France and Iran have settled a dispute over French repayment of a $1 billion loan that has been a major obstacle to normalizing relations, the French Foreign Ministry announced Oct. 29. The agreement ended several months of negotiations. French officials have repeatedly said they hoped that once the case was settled, Iran would use its influence to help free French hostages held by pro-Iranian Shiite Muslims in Lebanon.
A Foreign Ministry official said the two delegations initialed the text of an agreement in Paris this past week. The official, who spoke on condition of anonymity, said the agreement would later be signed by the leaders of the two countries. He did not provide details of the settlement.
Iran granted the loan in 1974 to a European consortium with majority French participation for a uranium enrichment project known as Eurodif. Iran also had an indirect stake in Eurodif.
Relations between France and Iran became strained in 1979 when Shah Mohammad Reza Pahlavi was overthrown by the Ayatollah Ruhollah Khomeini. Khomeini installed a Muslim fundamentalist regime.
At that time, the Khomeini regime decided to curtail Iran's nuclear program and renounce its contractual obligations. In response, a commercial court in Paris froze Iran's stake in the project and suspended repayment of the Iranian loan.