Iran Receives World Bank Loans

Overriding U.S. opposition, the World Bank today approved $231 million in loans to Iran, the first in seven years.

World Bank President James Wolfensohn and other participants at the meeting of the bank's 24-member executive board said the United States voted against the proposal, while France and Canada abstained.

In concluding remarks at the meeting, Wolfensohn said several bank shareholders expressed "deep concern with current events in Iran."

He was alluding to the current closed-door trial in Iran of 13 Jews charged with spying for Israel.

Wolfensohn said the concerned shareholders did not want their support of the loans to be "construed as support for the current events."

He said Inaamul Haque, who represents Iran on the board, "would personally pass on to his authorities the sentiments expressed."

The Clinton administration urged that the board not grant the loans while the trial was under way. Also, the United States must, by law, vote against loans for any nations on its list for sponsoring terrorism. Iran is one of seven such countries.

One loan, for $145 million, is intended for a sewage treatment project in Tehran, Iran's capital. The second, for $86.1 million, is supposed to help improve health care.

"We continue to be concerned about the policy environment in Iran, and believe it is premature to resume World Bank lending," a Treasury Department official said.

The official, speaking on condition of anonymity, said the Iranian government had yet to demonstrate "a unified commitment to economic reform necessary to encourage sustained economic development."

It is U.S. policy to oppose lending by multilateral institutions to countries on the State Department list of countries sponsoring terrorism.

Board members discussed the possibility of delaying the loans but decided to go ahead, Wolfensohn said.

"Executive directors have noted that in accordance with the mandate of the bank, the consideration of economic and human needs underpins the approval of these loans," he said.

He said the board also expressed support for the reform agenda of Iranian President Mohammad Khatami.

In a statement, the bank said it would closely monitor the two projects, which are expected to take about five years to complete.

"The World Bank will only consider a broader resumption of lending after the current efforts under the leadership of President Khatami to strengthen government and economic reforms begin to show concrete results," the international lending institution said.