Squeezed at Sea, Iran Faces New Restrictions on Its Flights

Dow Jones
09/23

Iranian flights are being canceled in several countries as part of an American pressure campaign over the Strait of Hormuz, further squeezing the Islamic Republic as it already faces a U.S. naval blockade and disruptions at its land borders.

Starting Wednesday, foreign companies that provide refuelling and other services to Iranian airlines risk facing U.S. secondary sanctions. The U.S. alleges Iranian commercial flights have played a role in transporting weapons and fighters.

The new push is designed to complement steps by the U.S. Navy to shut down seaborne traffic through Iranian ports through its blockade, disrupting Tehran's cargo and energy shipments. Much of the transit of goods has been redirected to land routes, which are now suffering severe bottlenecks.

"Iranian airlines will ultimately become primarily domestic airlines if service providers around the world are unable to continue providing them the services necessary to keep flying," said Matthew Levitt, who in the 2000s served as the deputy assistant secretary for intelligence and analysis at the Treasury.

"This in a way is really getting serious about the sanctions on Iranian airlines that have existed for a long time," he said.

The new restrictions on Iran's airlines are part of a set of Treasury sanctions targeting Iran's aviation sector that also included the blacklisting of agents working for Mahan Air, Iran's biggest private airline, and the designation of 27 smaller Iranian carriers. Mahan long has served as a key conduit for Iran's Islamic Revolutionary Guard Corps.

"If they land, you cannot provide them with fuel, you cannot provide them with landing services, you cannot sell them tickets, or you will be knocked out of the dollar system," U.S. Treasury Secretary Scott Bessent told CNBC on Monday.

The cancellation of flights represents a new woe for Iran's 90 million people, already beset by high inflation and the rapid depreciation of the country's rial currency. Iran's airlines had played a critical role in bringing vital goods such as medicines or automotive spare parts and in allowing people to leave the country.

The aviation pressure already is starting to bite, with multiple flight disruptions across the region's trading partners with Iran on Tuesday. There were cancellations by Iran Air-the country's national carrier-in Azerbaijan and by Sepehran Airlines, a recently sanctioned Iranian airline, in Iraq, according to official airport updates.

All departures from Georgia for Iran have been halted effective Monday, a spokesman for the Caucasus nation's aviation authority said.

Last week, Mahan Air told customers it would suspend flights to Turkey and Oman at these countries' request. The loss of two big destinations was a severe blow for the airline, which until now had continued to add new routes despite being sanctioned in 2011 for transporting personnel and weapons for Iran's military. Previous sanctions have affected Iran's ability to maintain its fleets, as commercial jets widely require U.S. components.

Iran's authorities say all international flights operated by Iranian airlines are operating as normal. Some Iranian airline flights to other international destinations, including to Dubai, still appeared to be scheduled as of Tuesday afternoon. The United Arab Emirates Foreign Ministry didn't respond to a request for comment.

Turkey, which has long been reluctant to implement U.S. economic sanctions, is enforcing restrictions on Iranian banks. Last week, financial regulators in Ankara canceled the license of Bank Melli Iran's branch in Istanbul and took control of Golden Global Investment Bank, an Istanbul bank also sanctioned earlier this month for violating Iran-focused sanctions.

China and Russia, however, are emerging as holdouts in the U.S. campaign. Late Tuesday, Mahan aircraft were in the air flying to Moscow and to Guangzhou, an industrial hub in southern China, according to the aircraft-tracking website Flightradar24.

"There is an effort led by China and Russia and Iran to do what can be done to undermine the international sanctions regime and U.S. unilateral sanctions in particular," said Levitt, who is now a senior fellow at the Washington Institute for Near East Policy.

China's Foreign Ministry said it wouldn't enforce sanctions on Mahan and other Iranian airlines. "Friendly exchanges and cooperation between China and Iran, based on mutual respect and mutual benefit, are legitimate and lawful," it said in a statement Tuesday.

 

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