The British government has admitted for the first time it's debt to Iran stemming from a decades-old arms deal. Defence Secretary Ben Wallace revealed the details in a letter seen by the Guardian.
Wallace said that he has been seeking to pay off the debt to the Iranian government estimated to be as much as £400 million. He argues that it could help secure the release of British Iranian dual-national Nazanin Zaghari-Ratcliffe who is currently under house arrest in Iran serving a five-year sentence for allegedly spying for the British government.
The admission was made in a letter to Zaghari-Ratcliffe's lawyers. "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."
International Military Services Limited (IMS), was a subsidiary of the Ministry of Defence and signed contracts with pre-revolutionary Iran in 1971 to sell more than 1,750 Chieftain tanks and other armoured vehicles. However, the contracts were cancelled by the British after the ousting of Shah Mohammad Reza during the 1979 Islamic Revolution, by which time Iran had already paid for the undelivered vehicles and demanded the return of its money.
International arbitrators ruled in 2008 that Britain owed the debt. In subsequent court hearings, however, lawyers acting on behalf of the now defunct arms sales agency disputed the amount and, indeed, whether any debt was actually payable.
Former Foreign Secretary Jeremy Hunt said that Wallace had done something brave and important. "If Nazanin is released soon, I believe this acknowledgement of our historic debt will have played an important part."
Iranian news sources, though, have reportedly dismissed any link between Britain's debt payment and the status of prisoners held in Iran. Foreign Ministry spokesperson Saeed Khatibzadeh deplored attempts to link the two issues together, saying that the British government was liable for the non-delivery of the tanks, "Whether a UK government official acknowledges the debt or not."
One Iranian official, Abolfazl Amouei, is quoted as saying, "This is the right of the Iranian nation and the UK debt must be paid off to Iran." He also maintained that, "It is quite clear that if the British government expects goodwill from the Islamic Republic of Iran, it must prove its goodwill too."