Prevention of Nuclear Proliferation

Ben Wallace Excerpts

Tuesday 13th December 2011 Commons Chamber

[Mr Hoban]

The Government bore in mind when making their decision the strong concerns raised by the IAEA in its November report. Indeed, the way in which it expressed them marked a step change in its level of concern compared with previous quarterly reports. The increase in concern on the part of the Financial Action Task Force about how financial systems could be used to finance terrorist acts or in other areas led to the Government’s decision to move, which was an important thing to do. It is a proportionate response to the risk posed by Iran to require the UK financial sector to cease all business relationships and transactions with the Iranian banks and their branches and subsidiaries, including the Central Bank of Iran.

[Mr Ben Wallace (Wyre and Preston North) (Con)]

Can my hon. Friend perhaps answer a technical question relating to the Treasury’s responsibilities? Is the United Kingdom in the correct legal position unilaterally to stop banks being used in trade with Iran, or could we find UK companies that abide by the European Union ruling or law, which still allows that, taking the UK Government to court to allow them to continue using those banks?

[Mr Hoban]

We are acting under powers that were put on the statute book by the previous Government. My hon. Friend will be aware that there is a licensing regime in place, and some licences have already been issued on a general basis—there are applications that I shall perhaps turn to a little later when dealing with specific examples. Permission has been given on a general basis to enable transactions to be completed, for example, so there is a regime in place. However, if my hon. Friend has particular concerns, I would encourage him to engage with Treasury officials to take them forward. I know that my hon. Friend, as chairman of the British-Iranian all-party group, has a clear interest in this subject. If there are particular concerns of which businesses are aware, I encourage them to talk to us about them.

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[Mr Ben Wallace (Wyre and Preston North) (Con)]

May I declare an interest, as co-chair of the all-party group on Iran? I apologise to you, Mr Deputy Speaker, for the fact that I shall have to leave before the conclusion of the debate as I have to chair the group’s meeting on The Daily Telegraph versus The Guardian on the future of Iran, which we hope will be an entertaining event.

I would like to put on the record why I support the Government’s attempt to impose sanctions on financial transactions coming out of Iran. My support is not unqualified, but I support the aims and ambitions. It is absolutely clear that in the past decade or so Iran has used a plethora of its banking network to fund Hezbollah and other organisations, and to try to acquire conventional and perhaps potential nuclear parts for its programmes at home. So I understand what our Government are trying to achieve.

I would have been less supportive before June to July 2009. Before then—indeed, when I last visited Iran—whatever we may have thought of the Iranian Government, they ruled by consent, and attempts were made by a number of senior members of the Iranian Government to reform Iran. Unfortunately, after President Ahmadinejad’s last election, we have seen a clear move away from the rule of law towards a much more totalitarian state. Anyone who has contacts with the Baha’is or with mere critics of the Iranian Government will notice that these people’s human rights are constantly being exempted from the Iranian constitution under the guise of “national security”, “spying” and so on. All those traits lead me to worry about the shifting nature of the regime.

I know enough about Iranian history to put aside the rhetoric. Death to America day is still an annual event in the Iranian calendar and has been since 1981, but let us not forget that before that there were plenty of other annual events, under both shahs and even before that, which related to us, too. I put aside the rhetoric because it is a regular occurrence that the British embassy is abused. Every Tuesday rent-a-mob turn up on a bus and stones are thrown over the wall. When I was there they were pelting stones into the garden. Under the previous Government it was invaded twice, although certainly not as seriously, and without any threat. We should be in no doubt that that is certainly co-ordinated.

The antagonism towards the British embassy goes back hundreds of years to the time of the “great game”. More recently, in the ’80s, the street running parallel to it was renamed Bobby Sands avenue, just to annoy us. It is a game the Iranians play, I am afraid, and one could say that part of the Iranians’ problem is that they have too much history, not too little, to draw on.

I shall push aside the rhetoric, however, and focus on what is more worrying: the nature of the regime. I can understand that it is certainly time to send a strong message that the rule of law is the best protection for the Iranian people and the Iranian street. I mean the rule of law according to their constitution not ours, not a rule of law that we seek to impose on them. Their constitution is actually one of the few in the middle east to give automatic rights to Jews, Christians and a range of other peoples. By making those exemptions, they show the danger of the nature of regime that the west and the rest of the United Nations should seek to put right.

[Mr Brian Binley (Northampton South) (Con)]

I thank my hon. Friend for giving way, and I shall be very brief. Does not my hon. Friend agree that although the Iranians may have the constitution in place, they certainly do not act as though a constitution were in place? Therein lies the problem with human rights.

[Mr Wallace]

Absolutely. They do so less and less each day, and that is one of the major regrets for someone such as me who believes that Iran has a great future and that the west often looks to the wrong allies in the middle east in the long term. I disagree, however, with the position on the Mujahedin-e Khalq. I believe that if one of the few things the Iranians and the Americans both agree on is that the MEK should be a proscribed terrorist organisation, we should perhaps maintain that.

