Campaigners reveal extent of British support to the Shah’s Iran

Liberal Democrats fail to follow Norway’s debt audit lead.

A British made Chieftan tank on display in the UK (Andrew Skudder, 2005, Flickr)
A British made Chieftan tank on display in the UK (Andrew Skudder, 2005, Flickr)

Documents released under the freedom of information act to Jubilee Debt Campaign have revealed that all of the debt the UK claims from Iran comes from loans to the Shah to buy Rapier missiles and Chieftan tanks. The loans were given in the 1970s, when Iran was ruled by the oppressive and autocratic Shah. Following the revolution in 1979, the new Iranian government stopped paying the debt, but the UK government still claims £28 million, plus an unknown amount of interest accrued over 34 years, is owed.

Between 2004 and 2006, the UK government guaranteed £178 million of loans to the Iranian government to buy British exports for gas and oil developments. By backing loans to a government which had not agreed to pay previous debts, this broke the government’s own rules.

The UK government continues to back loans to repressive regimes to buy arms. In 2012/13, Vince Cable’s UK Export Finance guaranteed £2 billion of loans to Oman to buy Typhoon fighter aircraft.

Tim Jones, policy officer at Jubilee Debt Campaign, said:

“There is no reason the Iranian people should ever repay unjust loans to the Shah for arms used to repress them. Neither should the UK government continue to back damaging loans, whether for oil drilling in Iran or arms sales to repressive regimes in the Middle East. Despite making promises to change this system, Vince Cable and the Liberal Democrats continue to demand the payment of unjust debt, whilst undermining human rights with new damaging loans.”

The Liberal Democrats have a policy to “conduct our own audit of all existing UK government and commercial debts, ruling invalid any past lending that was recklessly given to dictators known not to be committed to spend the loans on development”. However, Vince Cable has refused to hold an audit into the debt since being in charge of the department responsible, despite 198 MPs calling on him to do so, including virtually all of his party’s backbenchers. An All-Party Parliamentary Inquiry has also called on him to hold an audit into the debts.

In August, the Norwegian government released the first ever official audit by a creditor into the debts owed to it. The Scandanavian country has previously cancelled debts for loans for ship exports because the projects damaged development in the country’s concerned.

Tim Jones continued:

“Norway has shown it is possible for a country to take responsibility for its past debts. But Norway’s debts have nothing on the British government, which has made a speciality of arming the most brutal dictators in the world, and making the people of those countries pay for it.”

In November 2012, the UK government for the first time revealed information on the origin of debts owed by developing countries, but this specifically excluded Iran. The documents revealed that:

  • Three-quarters of Indonesia’s debt comes from arms sales to dictator General Suharto
  • One-quarter of Egypt’s debt comes from arms sales to dictator General Mubarak and his predecessor
  • Over-half of Ecuador’s debt is from arms sales

Documents released under freedom of information requests have now revealed that the arms sales to Ecuador included loans for the military junta in the 1970s to buy Jaguar fighter aircraft. The UK government kept lending Ecuador money for arms sales into the 1980s, even though the government had already stopped paying for previous loans because their debt was so big. Ecuador has paid around £40 million to the UK government since 2005, but still has around £30 million left to pay between now and 2018.


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