Boeing Secret Deals with Iran, Skirting Sanctions

Why Boeing kept Iran dealings under the radar

Author: Saam Borhani

alMonitor: Barely a week after the Jan. 16 lifting of nuclear-related sanctions on Iran, Tehran hosted its first international business summit in years. The event, sponsored by the Centre for Aviation (CAPA), brought together 400 executives of the global aviation industry to re-establish links with their Iranian counterparts after a decades-long estrangement. What raised eyebrows in Tehran and Washington, however, was the conspicuous absence of Boeing, the world’s largest aircraft manufacturer. Boeing’s curious decision to skip the CAPA event raised questions about the United States’ commitment to the sanctions relief mandated under the July 14, 2015, Joint Comprehensive Plan of Action (JCPOA). The decision Boeing made to stay home, likely prompted by unease as to the confusing web of remaining US sanctions, is a harbinger of things to come for the delicate dance between Iran and American business.

It turns out that Boeing, while skipping the high-profile CAPA event in Tehran, has actually been unofficially negotiating behind the scenes with Iranian civil aviation officials for a considerable time. Indeed, weeks after European rival Airbus signed a multibillion dollar deal for 118 passenger jets with Iran, Washington finally gave the go-ahead for Boeing to begin official negotiations and to apply for special licenses to sell aircraft to the Iranians.

As the world cashes in on an Iran ready to do business, the United States risks being late to the game because of a mixture of political sensitivities, confusion about the remaining American sanctions and structural impediments that make trading with Iran prohibitively risky for all but the most adept American companies.

American trade with Iran is known to attract seething headlines in both countries. A simple form on McDonald’s website about franchise opportunities in Iran last year prompted warnings of an impending cultural invasion of the country in the Iranian right-wing media. Similarly, US companies risk the wrath of special interest groups devoted to inflicting reputational damage because of trade with Iran. Halliburton and Hewlett-Packard are prominent examples of companies that have been attacked in the American media for previous legal business relations with Iran.

Groups such as United Against a Nuclear Iran have also been successful in convincing around half of the state legislatures to pass measures punishing companies operating in Iran. These local laws have directed state pension funds with billions of dollars in assets to divest from targeted companies and sometimes have barred these companies from public contracts. The impact of these state “sanctions” on the JCPOA is not clear and may yet prompt a political and legal battle between the federal government and state officials. Indeed, the harm to the reputations of US companies by such local punitive measures is a strong deterrent to engaging with the Iranian consumer. It is also an issue that is likely to continue, as long as Iran remains listed as a state sponsor of terrorism by the State Department.

For American companies large enough to weather bad publicity, the remaining and now largely unilateral US sanctions on Iran represent a potentially costly minefield. The JCPOA allows for licensed sales of American airliners to Iran and the legal importation of Iranian foodstuffs and rugs. Besides these specific carve-outs, US companies may trade with Iran under the general licenses that were available before the JCPOA and under specific licenses granted by the Office of Foreign Assets Control (OFAC), the Treasury Department’s sanctions administrator. In addition, foreign subsidiaries of US companies that are not under the control and direction of US persons may trade directly with Iran. Maintaining a robust compliance system and routinely checking company interactions with Iran to make sure that they do not run afoul of OFAC regulations is a costly and time-consuming endeavor. Indeed, any American company that trades with Iran under the terms of the JCPOA, and especially under the complicated foreign subsidiary clause, must be large enough to support sufficiently adept legal compliance teams. Small and medium-size US businesses are thus effectively shut out of a presence in Iran for this very reason.

For the large multinational American companies that may be able to gain a foothold in Iran, there remain structural constraints that residual US sanctions place on legal trade with Iran. The United States has made it clear that no payments linked to Iran may be processed through its financial system. This means that profits made by American businesses in Iran will likely not be able to be directly repatriated and probably will remain offshore in segregated foreign accounts. American companies must also contend with strict bars on doing business with any Iranian entities that remain on OFAC’s “specially designated nationals” list, the Iranian government and the Islamic Revolutionary Guard Corps. Each of these barred entities took over vast parts of the Iranian economy as a result of the international sanctions that have now been lifted.

