Nazanin Zaghari-Ratcliffe: Defence secretary trying to pay off Iran tank debt to speed up release

The government is seeking ways to pay off a 40-year-old debt to Iran over tanks that were never delivered in a bid to pave the way for Nazanin Zaghari-Ratcliffe’s release from prison.

Ben Wallace, the defence secretary, made the admission for the first time in a letter sent to Ms Zaghari-Ratcliffe’s lawyers and seen by The Guardian.

The British-Iranian dual national has been detained in Iran since 2016. Although the Iranian authorities have not publicly stated the controversial £400m debt is behind the stand-off, experts have long believed Britain’s refusal to settle the deal has made negotiations more difficult.

The complex dispute dates back to the 1970s, when the Shah of Iran ordered 1,500 British Chieftain tanks and armoured vehicles.

When the Iranian Revolution of 1979 deposed the Shah delivery of the tanks was cancelled, but Iran’s new rulers demanded their money back.

This triggered a decades-long legal battle as lawyers for the Islamic Republic tussled with those representing International Military Services (IMS), a subsidiary of the Ministry of Defence, over how much the debt was worth.

Despite an international arbitration ruling in 2008 the UK did owe millions to Iran, the government has not yet paid up.

Lawyers for the two sides continue to haggle over whether interest has accrued in the decades since the tank deal fell through. Sanctions imposed by both the EU and the United States on the Iranian defence ministry are a further complication, potentially making any payments from Britain illegal.

But in the letter, Mr Wallace confirmed for the first time the MoD was working to try to resolve the tanks debt as an issue.

“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.

“I have previously stated my personal position and I remain committed to its resolution, but it would not be appropriate for me to comment further at this time.”

Before he joined the cabinet, Mr Wallace was critical of the government’s long delay in settling the debt, describing it as “un-British, double-dealing and obfuscatory”.

Despite the admission, Mr Wallace’s letter adds the defence secretary continues to believe Ms Zaghari-Ratcliffe’s detention is arbitrary and unjust and she should be released immediately, regardless of the Chieftains debt.

Richard Ratcliffe, Ms Zaghari-Ratcliffe’s husband, said he was “heartened” by Mr Wallace’s letter, which he said was the first reply the family had ever had to letters to successive defence secretaries about the issue.

“I appreciate him responding and setting out his personal position that the IMS debt should be paid,” he told The Guardian.

“I’d also like to understand at a basic level what is going on. The prime minister, the defence secretary and a lot of other ministers are all on record saying they want this solved. It is not clear, then, who can be blocking this.”

A court hearing in the case which was due to be held in March has been postponed until November, the day after the US election.

The family’s lawyers have previously claimed this was deliberately timed to avoid any conflict with the Trump administration over Iran policy in the lead-up to the presidential election.