Britain-Iran Relations

Seema Kennedy Excerpts

Wednesday 12th October 2016 Westminster Hall

[Seema Kennedy (South Ribble) (Con)]

I beg to move,

That this House has considered relations between Britain and Iran.

It is a great pleasure to serve once again under your chairmanship, Mr Hanson—it has been many times this week—to consider the relations of this great country with Iran. I have moved the motion because I am the first Member of this House to have Iranian heritage, although there are two Members of the House of Lords who are also from Iran.

Trading and cultural relations between Britain and Iran—or England and Persia, as they were then known—have existed since the early 17th century. The English vied with the French as some of the earliest translators of Farsi poetry into European languages; anybody who knows anything about Iranian culture knows the great cultural and symbolic nature of its poetry. In the 19th century Britain’s influence began to grow through acquiring trade concessions as a means of protecting the passage to India. At that time, there was great rivalry between Britain and Russia, with different spheres of influence in different parts of the country—Russian influence in the north, and British in the west. There were informal residencies in Iran from the mid and late 18th century until well into the 20th century, and what we now know as BP began life as the Anglo-Persian Oil Company in 1909.

There was a constitutional revolution in Iran in 1910, and at that time the revolutionaries actually took refuge in the British embassy gardens. There have been high and low points to the relationship between these two peoples throughout the 20th and 21st centuries. Since 1979 and the Islamic revolution—in just that short period—full diplomatic relations between the two countries have been resumed and broken three times. That reflects the desire for contact, relationship and dialogue between the two nations, but also the great sense of distrust that remains on both sides.

I come to this debate today with my eyes open about the reality of life in Iran. I am only here today because my family was forced to flee following the Islamic revolution, and my father had his business and our home confiscated. Many hon. Members will rightly and reasonably raise the Iranian Government’s record on human rights, women, press regulation and the treatment of minorities. Those are points of difference between the two Governments, and I am sure my hon. Friend the Minister will address them in his summing up. I want to speak instead about areas where the two nations can work together.

Last year, an historic nuclear deal was signed. I am sure that all hon. Members attending today’s debate—many of whom have spoken on the subject before—will know the background, but it is worth reiterating. From 2006 onwards a series of UN and EU sanctions was imposed on the country following the International Atomic Energy Agency’s report on Iran’s nuclear programme. The Iranian regime always claimed that its nuclear programme was entirely peaceful, but the international community was alarmed by the thought of the country having a nuclear weapon and imposed a series of sanctions in relation to the nuclear programme. By summer 2013 the sanctions were having a profound effect on the Iranian people and Hassan Rouhani, the presidential candidate, fought his campaign on having serious talks with the west and getting the sanctions lifted. On 14 July last year, China, the US, Russia, Britain, France, Germany—the P5+1—the EU and Iran announced the joint comprehensive plan of action, according to which Iran would reverse its progress towards a nuclear weapon in return for the lifting of economic sanctions.

[Alec Shelbrooke (Elmet and Rothwell) (Con)]

Does my hon. Friend agree that the success of the negotiations with Iran was based around the economic impact on normal people? Does that therefore suggest that if a more military attack had taken place, it would have united people against the west, because the economic impact would have been far greater?

[Seema Kennedy]

I think that jaw-jaw is always better than war-war, and we have to consider all options before we enter into any military action.

In January this year we reached implementation day, when it was agreed by the observing authorities that Iran had reduced its uranium stockpile, cut its capacity to enrich uranium and modified the heavy water reactor at Arak. At that point the nuclear sanctions were lifted. I will not address the rights and wrongs of the nuclear deal, as many other hon. Members can speak on that, but I contend that the deal has made the region safer.

[Jack Lopresti (Filton and Bradley Stoke) (Con)]

I congratulate my hon. Friend on securing this debate and making a very good speech. Hon. Members have spoken about the success of the nuclear deal. Iran is reported to have launched up to nine ballistic missile tests, in defiance of UN Security Council resolution 2231, since the deal was agreed in July 2015. It is still the world’s largest state sponsor of terrorism and is funding chaos, havoc and murder right across the region through its proxies. So what is my hon. Friend’s view of the success of the nuclear deal?

[Seema Kennedy]

I would say to my hon. Friend that the deal was limited to Iran’s nuclear programme. I agree that there are many points of difference between our Governments and I am sure the Minister will address them in his summing up.

The deal made the region safer by reducing the possibility of a nuclear stand-off between regional rivals at such a volatile time. It was an example of diplomacy in a part of the world where there has been too little of it.

