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March 2016: A closer look at Iran

Iran has remained outside of the international business community for approaching forty years. First imposed by the US in 1979, sanctions were expanded in 1995 and again in 2006 following Iran’s refusal to suspend its uranium enrichment efforts.

On January 16, 2016, it was announced that Iran had completed the requisite steps agreed to under the terms of the Joint Comprehensive Plan of Action (JCPOA) in July 2015. Iran agreed to scale back its nuclear efforts in return for an unfreezing of up to $100bn of assets and a lifting of nuclear-related sanctions.

Iran is the largest economy to rejoin the global economy since the end of the Cold War and this could lead to a potentially huge windfall for the civil aviation industry.

The markets appeared to be caught slightly by surprise by the speed with which Iran met the “Implementation Day” conditions and within hours of the declaration, Iran had announced a number of commercial deals, including one with Airbus that was later confirmed on January 28 for 118 aircraft.

In the days following the announcement, the media was full of stories of opportunities and potential transactions. However, while Implementation Day brings Iran out of isolation and creates enormous potential opportunities, the remaining sanctions and complexity around the US position in particular suggests operators, lessors, financiers and investors should still tread carefully.

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