Secretary of State for Defence of the United Kingdom Ben Wallace has issued in a letter to the family of Nazanin Zaghari-Ratcliffe, a British-Iranian woman detained in Iran, saying the British government is seeking ways to resolve a 40-year-old British debt to Iran in order to secure her release from prison.
The letter, which was also sent to Zaghari-Ratcliffe's lawyers and obtained by The Guardian, showed the British government admitting for the first time that Zaghari-Ratcliffe's detention in Iran since 2016 could be related to the £400 million debt that Britain has refused to pay to Iran for over four decades.
The British debt to Iran is related to a contract between Britain and the Pahlavi government in 1971 involving an Iranian order of 1,500 Chieftain tanks and armored vehicles, for which Iran paid the full amount at the time. The contract was canceled after the Shah of Iran was deposed in 1979, and Britain has not refunded the money since then.
Zaghari-Ratcliffe is currently serving a five-year sentence in Iran for allegedly serving as a British spy. Richard Ratcliffe, Zaghari-Ratcliffe's husband, has long said that Iran took his wife hostage to pressure the British government to settle its debts.
Wallace also stressed that Zaghari-Ratcliffe's detention in Iran is illegal and urged Iranian authorities to release her immediately with no conditions.
Neither the British government nor Iran had previously acknowledged the connection of Zaghari-Ratcliffe's case with Britain's debts.
The payment of the debt – and the interest accrued over the decades – is not likely to be a straightforward process due to the U.S. sanctions on Iran. In January, The Guardian said Sir Alan Duncan, the former Foreign Office Minister of State for Europe and Americas who became involved in Zaghari-Ratcliffe's case, proposed that the British government pay its debt into a new escrow account to sidestep U.S. sanctions.
Iran would be able to withdraw money from the account in the form of humanitarian aid to avoid violation of the U.S. sanctions if this proposal was accepted. The Foreign Office shelved his plan to resolve the debt issue after Duncanresigned in July 2019, but the plan is now being reconsidered.