The JCPOA has opened small opportunities for trade between American and Iranian firms. However, the remaining labyrinth of hard-to-understand restrictions will likely spook most Americans.

Both the Iranian and US governments have a vital interest in seeing that the JCPOA is an enduring agreement — and this partly depends on sanctions relief benefiting Iranian and American private sectors in a way that would effectuate the “buy-in” of JCPOA skeptics. A mutually beneficial trading arrangement that connects the private sectors of the United States and Iran — despite political differences — would strengthen the nuclear deal by attaching a direct economic cost to nonadherence. The limited avenues for legal trade, if quickly institutionalized, can be insulated from the historically volatile political relationship between Iran and the United States.

In this vein, a quiet Iranian commitment to protect American investors in Iran and to tone down the harshest anti-US rhetoric, at least with respect to American business, would give space for Wall Street to influence a change in Washington’s largely monolithic view of a hostile Iran. More importantly, a quiet US commitment to actively support legal trade with Iran — with the same zeal that it uses to enforce sanctions — would give the Iranians space to consider future negotiated compromises.

 

Report for California, What About your State?

Golfing, tequila and spa treatments: These are the gifts given to California lawmakers in 2015

LATimes: State legislators accepted more than $892,000 in gifts last year, including foreign trips, expensive dinners, concert and sports tickets, golf games, spa treatments, Disneyland admissions and bottles of tequila and wine, according to filings released Wednesday.

Lawmakers had their expenses covered by others for educational and trade trips to France, China, Argentina, Australia, Taiwan, Singapore, Mexico and Israel.

 

In fact, travel costs dominate the gift tallies from last year with a large number of lawmakers deciding to fly overseas for conferences or policy meetings paid for entirely by influential interest groups and foundations.

The travel included 21 lawmakers who attended a conference in Maui in November at a cost of about $3,000 per person, paid for by a nonprofit group funded by oil and tobacco firms and other interests lobbying the Legislature.

The flood of gifts, especially from groups tied to interests seeking favorable treatment at the Capitol, raises red flags for ethics experts including Bob Stern, former general counsel for the Fair Political Practices Commission and a co-author of the state Political Reform Act.

“The people that make these gifts are trying to influence legislators and create goodwill, and clearly it does,” Stern said. “The average citizen doesn’t get these gifts. It’s only when you are in a position of power that you get these gifts.”

The total value of gifts is up by about $50,000 from 2014. A group with interest in promoting climate change policy helped send a large delegation of legislators led by Gov. Jerry Brown to a United Nations summit on climate change held in Paris in December.

Senate President Pro Tem Kevin de León (D-Los Angeles) had $4,077 of his travel expenses to Paris covered by the Climate Action Reserve, which advocates for solutions to climate change.

In all, De León received $30,200 in gifts, among the most of any lawmaker. Much of it was for educational trips to Japan, Mexico and Australia.

The $14,055 cost for de Leon’s Australian trip to look for drought solutions was covered by the California Foundation on the Environment and the Economy, a San Francisco think tank financed by special interests including PG&E, Shell, the State Building and Construction Trades Council and Chevron.

Claire Conlon, a spokeswoman for De León, defended both the travel and the way it is financed.

“As elected representatives of the world’s seventh-largest economy and a gateway to international trade corridors, building global relationships and studying best practices in other countries is an essential part of the job description,” she said. The funding arrangements with “respected nonprofits” mean “not a single taxpayer dollar is being spent,” she added.

De León also reported gifts of USC football tickets, bottles of tequila, meals and a tie. The disclosure forms that lawmakers must file annually do not require detailed descriptions of the gifts, so there is no way to know the brand of tequila or color of the tie.

Sen. Benjamin Allen (D-Santa Monica) reported receiving $37,900 in gifts, the most of any lawmaker, much of it to cover the cost of educational trips to China and Argentina.

“I represent a diverse coastal district with thousands of globally focused employers creating good jobs for our local economy,” Allen said. “The trips involved important public policy, environmental, economic and cultural exchanges, and I was honored to serve as part of these educational legislative delegations. Not a single taxpayer dollar was spent, and I fully reported and disclosed all such travel.”

Sen. Anthony Cannella (R-Ceres) reported $31,100 in gifts, including expenses for trips to Singapore and Australia. He also received more than $1,100 in green fees for golf paid for by supporters including the prison guards union and the California Independent Petroleum Assn.

