The US has imposed sanctions that prevent US companies from exporting products to Iran. The sanctions also preclude non-US manufacturers from exporting to Iran if US-made content exceeds 10 percent. Since the European Union does not impose restrictions on sales of civil products to Iran, Eurocopter and AgustaWestland market their products in the country, but the US sanctions restrict the Europeans' offerings to just a few models.
Iran's burgeoning aviation industry is a sector rapidly drawing increasing attention. As evidenced by the inaugural flight of Iran's indigenously designed and manufactured Azarakhsh fighter jet to the mass production launch of small turboprops and passenger planes, this sector was seen to be making rapid strides. Part of the impetus for the development of this industry lay within domestic demand factors. It was for a time estimated that over 10% of total demand for passenger planes in the Asian-Pacific market was in Iran, as domestic passenger traffic was expected to top eleven million passengers by the year 2000. This massive demand also spurred private sector investment in this sector as evidenced by the establishment of 17 private airlines, which controled over 25% of market share.
Iran's aviation industry infrastructure was by and large established in the 1970s, at the time of the Shah Reza Pahlavi and limitless oil revenues. Not only did the Shah order vast quantities of America's most advanced weapons, he was also acquiring the capability to produce them in Iran. Under a multibillion-dollar industrialisation programme, the Shah commissioned US arms firms to build entire weapons factories from scratch in Iran. Thus Bell Helicopter (a division of Textron, Inc.) was building a factory to produce Model-214 helicopters in Isfahan. Northrop was also a joint partner in Iran Aircraft Industries, inc., which maintained many of the US military aircraft sold to Iran and was expected to produce aircraft components and eventually complete planes. These efforts represented a large share of US industrial involvement in Iran, and were a centrepiece of the Shah's efforts to develop modern, high-technology industries.
The Iran Helicopter Support and Renewal Company (IHSRC), or Panha Company, was formed in 1969, the Iranian Aircraft Industries (IACI) in 1970, and Iran Aircraft Manufacturing Industries Corporation (IAMI), also known under its Farsi acronym (HESA), in 1974. Two other important companies, Iran Aviation Industries Organization of the Armed Forces (IAIO), also known as the Iranian Armed Forces Aviation Industries Organization (IAFAIO), and Ghods/Ghoods Research Center were formed in the early 1980s. These companies progressed from repair and maintenance facilities to larger defence enterprises with several thousands employees, except for Ghods which has remained relatively small.
In April 1997 Acting Commander of the Ground Forces of the Iranian Army, Lieutenant General Mohammad Reza Ashtiani announced that the design and construction of helicopters had started and would bear results in the ground forces five-year plan. General Ashtiani also claimed that 14,000 various kinds of aircraft parts had been produced by the forces, with some of the parts manufactured at costs one thousandths of similar foreign made parts. He stated that Iran had saved the equivalent of 30 billion rials in hard currency. In the Iranian budget year which started on 21 March 1997, he disclosed that the aviation wing of the army intended to produce 90 percent of its spare parts requirement.
Joint aircraft technology projects with Russia were supplemented by such projects as the indigenously designed and manufactured Shabaviz helicopter manufactured by Iran Helicopter Support and Renewal Company (IHSRC, also sometimes written Iran Helicopter Support and Renewal Industries) and the S-68 turboprop trainer manufactured by Iran Aircraft Industries. Iran Helicopter Support and Renewal Industries in Tehran is a producer of the helicopter's body and maintenance of helicopters according to American standards. However, the achievements of Iran's aviation industry has not only been limited to the manufacture of planes. Iran Air had successfully completely overhauled a number of planes in its fleet, without any foreign assistance as have other local companies such as Aseman.
Iran's defense industries had a long history of reverse engineering equipment, primarily those of Western origin, in order to maintain and potentially upgrade their existing inventory. A lack of spare parts and technical assistance from the original manufacturers meant that in numerous instances Iran looked to the international market, both legal and illegal, to secure sources of parts and equipment. For instance, on July 10, 2003, ICE agents executed search warrants on 18 US companies in 10 states suspected of exporting military components to Multicore, Ltd, a front company in London that was involved in clandestinely procuring weapons systems worldwide for the Iranian military. Among the items allegedly exported by these US companies to Multicore were components for HAWK missiles, F-14 fighter jets, F-5 fighter jets, F-4 fighter jets, C-130 military aircraft, military radars, and other equipment. On 24 September 2003, ICE agents in Miami announced the arrest of Serzhik Avassapian, a 40-year-old Iranian national, on charges of attempting to illegally export roughly $750,000 worth of US F-14 fighter jet components to the Iranian government. During the undercover ICE investigation, there was also discussion of illegal exports of helicopters and C-130A electrical and avionic upgrades to Iran. By June 2006 there were still trials going on in reponse to a slew of investigations and arrests following the 2003 investigations.
Illegal purchase of equipment was not the only potential problem facing Iran's reverse engineering programs. In October 2006, Bell-Textron filed suit in a US District Court in the District of Colombia, accusing Iranian manufacturers of "trading on Bell's reputation" with their programs to develop domestic derivatives of the Bell 205, 206, and 214 helicopters.
Iran's state aircraft company, the Iran Aircraft Manufacturing Industrial Company, licensed production of the Antonov An-140 aircraft in a deal with both Russia and Ukraine, ostensibly for sales to Iran's airlines, with the military also taking interest. After the success of the deal with the first Iran-140 aircraft rolling out in 2004, Iran looked to sign a similar deal with the two countries for production of the Tupolev Tu-334, another airliner.
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