Charlotte Street Partners



The hidden costs of international debt

Written by Katie Armour, Senior associate 
Edited by Tom Gillingham, associate partner
28 April 2021

Good morning,

Last night Richard Ratcliffe said that his wife, the British-Iranian dual national Nazanin Zaghari-Ratcliffe, felt “no grounds for hope” after watching the House of Commons debate on her prolonged detainment in Iran.

After five years in jail on arbitrary charges of spying, the Iranian authorities announced on Monday that Zaghari-Ratcliffe would face more time in prison. She was sentenced to a further year’s travel ban and a year in prison for her involvement in “propaganda against the regime”.
Most people know this as a cruel story about unfair imprisonment, mental distress, family separation and a little girl who is growing up without her mum. It is all of those things. But it’s also a story of diplomacy, debt and international arms deals.
One woman’s fortunes have become inextricably and inexplicably tied to a dispute between nations, where a change in one case prompts a retaliatory change in the other. Once you see it you can’t stop.
In the early 1970s the Shah of Iran put in an order for 1,500 British battle tanks. He paid upfront, but only 185 were delivered to Tehran before the Iranian revolution began.
As a result, the British government owes Iran just shy of £400m, a debt the current UK defence secretary acknowledges, but the two countries are now 30 years into legal disputes and there is no resolution in sight. Iranian historian Professor Ali Ansari said: “Any debtor will always drag their feet but London has dragged this out spectacularly”.
Earlier this month the current round of legal tussles was delayed for the eleventh time since it was introduced in British courts in 2013 and politicians aren’t blind to the timings.
Jeremy Hunt wore a face mask made by Zaghari-Ratcliffe in parliament yesterday and pushed the government to set out plans to counter this “hostage diplomacy”, saying that without concrete action it was “all bark and no bite”. Tom Tugendhat echoed his sentiment and asked ministers to explore the possible applications of the Magnitsky Act against the Iranian revolutionary guard.
Zaghari-Ratcliffe isn’t the only dual British and Iranian national who has found her case tied up in bargaining outwith her control, but her case is particularly well known and her freedom is now being tied to bigger and bigger asks.
Over the last year we’ve got used to quick solutions to complex problems, with vaccines sped through development stages and arenas transformed into hospitals in a matter of days. That leaves you thinking there are undoubtedly innovative ways to pay back this arms debt and not leave an individual serving the debt of a state.
The UK government needs to sort this out swiftly and find a way to return hope to the situation. As it stands, Richard Ratcliffe warns “there will be many more Nazanins.”


In an interview with ITV news yesterday, Tony Blair questioned whether Nicola Sturgeon would have a mandate for a second independence referendum if she won a majority government in Holyrood. The former prime minister argued that Scots didn’t want the “disruption” but warned it may become “difficult” for Boris Johnson to avoid a second vote if “opinion looks as though it is fixed”. Tony Blair suggested there should have been more focus from unionist politicians on emphasising “the enormous things that the different countries in the United Kingdom have in common”. (£)
Arlene Foster’s position as leader of the Democratic Unionist party is in jeopardy after reports that a letter of no confident in her leadership has been circulated Democratic Unionist Party MPs and Northern Ireland Assembly members. The BBC understand that 22 members of the legislative assembly, four MPs and one peer have already signed the letter. A separate letter has also been sent by DUP councillors to the party chairman, Lord Morrow, expressing their “severe worry” about the state of both the party and the country.
Former chancellor of the exchequer Alistair Darling is reported to have turned down an offer to sit on a trust to refurbish Number 10 Downing Street, citing concerns about the potential for donors to expect political favours in return. Darling believed the focus was to maintain state rooms and offices. It is understood he advised that donors could expect political favours, access to the prime minister, peerages, honours or tours of the property.

Business and economy

The maker of Crocs shoes has reported record sales rises of 64% in the first three months of 2021 compared to the same period last year. The jump in demand is being attributed to Crocs being the “it shoe” for the pandemic to accompany loungewear in lockdown. The company now intends to focus on celebrity and social campaigns in Asia where it projects the largest long-term growth opportunities.
Alphabet, the company that owns Google and YouTube, has doubled its profits from digital advertising during the pandemic as people across the world have spent more time online. The technology group’s revenues jumped 34 per cent to $55.31 billion in a record-breaking first quarter, lifting net profits to $17.93 billion. Chief executive Satya Nadella said: “Over a year into the pandemic, digital adoption curves aren’t slowing down. They’re accelerating and it’s just the beginning.”

