December 13, 2017 | Policy Brief

Iranian Budget Hints at British Ransom Payment

December 13, 2017 | Policy Brief

Iranian Budget Hints at British Ransom Payment

This past weekend, British Foreign Minister Boris Johnson departed Tehran without securing the release of Nazanin Zaghari-Ratcliffe, the Iranian-British dual citizen being held hostage by Tehran. However, a single line in Iran’s newly released budget proposal for the coming fiscal year suggests that London and Tehran may be close to a ransom arrangement.

The ransom consists of £400 million that the Shah of Iran paid for British weapons before his ouster in 1979. As a result of the Islamic revolution that year, the UK neither delivered the weapons nor returned the shah’s payment. As a result of sanctions on Iran, British courts have ruled that the funds may not be released. The British government denies that there is any connection between negotiations about the money and negotiations concerning the release of Zaghari-Ratcliffe. An Iranian spokesman claimed that an agreement to return the £400 million is imminent, but has nothing to do with the status of Zaghari-Ratcliffe, who is employed by the Thomson Reuters Foundation, the charitable arm of the news company by that name.

In Iran’s proposed budget for the 2018-2019 Persian calendar year, Table 9 calls for the allocation of 20,000,000 million rials (about £425 million) to Iran’s defense budget. The language employed in the new budget strongly resembles a budget item from two years ago, which directed that $1.7 billion in proceeds from the settlement of disputes over foreign arms purchases be turned over to the military. In that instance, the dispute was with the United States; the payment immediately followed the release of five American hostages.

Tehran has a long history of hostage operations designed to secure cash, weapons, and other concessions from the West. Just months after the conclusion of the nuclear deal with Iran in 2015, Reuters reported that Iran had increased the rate at which it was arresting dual nationals. It currently holds 30 dual nationals, including 19 Europeans and six U.S. citizens or green card holders.

Tehran arrested Zaghari-Ratcliffe in April 2016, while she and her three-year-old daughter were visiting family in Tehran. A court subsequently sentenced her to five years in prison on trumped-up charges of trying to overthrow the regime. In November of that year, her husband Richard Ratcliffe asserted that Iran had arrested his wife and other British citizens to force repayment of the £400 million. Ratcliffe also reported that his wife’s health was deteriorating and that she had at times become suicidal.

If the UK pays the ransom Iran now demands, one should expect Tehran to arrest more dual nationals. Last month, Iran’s foreign minister, Javad Zarif, said Iranian courts have cumulatively issued $60 billion in fines against the United States. Iran’s only way to force the U.S. to pay these fines is to arrest Americans and demand new ransoms. If the UK follows the precedents of paying ransoms to Iran, Tehran’s hostages-for-cash scheme will surely continue.

Saeed Ghasseminejad is a research fellow at the Foundation for a Defense of Democracies. Follow him on Twitter @SGhasseminejad.

Follow the Foundation for Defense of Democracies on Twitter @FDD.