Thursday, March 29, 2012

How Much Darker Should It Get?

Azadeh Moaveni has written a piece for Guardian in which she writes "But the reality is not as black and white as Tehran makes out. American law includes provisions allowing Iran to procure spare parts by applying to the US treasury department for a special licence. Under this provision, Iran applies for what it needs through an intermediary and the parts are installed in a licensed third-country, such as by Lufthansa in Germany. Iran has availed itself of this option in the past, and the treasury has issued nearly a dozen special licences related to its civil aircraft, according to a treasury department official. Given that Tehran is pretending this provision doesn't exist and is declining to use it more aggressively, Washington should make the case that Iran is playing its own cynical game."

I read this part several times and shared it with a few friends. While I have no doubt that Ms. Moaveni's ultimate goal is to reduce the pain and sufferings of Iranian people, I doubt that she has a true grasp of the factual reality which exists on the ground.  The truth is that the aforementioned provisions and the procedures to use them are not known. And even if they were implemented in practice, benefiting from them would not be that simple.

First one does not apply to U.S. Treasury on his or her own. The interactions between nations are ruled and governed by national governments. Particularly in Iran where national sovereignty is emphasized on a daily basis such applications without the government's explicit authorization are nothing short of treason.

Secondly even if Iranian businesses apply to be exempted from sanctions on humanitarian grounds on what basis these exemptions will be granted. The public sector is the largest sector in Iran's economy and Iranian government either owns or controls most of the industries in this county.

Third few private entrepreneurs in Iran have the resources to apply for such permits on their own. The financial burden will be too heavy and the process too time consuming. Paradoxically only businesses with government connections and access to government resources could go through this process. Wouldn't this be against the spirit of sanctions?

Since Ms.Moaveni has paid particular attention to Iranian airlines and their plight, I would like to point out a few particulars about this industry in Iran. Iranian airlines are a mix of public, semi-private and private firms. The problem is not lack of parts, it is the age of the existing fleet. Iran is one of the few countries, if not the only one, where one still could board a Boeing 707 or a 727-100 or a 747SP. These are considered classic airplanes these days. Both private and public airlines do not have access to modern aircraft. Even if one or two private airlines in Iran could receive such exemptions one would wonder how they should manage the financial transactions for this process.  No banks would accept their wires and Iran banking system is being isolated aggressively. In my last trip to Iran I talked to the director of a private flight school where men and women learn to fly and receive their licenses. The operation was fully private with two women flight instructors.  The director was desperate, since he could not get either parts for his light single engine airplanes or replace them with new ones. He told me "We simply do not have the funds to keep bypassing sanctions".

The fact is that the situation does not need to be pictured as black and white. Since it is black. And may be that is why now owning up to it has become a bit difficult.

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