A spa treatment, costing $396, was provided to Sen. Holly Mitchell (D-Los Angeles) by the Legislative Black Caucus.

In the Assembly, Cristina Garcia (D-Bell Gardens) received the most gifts, $33,832 worth and mostly involving overseas travel. Her $17,000 trip to Taiwan was paid for by the Taipei Economic and Cultural Foundation and her $14,348 trip to Australia with De León was covered by the California Foundation on the Environment and the Economy.

Evan Low (D-Campbell) received more than $31,000 in gifts, including a trip to China paid for by a group called U.S.-Asia Innovative Gateway, and a trip to Newport Beach paid for by the California Independent Petroleum Assn. He also received a $287 ticket to a Giants baseball game from PG&E.

Many of the gifts received by lawmakers would have been prohibited by legislation the governor vetoed two years ago. The bill would have banned nontravel gifts over $200, and barred tickets to amusement parks, professional sports games and concerts, as well as green fees for golf.

The public can read each legislator’s gift report on the FPPC website.

In vetoing the gifts bill, Brown wrote that it would be “adding further complexity without commensurate benefit. Proper disclosure, as already provided by the law, should be sufficient to guard against undue influence.”

The size of some of the gifts received last year troubled Jessica Levinson, a Loyola Law School professor and president of the Los Angeles City Ethics Commission.

“It’s fair to ask public officials to forgo gifts over certain thresholds,” she said.

A new bill proposes to outlaw travel gifts like the annual Maui convention put on by the Independent Voter Project, which received financing for the event from groups including the Western State Petroleum Assn., Shell Oil, Sempra, tobacco giant Altria, AT&T, the California Cable and Telecommunications Assn. and Koch Industries.

Many event sponsors send lobbyists or representatives to rub elbows with the elected officials poolside or on the golf course.

Freed Dealer, Obama Released, Kills 3

Crack Dealer Freed Early Under Obama Plan Murders Woman, 2 Kids

JW: A convicted crack dealer who left prison early as part of the Obama administration’s mass release of federal inmates has been indicted by a grand jury for fatally stabbing his ex-girlfriend and her two kids in Columbus, Ohio. The gory crime drew national attention because the children, ages 7 and 10, were murdered to eliminate them as witnesses in the brutal massacre of their 32-year-old mother.

This week a grand jury in Franklin County returned a 10-count, death-penalty indictment against the ex-con, 35-year-old Wendell Callahan, for the triple murders. Callahan broke into his ex-girlfriend’s apartment and stabbed the three victims, according to a statement issued by Franklin County Prosecutor Ron O’Brien announcing the indictment. The bloody crime scene was discovered by the woman’s current boyfriend, who subsequently engaged in a fight with Callahan before he fled. The indictment includes charges of aggravated murder with prior calculation and design and aggravated murder of victims under the age of 13. “There are multiple charges regarding the three victim deaths because there are different methods to commit the crime of murder and the Prosecutor’s Office typically charges all methods”, O’Brien stated. Callahan is in jail on $3 million bail and is scheduled to be arraigned later this week.

Callahan should have been in jail when the crimes occurred, but he was released four years early because federal sentencing guidelines for crack dealers got reduced. The change is part of President Obama’s effort to reform the nation’s justice system as a way of ending racial discrimination. The initiative was technically launched back in 2010 when the president signed a measure that for the first time in decades relaxed drug-crime sentences he claimed discriminated against poor and minority offenders. This severely weakened a decades-old law enacted during the infamous crack cocaine epidemic that ravaged urban communities nationwide in the 1980s. As part of the movement the U.S. Sentencing Commission lowered maximum sentences for drug offenders and made it retroactive, leading to the early release of thousands of violent thugs like Callahan.

In November the administration began releasing 6,000 drug convicts coined “non-violent” offenders whose sentences were too long under the old guidelines. News reports quickly surfaced contradicting the administration’s assessment that the newly released convicts were not violent. Among them was the leader of a multi-million dollar operation that smuggled drugs from Canada to Maine. Prosecutors refer to the 29-year-old con as a “drug kingpin” who was one of “America’s Most Wanted.” Shortly before the administration’s mass release of drug convicts, federal prosecutors warned that drug trafficking is inherently violent and therefore the phrase “non-violent drug offenders” is a misnomer. The nation’s prosecutors also cautioned that reducing prison sentences for drug offenders will weaken their ability to bring dangerous drug traffickers to justice.