Columns of note

In The Times today, Alice Thomson explores the revelations that the prime minister’s controversial house renovations were prompted by a dislike for the existing furniture, which was described as a “John Lewis nightmare“. She suggests Boris Johnson’s dishevelled appearance and tastes over recent years have been “mildly endearing” but that this obsession with wallpaper transforms him into an “unappealing snob”. She goes on to argue that portraying John Lewis as anything less than aspirational makes the prime minister appear very out of touch. (£)

In The Guardian’s Today in Focus podcast, Anushka Asthana explores the devastating second wave of covid gripping India in an episode fittingly titled India’s covid disaster: a crisis for the world. The programme is a heartbreaking update on just how serious the situation is, with Indian hospitals turning away prospective patients amid shortages of essential medicines and oxygen. It’s a tough but important listen.

Cartoon source: The Times


What happened yesterday? 

The UK is expecting a positive week as restrictions begin to ease in England. From today non-essential shops, gyms, hairdressers and hospitality with outdoor areas will reopen to customers.

Spectators will take interest this week in US defence secretary Lloyd Austin’s visit to Germany and further afield in the retiral of 89-year-old Raul Castro in Cuba, who is set to cede power to a younger generation on Friday when the Communist party congress meets.

In corporate activity, investors will be watching closely as JPMorgan Chase and Citigroup report this week. Senior executives at both companies suggested in January that “the tide would turn” as they had healthy pipelines of investment.

Results from Tesco and luxury brand owner LVMH will also be ones to watch this week.

In company news: 

BP reported stronger results than expected from its first quarter due to higher oil prices, achieving its debt reduction target ahead of schedule and announcing it would resume share buybacks in the second quarter up to the value of $500m. Its shares, however, closed 0.42% down.
Software firm Aveva dropped by 5.43% despite reporting a double-digit revenue growth for the second half of its financial year.
HSBC’s share price rose by 4.18% after its first quarter profits more than doubled compared to a year ago.

What’s happening today?

Lsl Prop
Propty Franchis

Ab Dynamics

Q1 Results

Trading Announcements
1Spatial Holdings

Interim Management Statement 

British American Tobacco
FDM Group
Global Inva
Grafton Group
Greencoat UK Wind
Hutchison China
Krm22 Plc
Lancashire oldings
Mhp Reg S
Mobius Investment
Natwest Group
Pershing Square Holdings
Pershing Square $
Premier Miton
RPS Group
Smithson Invest

Eurasia Mining
Fondul Propretatea
Electrica Regs

Fondul Propretatea
Electrica Regs

Final Dividend Payment Date
Xp Power

Interim Dividend Payment Date 
Close Bros
M&g Plc

Source: Financial Times

did you know

The use of wallpaper can be traced back to the 16th century when it was used to decorate the inside of cupboards in merchants’ houses (Source: V&A)

Parliamentary highlights

House of Commons

Oral questions

Prime minister’s questions

Urgent question
Support for the Indian government 

Ten Minute Rule motion
Environment (Regulation) 

Draft double taxation relief
Corporate insolvency and governance
House of Commons report on the independent complaints and grievance system  

National Minimum Wage enforcement 

Westminster Hall debate
Proposed closure of GKN Automotive plant in Birmingham
Extending redundancy protection for women and new parents
British meat and dairy products
Protecting consumers from online scams
District heat networks

House of Lords 

Oral questions
Citizens’ rights in Northern Ireland
Political situation in Zimbabwe
Care home occupancy rate
Flight passengers crossing the border into Northern Ireland 

Private Notice question
Response to the sentencing of Nazanin Zagari-Ratcliffe 

Prisons (Substance Testing) Bill
Botulinum Toxin and Cosmetic Fillers (Children) Bill
Education (Guidance about Costs of School Uniforms) Bill
Animal Welfare (Sentencing) Bill
National Security and Investment Bill 

Orders and regulations
Abortion (Northern Ireland) Regulations 2021 

Financial Services Bill 

Post Office Court of Appeal judgement
Carrier strike group deployment

Scottish Parliament 

The Scottish parliament will remain in recess ahead of the election on 6 May.

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