Defense and Foreign Office clash over £ 400million debt linked to Zaghari-Ratcliffe’s release | Department of Defense

The UK Ministry of Defense (MoD) has rejected the Foreign Office’s call to hand over £ 400million owed by the UK government to Iran from a decades-old UK tank sale, claiming that he was not prepared to give the money to the Iranian Revolutionary Guards. Corps (IRGC), the Guardian understands.

The case is important because if the money were to be transferred, as an international arbitral tribunal ruled, the imprisoned Anglo-Iranian woman Nazanin Zaghari-Ratcliffe is more likely to be released.

Ministerial sources have said that successive Defense Secretaries Sir Michael Fallon and Gavin Williamson have opposed the release of the payment, saying they are not ready to hand over the money as they claim it will end between hands of Iranian forces determined to pursue what they see as a malicious military program in Yemen, Syria and Lebanon.

This is the first time that such a clear political and legal motive has been attributed to the Defense Ministry’s refusal to hand over the money.

Iranian authorities have not made an explicit link between the unpaid payment and the fate of Zaghari-Ratcliffe, who is serving a five-year prison sentence for espionage, but privately the Iranians cite the £ 400million as the ‘one of the reasons for the lack of trust between Tehran and London.

The UK and Iran presented their legal arguments over the payment at a High Court hearing last week and a ruling is expected shortly.

The IRGC is the military wing of the Iranian government. It has been declared a terrorist organization by the United States, but not by the United Kingdom.

A source said the records would show there had been heated discussions between the Foreign Ministry and the Defense Ministry over the debt.

Some members of the government argued that the UK lost the international arbitration case, owed money and needed to show its willingness to work with Iran.

It has been pointed out that the UK is actively trying to set up a special purpose vehicle designed to facilitate trade between Iran and the UK, so it should not join a US economic blockade of Tehran. .

It has also been argued that the money could be given to Iran by the UK in a way that avoids current EU sanctions, a case lawyers for the UK government do not accept.

Lawyers for Zaghari-Ratcliffe’s husband, Richard Ratcliffe, have frequently urged UK ministers to discuss ways in which the debt could be paid to an Iranian government entity other than its Defense Department, or through humanitarian channels. Another option is for the UK Treasury’s Financial Sanctions Office to issue a license that would make the payment authorized under EU law.

Over the weekend, the veil of secrecy over the decades-old dispute was lifted when The Sunday Times obtained a court order allowing the case’s arguments to be published, a decision welcomed by Ratcliffe on Tuesday.

Court documents show that Iran asked the Treasury to approve payment from a government-owned defense company to the Central Bank of Iran. Iranian officials believe the payment can be made without violating EU sanctions.

The dispute revolves around a 1970s defense agreement between the Iranian Ministry of Defense and a now-defunct British government defense trade service, International Military Services.

IMS signed contracts in 1971 to sell over 1,500 Chieftain tanks and armored vehicles to the Shah of Iran. The contracts were canceled after the shah’s dismissal in the 1979 revolution, but Iran had already paid for the undelivered tanks and demanded its reimbursement.

It won an arbitration case before the Hague-based international chambers of commerce in May 2001 for repayment of funds, but IMS, acting on behalf of the UK government, appealed the size of the settlement.

To avoid contempt of court charges, the IMS agreed in December 2002 to pay the High Court money as security, but there is now a dispute over the interest to be paid on the sum. In addition, the Defense Ministry said that even if an agreement on the amount to be paid is reached, the money could not be turned over to Iran’s military sales branch because the organization is under sanctions from Iran. the EU.

Foreign Secretary Jeremy Hunt said there had never been a government policy to keep hearings private, but rather it was normal legal practice for such cases to be arbitration takes place in private. “We are very happy that this is public,” he told BBC Radio 4’s Today program on Tuesday.

Hunt, who claimed Zaghari-Ratcliffe was being used as a diplomatic pawn in a larger dispute between Iran and the UK, appeared to compare any forgiveness of debt to ransom money.

“The problem is, if you pay a ransom to someone who’s a hostage, all that happens is you could get that hostage out, but the next time they want something, they’ll just take it.” someone else held hostage. This is the riddle we have.

Ratcliffe supporters have said Hunt’s description of the payment as a ransom is surprising given the government acknowledges that a payment is due and it predates the Zaghari-Ratcliffe case by more than a decade.

Zaghari-Ractliffe was sentenced in Iran in September 2016 for espionage, which she denies.

Ratcliffe said until the Sunday Times intervened, the government would not even tell Parliament on the day of the hearing. The ministers also gave a series of written replies insisting that the procedure must remain private and confidential since it is an arbitration award.

Ratcliffe said the case “matters to us because we have been explicitly told that we are linked to this court case.” We get the impression that we are a very explicit bargaining chip that is being used.

During a debate in Westminster in March 2014, Ben Wallace, who was then a backbench MP but is now Security Secretary, called Britain’s handling of the case “un-British because it has been marred by double play and obscuration “.

During his tenure as Foreign Secretary, Boris Johnson had informed selective reporters that the money would be paid, but then found he could not deliver on his pledge due to resistance from lawyers for the government and the Ministry of Justice. Defense.