I have some specific questions for the Minister about the sanctions. Why did he choose to include the Central Bank of Iran? A number of cases have been brought to my attention, including one from a company in Cambridge that has gone through five regimes of British export licences, and has European as well as Treasury approval to sell engineering goods to Iran. It is owed £12 million for goods already delivered and the sanctions—either those effectively extraterritorially imposed by the United States or our own—have prevented it from getting its money. I suspect—in fact, I know—that that threatens its very viability. When I went to visit Treasury officials, the answer to the problem was that they did not really get engaged in commercial-to-commercial decisions. I am afraid that the Treasury’s decisions have caused the problem, and in the past, companies—including American companies—have used a corridor from central bank to central bank to clear certain moneys. Not so long ago, JP Morgan in New York received money from Iranians that was owed to an American/UK contractor. If they can do it, so can we.

[Bob Stewart (Beckenham) (Con)]

The only question I would ask is: would not the Iranians consider it to be part of the irritation factor not to use such a channel, if there was one? They could stop that payment, which is owed to one of our companies, just to irritate us further, even if there was such an avenue.

[Mr Wallace]

My hon. Friend would have a point if it was not for the fact that at the moment, the Iranians need our goods more than we need theirs. I meet plenty of day-to-day Iranians in business and everything else—not in my business, as I do not have any such interests—who try to do the right thing and live by the rule of law.

Secondly, I ask the Minister what our European colleagues are doing. Historically, Germany and Italy are some of the biggest traders with Iran, and my worry is that the strength of the E3 plus 3 was unity. That was its strength: we brought together the three European powers of Britain, Germany and France along with China, Russia and America. For every round of sanctions that has come before this House or the international community, there have been fewer and fewer signatories to it. As the right hon. Member for Blackburn (Mr Straw) pointed out, as we get fewer and fewer signatories we are at risk of undermining the message that says that we all agree that Iran should not be progressing along such a path.

My worry is that the Iranians are super-sensitive to such differences. They are one of the greatest trading nations in history, of course, and my word, are they canny! When I was there, there was no shortage of some of the things that were subject to sanctions. They used to use the Bahrainis as one of the greatest routes for money, goods, new cars and so on. Without Germany and without Italy, there is a real danger that we could be left high and dry.

[Mr Straw]

May I, as one of the three Foreign Ministers who got the arrangement going in the middle of 2003, underline the hon. Gentleman’s point about the E3? There were two huge advantages. One was that we were not the United States, although we consulted them, and the second was that because France, Germany and the UK were working together, each of us could reach out to a series of other allies. We did not just get three rather large countries on board but many others, too.

[Mr Wallace]

It is absolutely true that Russia and China often need to know that the west is united before they move from an agnostic position to a proactive one. One worry I have about the full closure of the embassy in Tehran is the fact that I have seen the Chinese and Russian embassies in Tehran, and the Chinese and the Russians will not waste any time in becoming the prominent voice of the E3 plus 3. I know that we have not shut down diplomatic relations, and I reiterate the importance of that.

Another thing to which the Iranians will be hypersensitive is the charge of hypocrisy in the middle east. We must always be aware of it. Pakistan is one of their neighbours, and it not only started a nuclear programme but distributed it. In fact, Mr Khan is probably the one responsible for giving the Iranian programme a bit of a boost. The response to that is that the west has done everything other than punish the Pakistanis for not being a signatory of the nuclear non-proliferation pact: therein lies part of the problem. I noticed last week that Australia has agreed to sell uranium to India. India is not a signatory of the nuclear non-proliferation pact and is not going by that rule, and although the nature of the Indian Government is entirely different, the Iranians are obsessed with treaties and they can see what is happening. We must be consistent.

The other issue is Israel, of course. This is not about the conflict or whether it is right or wrong, but Israel is another country in the middle east with a nuclear weapon that does not sign up to the UN nuclear non-proliferation regime at all. That will be used against us. As long as we are consistent and say to Iran that it must comply, but we would also like Israel to comply, that strengthens our hand.

Thirdly—and finally, because I am aware that many people wish to speak—where will we go from here on sanctions? It is important to recognise that sanctions are part of the process of trying to bring Iran back to the rule of law, and back to attempts to solve the issue by allowing inspectors in. That would allow Iran to play a full role in the world, which it should do, and would allow the Iranian leaders to understand that we are not trying to make war with Iran but to make peace and allow it to live to its full potential. The worst thing for the Treasury and this Government would not be if the sanctions failed, but a war or military intervention that would see oil prices go through the roof. I do not think that this frail economy could survive oil at $250 a barrel.

[Several hon. Members]

rose—