Why does the UK owe Iran £400m and will it pay the debt?


What connects the £ 400 million debt to the last shah of Iran and the detention of Nazanin Zagari-Ratcliffe and others with dual British citizenship in Iran?

Shortly before the 1979 Iranian revolution, which removed Mohammad Reza Pahlavi from power and laid the foundation for an Islamic republic led by Ayatollah Khomeini, the British government struck an arms deal with the Shah, promising to supply arms and weapons worth more than £ 600 million. But Britain was ultimately unable to provide goods before the revolution: leaving the Shah and his government without a livelihood or a job.

For decades, the British government argued that its historic debt to the Pahlavi dynasty could not be claimed by the Islamic Republic that succeeded it, but in 2009 the International Court of Arbitration in The Hague ruled that the republic’s rights as a “successor state” to the Pahlavi dynasty meant, that the UK is under an obligation to pay the outstanding debt.

But now the UK is facing another obstacle: International sanctions against the Iranian government mean that the British state cannot pay its debt without violating those sanctions, thus causing a diplomatic scandal between it and other countries that have sanctions against Iran.

Until the debt is paid, however, the Iranian government will continue to use the fate of dual citizens like Zagari-Ratcliffe as leverage. When Boris Johnson was British Foreign Secretary, he pledged to pay a £ 450 million debt, and as a result, this is now referred to as a condition for Zagari-Ratcliffe’s release.

“It may well be that everything was more complicated than he thought when he made the promise,” said Nazanin’s husband. Richard Ratcliffe, told me when I interviewed him last week… “But the Iranians don’t care what he meant. They care what he said. The fact is that Nazanin and the others will not return home until his words are contained. “

Now Jeremy Hunt, Johnson’s predecessor as Foreign Secretary, has connected calls for the UK to pay off the debt.

The repayment of the £ 400 million debt will help settle the British government’s accounts in accordance with international law and will help pave the way for the release of Zagari-Ratcliffe. But that will mean helping a country with which the UK government is at odds and creating a new diplomatic headache. However, this may now be the only way to secure the release of the woman, whose continued detention, according to many, is the fault of Boris Johnson.

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[See also: Richard Ratcliffe on his hunger strike: “It’s important she knows that I’m there for her.”]


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