A bargaining chip.

A UK flagged oil tanker has been hijacked in the Gulf by Iran and everyone is getting very excited about it.   

But why the excitement I ask.  This is, after all, simply the next instalment in a chapter of an ancient book that goes back to Biblical days.  This current instalment began 48 years ago when I was still at school in 1971.  Back then Iran were our best friends, sort of.  So good a friend were they that we agreed to sell them 1,500 Chieftain tanks.  Quite an order.  And the bill for the Shah of Iran was a cool £650m.   Adjusted for inflation that is a heady £4,103m in today’s money. 

But then things began to go a bit wrong in 1979.  And before we knew it the Shah was no longer ruler of Iran.  The new boys in town were headed by the Ayatollah Khomeini.   To popular acclaim by the people of Iran, (at least, that’s how some write the history of the period), he was back on an Air France flight from Paris where he had been in exile.  

This provided the UK with a bit of a problem.  The Ayatollah really wasn’t our kind of guy.  So we decided we wouldn’t give him the balance of the tanks we were yet to deliver.   The contract was cancelled.   Britain had managed to deliver 185 tanks to Tehran up to this point.  Unfortunately for Iran the Shah had paid it all up front, rather than on delivery.  Not surprisingly Iran said “Ok, give us our money back for the tanks you haven’t delivered”.  Reasonable?  Not to the then UK government. So we refused to give them back the balance of £450m for the undelivered tanks.  That is £2,840m in today's money. Add to that any interest that could  be also added and you have a pretty big figure.

Iran won an arbitration case at the Hague-based International Chambers of Commerce in May 2001 for repayment of the fund, a legally binding judgement.
  
So all of a sudden the oil tanker makes sense.  So does the jailed journalist Nazanin Zaghari-Ratcliffe.   Iran is owed a lot of money by the UK.  

The Iranian authorities have never made an explicit link between the outstanding payment and the fate of Zaghari-Ratcliffe, who is serving a five-year jail sentence for espionage, but in private Iranians cite the money owed as one reason for the lack of trust between Tehran and London.   

So today they have added a bargaining chip to their armoury to fight for the money they are legally owed.  An oil tanker.  

Who can blame them?