The UK defence secretary, Ben Wallace, has for the first time stated that he is actively seeking to pay a debt owed to Iran for the non-delivery of Chieftain tanks ordered by the last Shah of Iran before he was overthrown in 1979—and the move could be highly important in securing the release from Iran of British dual nationals including Nazanin Zaghari-Ratcliffe.
It is thought that the UK owes the Iranian government as much as £400m for the non-delivery of the tanks. However, if it pays the debt the British government must find a way of doing so that will not breach either US or EU sanctions in effect against Tehran.
Until now, UK officials have been far from clear what their standpoint on the debt claimed by Iran actually is. An international arbitration in 2008 ruled the UK owed the debt, but in drawn-out court battles that followed lawyers acting for International Military Services (IMS), the UK Ministry of Defence’s now-defunct arms sales agency, questioned not only the size of the debt, but, at times, whether any debt was even payable.
Neither Iran nor the UK government formally acknowledge that the release of UK dual nationals in Iranian jails or under house arrest is connected to the non-payment of the debt, although officials on both sides privately see the unpaid sum as the chief obstacle to the freedom of some of those detained.
The Guardian reported on September 9 that in a letter to lawyers acting for Zaghari-Ratcliffe, a mother of a young daughter who has been detained in Iran in jail and then house arrest since 2016, Wallace wrote: “With regard to IMS Ltd and the outstanding legal dispute the government acknowledges there is a debt to be paid and continues to explore every legal avenue for the lawful discharge of that debt.”
The former UK foreign secretary Jeremy Hunt ws quoted by the newspaper as saying Wallace “has done something brave and important”, adding: “If Nazanin is released soon I believe this acknowledgement of our historic debt will have played an important part.”
Wallace, as defence secretary, is the 99% shareholder of IMS and so its lead decision-maker. As a backbench MP and before becoming defence secretary, he was sharply critical of the delay over the payment of the debt, saying it was a stain on the UK.
A much-postponed next court hearing over the debt is due to be held on November 4, two days after the US election. It is not inconceivable that the UK approach to paying the debt could be swayed by the result of that election and its likely impact on US-Iran relations.
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