Iran Confirms Britain Will Pay £450 mn over Canceled Arms Deal

Britain will pay Iran an outstanding debt of more than £400 million, announced Tehran’s ambassador to the UK, Asharq Al-Awsat reports.

“Britain is to pay Iran £450 million as an outstanding debt,” Hamid Baeidinejad said. Writing on his Telegram account, he explained: “An outstanding debt owed by the UK to Tehran will be transferred to the central bank of Iran in the coming days.”

Britain owes Iran around £450 million for a canceled arms deal in the 1970s. The Shah of Iran paid Britain £650 million for 1,750 Chieftain tanks but only 185 had been delivered when he was toppled in 1979 and the new government canceled the order. Britain was told to pay back £450 million by the International Chamber of Commerce in a 2009 ruling, but sanctions on military equipment prevent payment. The UK has since agreed to pay back some of the debt, but says it is unable to transfer the money because of international sanctions on Iran.

The amount was reportedly transferred to a bank account controlled by the High Court in 2002, but has not been passed on to Iran. Talks to resolve the issue have been going on for many years.  The Sun reported earlier this week that Mr Johnson and Philip Hammond, the Chancellor, have now authorised the payment to Iran to finally settle the dispute.

Of note, the British government sold the remaining tanks to former Iraqi dictator Saddam Hussein to be used against Iran in the 1980-88 Iran-Iraq War.

Baeidinejad said shortly afterwards, Iran lodged a complaint with the International Court of Arbitration in The Hague, the Netherlands, which in 2001 found the British side guilty for failing to fulfill its commitments under the two agreements. The Iranian ambassador said the two sides were wrangling over the precise sum of money the British government owed Iran for years, and they eventually gave ground over the sum in 2009.

“However, the British side continued to drag its feet over resolving the debt, claiming EU economic sanctions against Iran were blocking its settlement,” he said. But the removal of sanctions under the 2015 nuclear deal removed the excuse and the British government has now decided to settle the longstanding debt.

“We regret that some British media outlets are trying to draw a connection between this case and issues raised in British politics. This is a complicated case that has been pursued for a very long time and has no relation with other issues,” he said.

In a post on his Telegram channel on Friday, Baeidinejad said the payment will be made in the coming days, ending the four-decade legal dispute.

The Times said Saturday that the British government believes that the Iranian announcement could really be made to push Britain to pay the debt, noting that Foreign Secretary Boris Johnson is preparing to visit Tehran soon. Talks about paying the compensation to Iran came at a time when London has been working on the case of releasing Iranian-British national, Nazanin Zaghari-Ratcliffe, who was detained in Iran on charges of working against the regime.

It had been widely reported in recent days that the UK Government was considering paying the amount to help persuade Iran to release Zaghari-Ratcliffe, who was detained by Iranian authorities during a family holiday in April 2016.

Iran claims she was plotting to topple the government there – an allegation strongly denied by her family, the British Government and her employer, the Thompson Reuters Foundation.  Her plight received fresh publicity after Boris Johnson, the Foreign Secretary, erroneously told a parliamentary committee that Zaghari-Ratcliffe had been “training journalists” in Iran. Facing heavy pressure and calls for him to resign, Johnson later admitted this was untrue.

Officially, the UK Government does not make ransom payments. The Foreign Office said the issue of the debt owed to Iran was unrelated to the case of Zaghari-Ratcliffe.  A government spokesperson said:

“It is wrong to link a completely separate debt issue with any other aspect of our bilateral relationship with Iran.”

Meanwhile, British reports on Saturday spoke of Iranian attempts to silence the Persian version of the British Broadcasting Corporation (BBC). The Times newspaper talked about pressure being exerted by Iran on families of journalists working for BBC Persian. It pointed out that the relatives of journalists are constantly facing the risk of arrest and interrogation with the aim of putting pressure on the employees to spy on them and prevent them from publishing “negative” topics against the Iranian regime.