Loans to Iran Stall After Arrest of Jews
By Nora Boustany
Wednesday, June 23, 1999
A quiet undertaking at the World Bank over the past 15 months to rehabilitate
Iran for assistance has suffered a setback. Industrious and delicate efforts
to revive Iran's eligibility for soft loans in social development sectors
have been stymied by the Tehran government's arrest of 13 Jewish Iranians
on unproved charges of espionage, according to a number of World Bank officials
Two projects worth $200 million -- initially drawn up in 1993, the last
time such plans were submitted to the bank's board of shareholders for
approval -- were in the process of being updated for submission to the
bank for approval by September, World Bank officials said. Then word came
last week to halt the process. World Bank lawyers who were due to travel
to Tehran within weeks were told that their plans were to be "postponed"
One of the projects involved loans for establishing medical clinics
in the countryside, and the other was designated to help set up a sewer
system in Tehran. There are currently six World Bank projects -- worth
$800 million and approved prior to May 1993 -- that are being supervised
and implemented in Iran and have not been affected by the spy case.
A bank official explained that the two projects in question, which have
lain dormant since '93, were being updated "in case there was a request
from the board" to consider them for approval. But, said one bank
specialist, getting a project considered "takes more than technical
reevaluation, such as clear signals from the shareholders." European
and Japanese shareholders have been eager for some time for Iran-designated
projects to go forward, but not the United States. Until the arrest of
the 13, there were indications that even that opposition might be overcome.
"We were half-ready to send them to the board. If you ask me can we
do it in three months, the answer is yes. If you ask me whether it will
be sent before the end of the year, the answer is no," acknowledged
one official in reference to the suspended projects. "It is not going
Ironically, things had been looking up for Iran in international financial
circles. In March, some members within the International Monetary Fund's
board of directors raised the issue of whether to help out Iran, especially
after oil prices plummeted. On one hand, Iran's conservative supreme leader,
Ayatollah Ali Khamenei, wary of moderate President MohammedKhatemi's opening
to the West, rejected an adjustment-and-
borrowing program recommended by IMF planners. But on the other, the
Iranian government has implemented key economic reforms, such as the removal
of subsidies to fuel and oil products, and is drafting a new five-year
economic plan with substantive structural reforms that its future parliament
will study and approve after elections next February.
While sources said the fate of the two World Bank projects was clearly
linked to the spy case, bank bureaucrats were reluctant to speak openly
about how the fate of 13 Iranian Jews factored into the impasse because
of the sensitivity of the issue. "Is it a human rights issue? I can't
say if it is the only issue. But it weighs on taking such a decision,"
one official conceded. Adherents to the faiths recognized under Iran's
constitution -- Muslims, Christians, Zoroastrians and Jews -- face varying
degrees of repression in Iran; the situation faced by unrecognized religious
minorities such as Bahais is worse.
The 13 detainees raised suspicion because of their alleged contacts
with family members in Israel, illegally importing prayer books from there
and, in the case of three of them, visiting Israel without notifying Iranian
authorities, according to well-informed Iranian sources and diplomats here
from countries close to Iran.
Yet they appear to be pawns in the pre-electoral tug of war between
the reform-minded Khatemi and the hawkish defenders of Iran's religious
power elite. Iran's judiciary is independent, and its members are appointed
by Khamenei. And while the intelligence ministry -- in charge of investigating
the charges against the 13 Jews -- operates under the shadow of right-wingers
opposed to reforms, there were open channels in the late '80s between Iran's
intelligence services and the Israeli Mossad intelligence agency to facilitate
Iran's procurement of arms in its war against Iraq.
A group of Iranian journalists close to Khatemi who visited New York
and Washington last week said at a closed forum at Middle East Insight
magazine that their counterparts in Iran should "insist on and be
the guarantors of an open and fair trial." Three Arab embassies in
Washington -- those of Syria, Jordan and Saudi Arabia -- were approached
by State Department officials to ask their governments to intercede on
humanitarian grounds with the warring wings of Iran's fractious polity.