World Bank agrees loans to Iran
By Stephen Fidler in Washington
The Financial Times
May 19, 2000
The World Bank board of directors on Thursday approved its first loans
to Iran in seven years despite US opposition but indicated it would be
some time before further loans were granted.
At a two-hour meeting, the 24-member board voted overwhelmingly in favour
of the two loans, which totalled $232m, including the director who represented
The US, the bank's largest shareholder, cast the only vote against the
loans, while France and Canada were the only abstentions.
The US must by law vote against the loans for any government on the
state department's list of state sponsors of terrorism. Iran is one of
seven countries on the list.
The decision had been delayed twice because of US pressure and Madeleine
Al- bright, the US secretary of state, had led a diplomatic effort to engineer
a postponement of loans because of the trial of 13 Jews accused of spying
James Wolfensohn, the bank's president, who chaired the meeting, said
several shareholders expressed deep concern with events in Iran - "in
particular their concern that their support of these projects [should]
not be construed as support for current events".
Worries were also expressed by some directors that momentum for economic
reform was weakening. The bank said it would be at least six to nine months
before any further loans for Iran were considered, and that would happen
only if efforts at reform yielded results.
But many directors at the meeting spoke against what they called the
politicisation of the bank, and said loans should be granted on economic
criteria only. The loan was viewed favourably, some directors said, because
financing the Tehran sewerage system and primary healthcare addressed human
needs. The loans were also seen as helping the reform efforts of President
Mohammad Khatami against conservative elements.
The bank's decision was condemned by some Congress members. Jesse Helms,
chairman of the Senate foreign relations committee, said the bank was already
being criticised for "subsidising vile resettlement policies in China".
Sam Brownback, a senior member of Mr Helms's committee, said the granting
of the loans at a time of significant political turmoil in Iran was questionable
economically as well as politically. Ayatollah Ali Khamenei, Iran's supreme
leader, halted the recounting of votes in Tehran, according to state-run
radio. This in effect confirmed that reformists had won control of parliament
for the first time since the 1979 revolution, AP reports from Tehran.
The intervention means that the reformists, who won 29 of the 30 seats
in Tehran in legislative elections in February, will be allowed to take
most of those seats.