In 1976, the Iranian government purchased 1,500 Chieftain tanks from the UK in a staggering deal. Iran never received the tanks, and the British Government admitted in 2017 it owes Iran up to £400 million from the unfulfilled deal. But plans to repay Iran will likely anger Mr Trump, who has seen explosive tensions this year between the US and the Middle Eastern country.
Defence Secretary Ben Wallace acknowledged last week the UK Government is seeking to pay off the debt.
The attempt at paying off the Chieftain tank debt comes as the UK is looking to secure the release of British dual nationals from Iran.
Mr Wallace made the admission in a letter to Nazanin Zaghari-Ratcliffe’s lawyers.
Mrs Zaghari-Ratcliffe has been detained in Iran since 2016 for reportedly “plotting to topple the Iranian government”.
He said: “With regard to IMS Ltd and the outstanding legal dispute the government acknowledges there is a debt to be paid and continues to explore every legal avenue for the lawful discharge of that debt.”
Mr Wallace has long believed the UK should pay back the debt owed to Iran.
In 2014, he said leaving the debt unsettled would be “un-British, double-dealing and obfuscatory”.
While neither Iran or the UK have said the payment is needed to free British dual nationals, Iranian judges have raised the debt as an issue and privately see it as the chief roadblock in release talks.
The US government has taken a firm stance in recent months against lifting sanctions and an arms embargo from Iran.
Mike Pompeo, US Secretary of State, was disappointed last month with “freedom-loving” Britain’s refusal to back America’s United Nations proposal to extend Iran’s arms embargo.
In an interview with the Spectator, he said: “You know, I regret it… We need nations to step up and do the right thing, whether that’s the United Kingdom or the French, the Germans, or others.”
The US’ proposal was defeated by 13 UN member states to 2, and was followed by Mr Trump attempting to force sanctions via a “snapback” policy in the initial nuclear deal with Iran.
The US similarly saw the release of American hostages in 2016 after paying back debt owed to the Iranian government.
Iran paid the US for 300 F-16 fighter jets, which were never delivered due to the 1979 Iranian Revolution.
Barack Obama, then-President, secretly delivered $400 million to Tehran to pay off a debt from an unfulfilled arms deal.
Five Americans were released concurrently with the payment.