Zaghari-Ratcliffe: UK acknowledges debt owed to Iran over Shah’s tank order

The defence secretary, Ben Wallace, has for the first time acknowledged that he is actively seeking to pay a debt to the Iranian government that could finally help to secure the release of British dual nationals including Nazanin Zaghari-Ratcliffe.

Wallace assured lawyers acting for the families that the government was exploring every legal avenue to pay the debt, which for the first time he formally acknowledged the government owes.

The admission came in a letter to the lawyers acting for Zaghari-Ratcliffe, who has been detained in Iran in jail and then house arrest since 2016.

The UK is thought to owe as much as £400m to the Iranian government arising from the non-delivery of Chieftain tanks ordered by the Shah of Iran before his overthrow in 1979.

International arbitration in 2008 ruled the UK owed the debt, but in subsequent protracted court battles, lawyers acting for International Military Services, the Ministry of Defence’s now-defunct arms sales agency, have questioned not only the debt’s size, but at times whether any debt was payable.

Neither Iran nor the UK government formally acknowledges that the release of UK dual nationals in Iranian jails is linked to the non-payment of the debt, although the issue has been raised by Iranian judges and is privately seen as the chief roadblock.

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In his letter, Wallace writes: “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.”Any payment must not, however, fall foul of EU or possibly US sanctions.Wallace, as defence secretary, is the 99% shareholder of IMS and so the lead decision-maker.