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US says UK repaying Iran old debt is a 'sovereign decision'

The decades-old $556m debt is linked to the imprisonment of Nazanin Zaghari-Ratcliffe, a British aid worker held in Iran since 2016
US Secretary of State Tony Blinken says Washington has demonstrated 'seriousness' in talks to revive Iran deal (Reuters/File photo)

US Secretary of State Tony Blinken has hinted that Washington might not stand in the way of Britain it wants to repay a decades-old $556m debt to Iran, describing the possible move as a "sovereign decision" by London.

Last week, an unidentified Iranian official was quoted by the state TV as linking the debt, stemming from an arms deal with Iran's shah that was cancelled after the 1979 Islamic Revolution, to the release of Nazanin Zaghari-Ratcliffe, a British aid worker detained in Iran since 2016 over charges of plotting against the Iranian government.

Zaghari-Ratcliffe's husband, Richard Ratcliffe, insists that the case against his wife is a sham and being used as a bargaining chip by Tehran to secure the funds.

"It’s a sovereign decision for the United Kingdom," Blinken told BBC Radio 4 on Thursday when asked about the US position on the matter.

Current US sanctions on Iran's banking sector may stand in the way of transferring large sums of money to the Iranian government.

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UK officials have acknowledged the debt and said they are looking to repay it, but have also insisted that the release of Zaghari-Ratcliffe should be unconditional.

"It's incumbent on Iran unconditionally to release those who have been held arbitrarily and - in our view - unlawfully," UK Foreign Secretary Dominic Raab said earlier this week.

UK calls on Iran to 'unconditionally' release Zaghari-Ratcliffe
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On Monday, the UK and US governments had denied reports from Iranian state media that a deal to free Zaghari-Ratcliffe and four American prisoners in Iran was imminent.

On Sunday, Iranian state media cited unidentified officials as saying Tehran was nearing an agreement with Washington to release four Americans in exchange for freeing four Iranians jailed by the US over sanctions violations. 

The purported deal, first reported by the Hezbollah-aligned Lebanese news outlet Al-Mayadeen, could also unblock Iranian assets frozen by US sanctions, the anonymous officials have said. 

Iranian state TV has also suggested Zaghari-Ratcliffe could be freed as part of a deal with London that would see the UK pay Tehran the debt of £400m ($556m).

Both Raab and Blinken described the reports as "not accurate" at a joint press conference earlier this week.

Raab has previously expressed the UK's willingness to pay back the funds.

"We recognise the IMS [International Military Services] debt should be repaid and we're looking at arrangements for securing that," he told Times Radio over the weekend.

Nuclear talks

Reports of the prisoner swap came after a second round of talks between Iran and world powers in Vienna aimed at reviving the 2015 nuclear deal.

The multilateral deal, nixed by former US President Donald Trump, saw Iran scale back its nuclear programme in exchange for lifting sanctions against its economy.

Since Trump embarked on his "maximum pressure" campaign of sanction, Iran has been downgrading its commitments to the deal - enriching uranium far beyond the limits set by the agreement, known as the Joint Comprehensive Plan of Action (JCPOA).

On Thursday, Blinken told the BBC that the agreement dealt effectively with Iran's nuclear programme before Trump withdrew from it, adding that the current US administration is serious about reviving the pact.

"I think we’ve demonstrated our very seriousness of purpose in terms of wanting to get back into the so-called JCPOA. Compliance for compliance. And what we don’t yet know is whether Iran is prepared to make the same decision and to move forward," he said.

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