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Mission to Renegotiate Billion-Dollar Loan

June 2, 1986

PARIS (AP) _ A French negotiating team went to Iran Monday for talks on the $1 billion loan dispute between Paris and Tehran, a major obstacle in relations between the two countries, the Foreign Ministry announced.

French reimbursement of the money has been reported to be a condition for the release of French hostages in Lebanon, although Iran denies that repayment of the loan is linked to the hostages.

The ousted Shah Mohammed Reza Pahlavi lent the money to a European uranium enrichment consortium known as Eurodif for a fuel processing plant.

After making the loan, the Shah announced plans for Iran to build a uranium enrichment plant with French help - all part of a broad effort by the Shah to shift to alternative energy sources in order to conserve oil reserves.

Eurodif still exists, but Iran pulled out after the revolution. Iran’s Islamic regime has been demanding reimbursement since it came to power in 1979.

Negotiations which started in December 1985 and continued in February this year during a visit by French experts to Tehran ″are being followed up on a new basis with the intention of reaching an accord acceptable to the two countries,″ a Foreign Ministry spokesman said. He could not be identified in keeping with French government regulations.

The new mission follows the May 21-23 visit to France by Iranian Vice Premier Ali Reza Moayeri and marks ″the new climate″ that has developed since, the spokesman said.

During his visit, Moayeri indicated that negotiations over the money were advancing. Outlining conditions for better relations, he called on France to extradite certain Iranian exile leaders based here and asked that France not sign further arms contracts with Iraq, Iran’s enemy in the Persian Gulf war.

There have been reports that those are also the conditions for Iran to take action in helping to free nine French hostages in Lebanon, four of whom are allegedly being held by the pro-Iranian Islamic Jihad.

Moayeri said during his visit that Iran has no relations with the kidnappers but would use its influence to try to resolve the affair.

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