Britain tried to strike a “grand bargain” to secure the release of dual citizens jailed in Iran and end outstanding financial disputes to capitalise on improved relations after the 2015 nuclear deal, former foreign secretary Philip Hammond said on Tuesday.
Mr Hammond, who headed the UK Foreign Office until July 2016, said that he sought to exploit a “mood of renewed engagement” between the two countries after the deal that lifted sanctions on Iran in return for ending its ambitions to secure a nuclear weapon.
The two countries had a series of outstanding disputes, including a lack of European investment and a “bizarre” compensation claim, in which Iran sought “hundreds of millions of pounds” from Britain for chopping down trees in a diplomatic compound.
Iran had also accused the UK of posting high-powered CCTV on its embassy in Tehran to collect information from outside of the compound.
Mr Hammond said he ordered officials in January 2016 to pursue “every available channel” to free dual citizens held in Iran, but three months later, Nazanin Zaghari-Ratcliffe was arrested at Tehran's international airport and was not allowed to leave for another six years.
He said that shortly afterwards, Iran informed the UK that officials would no longer deal with the cases through Iran’s Ministry of Foreign Affairs but through another ministry with closer ties to the Islamic Revolutionary Guard Corps.
This was “very bad news for us”, said Mr Hammond.
The former foreign secretary made his remarks while giving evidence before MPs charged with investigating the UK’s response to state-level hostage taking — with a focus on Iran — following the release in March of British citizens Ms Zaghari-Ratcliffe and Anoosheh Ashoori.
He said that Iran later became frustrated that the UK had not helped to open up a new era of trade and investment after striking the nuclear deal.
Former US president Donald Trump’s electoral victory in 2016 also dampened hopes of a new period of improved relations, he said.
“The mood at the top of the Foreign Office was we had actually achieved something in negotiations” over the Joint Comprehensive Plan of Action (JCPOA), Mr Hammond told the Foreign Affairs Committee.
“There was an opportunity to try to reset relations in the wake of Iran giving up the ambition of a nuclear weapon,” he said.
“There was in early 2016 an attempt by the [Foreign Office] to try to craft a grand bargain sort of approach that would deal with all the outstanding issues and try to exploit a mood of perhaps renewed engagement.”
The grievances included a 1970s-era debt owed by Britain to Iran over an aborted arms deal that ground through the courts for decades.
It was only settled this year — clearing the way for Ms Zaghari-Ratcliffe and Anoosheh Ashoori to return to the UK after spending years in Iranian jails on trumped-up security charges.
Mr Hammond left the Foreign Office in July 2016 to run the UK Treasury — which has been accused of dragging its feet in agreeing to settle the debt. He said he had long agreed that the debt should be paid but said “legal and technical” problems made it a complex process.
Banks were wary of paying the debt in case they fell foul of the US government’s “maximum pressure” campaign against Iran that began under Mr Trump.
The former chancellor — who left office in 2019 — said that he believed the new administration of President Joe Biden, with its less hardline approach to Iran, had cleared the way for the UK to settle the debt without angering its closest ally.