As if it weren’t bad enough that the administration is rewarding thousands of criminals with get-out-of-jail cards, huge amounts of taxpayer dollars are being spent on programs to help them find housing and jobs. In the aftermath of the mass release of federal prisoners Judicial Watch reported on two “re-entry” programs to ease the transition from jail. One received $1.7 million and ordered public housing facilities not to reject tenants with criminal records. The other allocated $20 million to the Department of Labor (DOL) to help ex-cons find work and thus end the “cycle of poverty, criminality and incarceration.”

More here including photos.

Hillary calls for sentencing reform too.

This all began in 2013 between Obama and Eric Holder and Loretta Lynch continues to carry the baton.

U.S. Attorney General Eric Holder has announced a major shift in how the federal government plans to prosecute nonviolent criminals involved in drug crimes, with the aim of easing overcrowding in the nation’s prisons.

Holder outlined several policy changes in a speech to the American Bar Association meeting in San Francisco.

The attorney general said too many Americans go to prison for far too long and for no truly good law enforcement reason.  His main focus was low-level drug crimes that can often bring minimum mandatory sentences of five or 10 years in prison.

Holder says the federal government will now follow the lead of several states that emphasize drug treatment and community service programs as alternatives for non-violent drug offenders who are not associated with criminal gangs or drug cartels.

“Widespread incarceration at the federal, state and local levels is both ineffective and unsustainable,” he said. “It imposes a significant economic burden totalling $80 billion in 2010 alone and it comes with human and moral costs that are impossible to calculate.”

Hey SEALS, Turnover your Weapons

Twisted priorities at the Pentagon, mandated by the White House and congressional budgets, then couple that with waste, fraud and abuse, ladies and gentlemen, our problems are much worse than can be defined.

Just WHOA…

SOCOM investigating Navy SEAL weapons shortages

STRIPES: WASHINGTON — The general in charge of U.S. Special Operations Command said Tuesday that he is looking into claims that Navy SEALs and other elite forces have shortages of key equipment.

Gen. Joseph Votel assured House lawmakers that the command will resolve any problems that it discovers in equipping special operators, such as a lack of service weapons, in preparation for increasingly common missions around the world.

Rep. Duncan Hunter, R-Calif., and other House lawmakers raised the alarm earlier this month on supply shortages in the special operations community, causing soldiers to dip increasingly into their own pockets to purchase basic military gear such as helmets, global positioning devices and medical supplies.

Most concerning, according to Hunter, is SEALs are now asked to hand over their personalized weapons after returning from deployment so they can be handed off to other SEALs who are deploying.

“I look forward to talking to Navy Special Warfare Command about this specific issue and make sure we understand it,” said Votel, who was testifying to members of the House Armed Services Committee. “If there is something that we are contributing to that is impacting the readiness of our operators, we’ll certainly take immediate actions to kind of correct that.”

Votel said the issue might be related to maintenance and the high usage of SEAL weapons.

“These guys do put a lot of rounds through the weapons,” he said. “What we do try to do is ensure with that many rounds going through our weapons that they do have the right level of depot maintenance when they do come back from deployments or long training periods.”

Hunter, who wrote a letter in February to the Navy Special Warfare Command about the concerns, brushed aside the general’s suggestion.

“This is not a factor of too many rounds going through the weapon barrel, and then you just change out the barrel anyway,” Hunter said.

He said the weapons are the most important pieces of equipment for the SEALs. They put time into calibrating their weapons and applying optics and lasers, then are forced to turn them over for reconfiguration.

“I’ve had multiple SEALs at multiple times over the last six months come to me in San Diego … and tell me how things have changed dramatically from five or six years ago, meaning they don’t get weapons now to work up with for two years,” Hunter said. “They get their weapon when a guy comes back and hands over the weapon.”

The military has increased its reliance greatly on special operations forces since 9/11. As such operations hit a high mark, other reports of supply shortages have come up as well.

