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    • News
    • UK Aid

    UK payments to Iran will not count toward aid budget

    The United Kingdom government's promise that the debt repayment, vital to securing the release of hostage Nazanin Zaghari-Ratcliffe, would be used for humanitarian goods, had prompted worries it might place further pressure on the aid budget.

    By William Worley // 25 March 2022
    Nazanin Zaghari-Ratcliffe speaks during a news conference in London, following her release from detention in Iran. Photo by: Victoria Jones / Pool via Reuters

    A debt of around £400 million ($528 million) paid by the United Kingdom to Iran, which enabled the release of hostage Nazanin Zaghari-Ratcliffe last week, will not be paid from the aid budget, according to James Cleverly, minister at the Foreign, Commonwealth & Development Office.

    The Pro read:

    What more UK aid cuts could mean for climate change, health, and conflict

    Despite global instability, dire climate forecasts, and a pandemic, the U.K. development sector is bracing for more aid cuts to programs aimed at tackling these problems. Experts tell Devex why they are needed.

    The government had said previously that the money Britain used to repay Iran — a country currently under U.K. financial sanctions — would be used for humanitarian items, leading to questions in the development community about whether the funds would be drawn from coffers earmarked for development.

    But answering a parliamentary question, Cleverly clarified: “The funds used to pay this debt do not count as Official Development Assistance, but they will only be available for the purchase of humanitarian goods.

    “The IMS [International Military Services] debt has been settled on terms confidential to both parties. The payment was made in full compliance with U.K. and international sanctions and global counter-terrorism financing and anti-money laundering regulations.”

    The debt was incurred when the U.K. did not fulfill an order of tanks to Iran after the fall of the country’s then shah, Mohammad Reza Pahlavi, in 1979. It has been a key sticking point in negotiations for the release of Zaghari-Ratcliffe and Anoosheh Ashoori, another hostage who was held for nearly five years, from detention in Iran.

    Why does it matter: There is significant concern in the U.K. development sector about pressures on the ODA budget after two rounds of cuts. Had the £400 million payment to Iran been paid for using aid, it would likely have harmed further programs. £400 million is nearly the total amount of U.K. aid support for Ukraine so far.

    • Democracy, Human Rights & Governance
    • Humanitarian Aid
    • Trade & Policy
    • United Kingdom
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    About the author

    • William Worley

      William Worley@willrworley

      Will Worley is the Climate Correspondent for Devex, covering the intersection of development and climate change. He previously worked as UK Correspondent, reporting on the FCDO and British aid policy during a time of seismic reforms. Will’s extensive reporting on the UK aid cuts saw him shortlisted for ‘Specialist Journalist of the Year’ in 2021 by the British Journalism Awards. He can be reached at william.worley@devex.com.

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