[David Simpson (Upper Bann) (DUP)]

Whatever the rights and wrongs of the nuclear agreements, there is still the issue in Iran of persecuted minorities, especially the Christian community. Surely it is time that was addressed, as well as the nuclear side of things.

--- Later in debate ---

[Seema Kennedy]

I thank the hon. Gentleman, who always speaks very powerfully in defence of Christian minorities. As I said in my opening statement, I am not blind to what happens in Iran and the treatment of certain groups. I hope that when the Minister sums up he will address what steps Government are taking through the Foreign Office, and now through our full diplomatic relations, on that issue.

[Mr Richard Bacon (South Norfolk) (Con)]

Will my hon. Friend remind the hon. Member for Upper Bann (David Simpson) that in Iran the Majlis reserves places, not only for the Jewish community but for the Christian community, in the Majlis, so that they have a part in the legislative process. That is not well-known and is something that is rare in the middle east.

[Seema Kennedy]

My hon. Friend has made the point, and I am sure the hon. Member for Upper Bann (David Simpson) has heard it.

We cannot underestimate the wider implication of the nuclear deal for bringing Iran back into the international fold, and the joy with which the deal was greeted both on the streets of Tehran and in the wider diaspora of between 4 million and 5 million people. Shortly after that, in August, the then Foreign Secretary, my right hon. Friend the Member for Runnymede and Weybridge (Mr Hammond), visited Tehran, which is something of a feat knowing the weather at that time of year. Full diplomatic relations were resumed this September, and in the same month British Airways resumed flights to Tehran six days per week. Just a few weeks ago at the UN General Assembly, the Prime Minister met Iran’s President Rouhani, who called the joint comprehensive plan of action a basis for closer bilateral co-operation.

There are plenty of warm words between Britain and Iran, but not an awful lot has happened since implementation day. The deal promised so much to businesses in the UK that wanted to trade, and to the Iranian people who are crying out for jobs and a better standard of living. Those promises are yet to be fulfilled. Iran has great potential as a country with which to build even stronger trade and cultural links.

Literacy in Iran is 85%, and the figure rises to 97% in 18 to 24-year-olds. The country holds 10% of the world’s oil and natural gas reserves. Historically, it has suffered from low economic growth, sharp fluctuations in revenue and low productivity, which has typically led to an overdependence on oil. Of course, we see that all over the region, and I would contend that overdependence on oil is part of the region’s problem, with a restive cohort of young people who have relied far too much on hydrocarbons.

Iran is moving towards a reduced dependence on oil, as it now accounts for only 30% of Iran’s budget and, for the first time, there is a positive trade balance in non-oil goods amounting to $1 billion. The International Monetary Fund estimates that Iran’s GDP will grow by at least 4.5% over the next year, and the rial continues to strengthen. Iran is focused on reducing inflation, and has reduced the role of its central bank to facilitate that and to make exports more competitive. Inflation is down from the historic high of 59% in the mid-1990s to 8% this year.

Companies are reticent about investing in Iran even though it is a natural market for Britain to export to. There are opportunities for British trade not only in energy, but in infrastructure. Last week, the state-owned National Iranian Oil Company sold condensate to BP for the first time since implementation day. However, anyone who has travelled in Iran knows that its infrastructure is crying out for investment, and it is said that the country needs $50 billion every year to upgrade its infrastructure. There are other opportunities for exporting British goods and services, particularly training. Businesses have told me that there is a dearth of people trained in administration and management, so the country could benefit from British expertise.

The big stumbling block about which British and Iranian businesses complain—I have spoken to the Minister about this on numerous occasions—is the remaining pre-nuclear sanctions, especially those around access to finance when doing business with Iran. Any banks with United States links are banned from doing business with the country: they are rightly terrified after the $9 billion fine that was levied on BNP Paribas. Lenders are restricted to those with absolutely no dollar exposure, which is a very small pool. Will the Minister confirm what further conversations he has had with his US counterparts on reassuring US banks that they will not be subject to large fines from the US authorities?

UK Trade & Investment statements on Iran are optimistic. UKTI says:

“There is a positive outlook for UK-Iran trade relations”,

and that the UK Government

“fully supports expanding our trade relationship with Iran and we would encourage UK businesses to take advantage of the commercial opportunities that will arise”.

But the level of such trade remains unclear. Indeed, the European Union traded €6.5 billion to Iran in 2015 and imported €1.2 billion, but I was unable even to find UK-specific statistics.

On the size of cover allocated by UK Export Finance, it states that

“the total cover allocated for Iran will be under continuous review”.

