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One woman, a travel blogger, was arrested this summer while visiting with her Australian fiancée. The second woman, a university lecturer, was captured earlier and has reportedly been sentenced to 10 years in prison. They have not been named at the request of the UK Foreign Office.
Sources said Tehran sees the women as bargaining chips to secure the release of Negar Ghodskani, a 40-year-old Iranian woman facing jail in the US after pleading guilty to a conspiracy to export prohibited technology. Ghodskani was arrested in Australia in 2017 at the request of the US government and gave birth to a baby boy while in custody in Adelaide. She was extradited to the US and now faces five years in federal prison.
Iran's government has repeatedly called for her release. Javad Zarif, the Iranian foreign minister, publicly suggested she could be swapped in exchange for Nazanin Zaghari-Ratcliffe, the British-Iranian mother imprisoned in Tehran.
"Nobody talks about this lady in Australia who gave birth to a child in prison," Mr Zarif said in April.
"I put this offer on the table publicly now: exchange them."
Australia's government is taking the lead in dealing with Tehran over the case.
Iran is believed to be considering leveraging at least one of the British-Australian women in an effort to free Ghodskani from US prison.
Ben Wallace, Britain's defence secretary, yesterday called for the women's release and said Iran "should behave like any other civilisation in the world" by following the rule of law.
The blogger and her fiancée were arrested in July after flying a drone without a licence, reported Manoto, a UK-based Iranian news site.
Both women are understood to be being held in Evin Prison, the Tehran facility where Mrs Zaghari-Ratcliffe has been imprisoned since 2016.
Richard Ratcliffe, her husband, accused Iran of pursuing "state-sponsored kidnap". He told 'The Daily Telegraph': "The British government must do more to stop our citizens being used as political pawns by the Iranian government."