 2009 to 2013, Ex-Im authorized more than $95 billion in loans and loan guarantees for Boeing. Approximately $16.1 billion of that financing went to foreign state-owned airlines from around the world, including Air China, Air India and Emirates Airlines.
According to a notice filed with the Federal Register from Ex-Im, the bank received an application this week for a loan guarantee to export Boeing airplanes to China. The specific airline, amount of the loan guarantee and value of the transaction are not included.
The notice does state that the transaction is, however, worth more than $200 million.
“The aircraft in this transaction will enable passenger route service within China and from China to various regional and international destinations, potentially including the United States,” it says.
The 80-year-old bank has been the center of much debate on Capitol Hill in recent weeks. Ex-Im’s charter expires Sept. 30, and Republicans and Democrats are sparring over whether to reauthorize the bank or allow its life to end.
Opponents of Ex-Im, led by House Financial Services Chairman Jeb Hensarling, R-Texas, argue the bank furthers corporate welfare and cronyism. However, its supporters, led by President Obama, say it helps small businesses and creates jobs.