Will the Minister tell us how much total cover is allocated for Iran and when will that be reviewed? Furthermore, will he confirm how much of the £50 million facility guaranteeing payments to UK professional advisory service providers advising the Government of Iran has been spent? There have been a lot of warm words but seemingly little progress on opening up the market to British businesses. How many, if any, business opportunities have been identified as a result of the memorandum of understanding signed between UKEF and the export guarantee fund of Iran?

France and Germany have led delegations to Iran, but Britain, even with the strong historical links that I outlined in my introduction, has lagged behind. I know that other hon. Members share my concerns about the effects of Brexit on Britain’s relationship with Iran.

Many of the smaller businesses that seek to trade with Iran are those run by members of the Iranian diaspora in the UK—a group of approximately 83,000 people. On behalf of that group, I pay tribute to the Minister for his role in saving Persian GCSEs and A-levels earlier this year. Knowledge of Farsi is crucial to preserving cultural heritage, and it eases the process of doing business between the two countries.

Members of the Iranian diaspora—who are, for the most part, dual nationals—are justifiably concerned about their status if they visit Iran, particularly in the fevered atmosphere leading up to next year’s presidential election and following the imprisonment of several dual nationals. Can the Minister give any guidance to dual British-Iranian nationals on their visits to Iran?

Soft power, it is always claimed, is key to British foreign policy. We are said to be the leader in soft power—[Interruption.] Somebody is laughing; I always wonder where we get these stats from as well. We should be exploiting our place in the world and our deep historical roots in the middle east to strengthen and encourage British trade with the region.

When it comes to soft power away from trade, there have always been cultural exchanges between universities, and art and cultural heritage groups. A series of exhibitions at the British Museum in 2009 were well attended and involved loans from museums in Iran. Those exchanges have continued and are an essential part of building understanding between the two peoples.

We cannot underestimate the power of cultural exchange and soft power, nor of symbolic gestures. Has the Minister’s Department considered the suggestion by the Select Committee on Foreign Affairs that the Government admit their role in the coup to overthrow Mosaddegh in exchange for an apology for the storming of the British embassy in 2011?

There is no doubt that many of our regional allies, especially members of the Gulf Co-operation Council, have been troubled by the UK’s renewed relationship with Iran, which they see as a threat to their relationship with us. However, it is not in the British national interest to see this as an either/or relationship, as that does not reflect the reality on the ground. Some 500,000 Iranians live in the United Arab Emirates, 80,000 in Kuwait, 173,000 in Bahrain and many in Saudi Arabia. The value of trade between Iran and the GCC is approximately $14.8 billion. Surely it is in the UK’s national interest to be part of that flourishing trade of people and ideas between Iran and the GCC. Is it not in our national interest to dampen down some of the fevered rhetoric between Iran and its Gulf neighbours, to unite in combating the evil death cult of Daesh and to work towards stability in the region?

Another area on which Britain and Iran have worked successfully together in the past is Afghanistan, in supporting the national unity Government and on counter-narcotics. What conversations has the Minister had with his Iranian counterparts on co-operating to defeat the Taliban in Afghanistan?

In conclusion, relations between Britain and Iran are of long standing. They are complex and often immensely frustrating. I look forward to hearing the contributions of hon. Members on both sides of the House who bring great experience, expertise and passion to this important debate.

[Several hon. Members rose—]

--- Later in debate ---

[Seema Kennedy]

I thank colleagues for their many thoughtful and interesting contributions to this debate. My hon. Friend the Member for South Norfolk (Mr Bacon) spoke with great experience about the need for more knowledge and engagement. My hon. Friend the Member for North West Hampshire (Kit Malthouse) put Iran in the wider context of Britain’s foreign policy. My hon. Friend the Member for Elmet and Rothwell (Alec Shelbrooke) said rightly that it is good that we are not here having bombed Iran in 2012. My hon. Friend the Member for Hendon (Dr Offord) always speaks powerfully and he put on the record his concerns about the treatment of women and religious minorities in Iran. I thank all hon. Members for their time. I thank the Minister for his response. I asked a number of technical questions, and I look forward to his responses to those he could not answer in his speech.

Iran is a middle east superpower and a vital key in the region’s security. All avenues of engagement and dialogue to build a bridge of understanding, to quote my hon. Friend the Member for North West Hampshire, should be pursued. Debates in this House are a vital part of such bridge building, and I thank all hon. Members who attended.

Question put and agreed to.

Resolved,

That this House has considered relations between Britain and Iran.