LONDON (Dispatches) -- The Iranian ambassador to the UK says the British government is taking a new approach to the payment of an outstanding £400 million debt it owes by to Iran.
Hamid Baeidinejad said the two sides were looking at novel ways for the debt to be paid.
It is the first time a UK or Iranian official has admitted in public that talks on the matter are underway, including the possibility of the debt being paid off through medicines and humanitarian goods.
Interviewed by the Iranian newspaper Etemad, Baeidinejad said the previous UK foreign secretary, Jeremy Hunt, had taken a counter-productive, aggressive approach to the issue, but Boris Johnson’s new government was adopting a different line.
Baeidinejad said the size and the interest was agreed between the two parties, and it was natural for discussions to start from how the payment could be made.
The UK says it cannot make the payment since the Iranian ministry of defense, to which the sum is owed, is subject to EU sanctions. Similarly, the pervasive U.S. sanctions make it difficult to make a payment to Iran’s central bank.
Baeidinejad added: "The legal process of this long-running case, which has been going on for more than 50 years, is nearing its end. The court has ordered the British government to pay the Iranian debt plus interest, and this cannot be changed. At the same time, the opposing lawyers have tried to use every legal opportunity to delay the practical execution of the court’s decision.”
He said: "It is natural to come up with ideas for the type of payment as the time comes to pay off the debt, given the complexities and banking problems. The Islamic Republic of Iran also has ideas for expediting the debt. Finalizing the payment method requires a mutual agreement, and talks are underway to determine the details of how the agreements will be implemented.”
The debt is related to an arms deal signed during the 1970s. The money was paid by the former Shah of Iran for 1,750 Chieftain tanks and other vehicles, almost none of which was eventually delivered.