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Could Iran buy Boeing planes?

Iran announced a deal with Boeing to buy passenger planes, though the effort faces hurdles in the wake of remaining US sanctions. Some say it could warm relations between the US and Iran.

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    An Iranian pilot demonstrates a flight simulator at the Mehrabad airport in Tehran in this 2011 photo provided by Capt. Hooshang Shahbazi. Iran said Tuesday it had reached a deal to purchase planes from Boeing.
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Iran says it has reached a deal with Boeing to buy passenger planes to update its aging civilian fleet, state-run Iranian news agencies reported on Tuesday.

If completed, the deal would mark the first time American-made jets flew over Iran's skies since the 1979 Iranian Revolution.

"Its details will be announced within next few days," Abbas Akhoundi, Iran's roads and urban development minister, said, according to the semi-official Fars news agency.

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But the plan still faces hurdles, including approval by the US government, but coming in the wake of the Obama administration's agreement last year to lift sanctions against Iran's nuclear program, it could point to a growing thaw in relations between the two countries.

Carrier Iranair will purchase more than 100 Boeing jets from the manufacturer and from leasing companies, though other details of the agreement are vague, Reuters reports.

A Boeing spokesman confirmed that the company was "engaged in discussions with Iranian airlines approved by the U.S. government" in an email to Reuters, though he declined to provide specifics.

"We do not discuss details of ongoing conversations we are having with customers, and our standard practice is to let customers announce any agreements that are reached," the spokesman wrote. "Any agreements reached will be contingent on U.S. government approval," he cautioned.

US approval is necessary because remaining American sanctions on Iran include a ban on using dollars in trading with the country. These restrictions have dissuaded many international banks and financial firms from beginning to do business with Iran, while frustrating Iranian officials in the government of President Hassan Rouhani, who brokered the nuclear deal by citing its benefits to Iran's economy.

There are also questions about whether Iranian Supreme Leader Ayatollah Ali Khamenei could back out of the deal because of mistrust of the US government, USA Today reports.

Boeing is hoping to catch up with European rival Airbus, which won a provisional deal in January to sell 118 jets to Iran for $27 billion, Reuters reports. The deal with Airbus is priced in euros instead of dollars, which are typically used by plane manufacturers, but many banks remain reluctant to finance such efforts because of the US' remaining sanctions.

Iranian officials have also expressed frustrations with Washington over how the deal has been implemented.

"In my view, they have not honored their obligations," Valiollah Seif, the governor of Iran's Central Bank, said in an appearance in April at the Council on Foreign Relations.

He particularly hopes the US will allow a procedure known as a U-turn, where money converted into one currency from another must briefly pass through a US bank – even though it won't stay there – because the US dollar is used in the conversion, Al-Monitor reports.

"This is our expectation, that the agreement will lead to that," Mr. Seif told Al-Monitor in April.

Some advocacy groups concerned about Iran's nuclear arsenal have also launched campaigns criticizing potential business deals. United Against Nuclear Iran, a New York-based group, for example, has been warning companies of legal problems in the US if they do business in Iran.

But despite the obstacles, if the Boeing purchase moves forward, it could provide a key boost for advocates of the nuclear deal who say it is critical to ensuring warming relations between Iran and the United States and other Western powers.

"The Boeing deal would be really important," Cliff Kupchan, chairman of the Eurasia Group, a Washington-based political risk consulting firm, told The New York Times. To ensure relations are warming, he said, "Iranian elites have to know that the U.S. wants constructive interaction. If Boeing sells 100 planes to Iran, it would send exactly the right vibe."

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