Last month, the nonprofit group Troops Direct reported the Marine Corps Fleet Anti-Terrorism Security Team deployed to Benghazi, Libya after the embassy attack there and lacked crucial equipment including sniper supplies and batteries.

Meanwhile, troops often have to buy their own medical equipment such as tourniquets, and shell out about $1,000 each for their own helmets or $500 for GPS devices, according to the group.

The shortfalls in SEAL weapons have surfaced, as the Navy Special Warfare Command budget increased by $11 million during the past couple of years, according to Hunter.

Rep. Richard Nugent, R-Fla., a member of the House Armed Services Committee, said he could not understand why the Navy would rotate SEALs’ service weapons and that he wanted answers.

“That’s the [weapon] you sleep with, the one you work with, so I will be interested to hear from Rep. Hunter the answer you come back with,” Nugent told Votel.

****

Lacking basic gear, special operators stuck buying their own equipment

STRIPES: WASHINGTON – Sean Matson, who recently left active-duty as a Navy SEAL, said the military measured his head four times – each time before deployment – with plans to provide him a more advanced ballistic helmet.

But the new helmet never materialized. During a deployment in Africa, Matson and six of his fellow SEALs each shelled out about $900 for updated helmets that held the lights, communications devices and batteries needed for their missions.

“There was never a clear solution to it, so guys were going out spending $800-$900 on their own ballistic helmet,” said Matson, who is now CEO of the military supply company Matbock.

Elite troops such as the SEALs are more and more forced to dip into their own pockets to purchase basic military gear such as helmets, global positioning devices and medical supplies, according to Matson and others involved in the military’s unofficial civilian-side supply network who came to Capitol Hill on Thursday.

House lawmakers have taken notice and said they will request an explanation from Defense Secretary Ash Carter.

“These are the guys we assume have the best gear all the time,” said Rep. Duncan Hunter, R-Calif., a Marine Corps combat veteran.

Hunter said special operations troops have been approaching him in his California district complaining about the inability to get needed materials and he has been investigating the issue.

Numerous individual instances point to a systemic problem in the military’s supply chain but a blind spot exists between Defense Department vendors and the troops who need the gear and supplies, Hunter said.

“It’s been impossible for me to find out how the money is getting stopped and why it is not going down to where it’s supposed to be,” he said.

Aaron Negherbon is the executive director of the nonprofit group Troops Direct, which ships needed and requested supplies – from boot laces to tablet devices — to servicemembers who cannot get it through their commands.

Less than two days after the attack on the U.S. embassy in Benghazi, Libya, Negherbon said he was contacted by the commander of a Marine Corps Fleet Anti-Terrorism Security Team that was being deployed there.

The commander told him the team lacked a variety of crucial equipment, including sniper supplies, he said.

“They came to us for…batteries because they didn’t have any of those … It is kind of like, ‘What the heck is going on?’” Negherbon said.

He said troops often have to buy their own medical equipment such as tourniquets, and shell out about $1,000 each for their own helmets or $500 for a GPS device that they need for duty during a deployment.

“The question is, why can’t you get this?” Negherbon said.

Often the answer seems to be a higher command does not have the money budgeted or the equipment was approved but not available from vendors.

“That is a good thing, we know where the problem is but [those issues] are very profound,” he said.

A small group of House Republican lawmakers gathered Thursday to hear the concerns.

Rep. Adam Kinzinger, R-Ill., an Air Force combat veteran, said the military has to weigh the concerns of supplying needed equipment with the desire of troops to always have the newest gear on the market.

Still, Kinzinger said the shortfalls in the supply chain could become a major issue if deployments ramp up again to the levels seen during the height of the Iraq and Afghanistan wars.

Rep. Chris Gibson, R-N.Y., an Army veteran, said the group should write a letter to Carter, saying they have serious concerns about supply breakdowns, including the inability of Matson and his fellow SEALs to get helmets capable of mounting lights, though the equipment was approved.

“If you’ve got a situation where unit is approved for an Ops-Core [brand ballistic] helmet and it’s not getting it, we need to understand what the problem is … that is unacceptable,” he said.

UK Muslim Brotherhood, Cross/Double-Cross