The World Bank’s lending to Iran has been under scrutiny by Republican Rep. Mark Kirk of Illinois, who on Wednesday told a hearing of the House of Representatives appropriations committee that World Bank funding for Iran totaled $1.3 billion and that it continues to lend to Iran.
The United Nations imposed fresh sanctions on Iran on Monday for refusing to suspend uranium enrichment, which the U.S. administration says is a step toward building a nuclear bomb. The latest sanctions increase the number of individuals and firms on a travel and asset-freeze blacklist and called for vigilance over Iranian banks and shipping firms.
U.S. Treasury Secretary Henry Paulson, addressing the committee, said World Bank projects to Iran were approved before he joined the Treasury in mid-2006 and no new projects had been approved since.
“These votes predated my arrival at treasury but I understand the U.S. government voted against every one of these loans and these guarantees,” Paulson said.
“There haven’t been any new programs that have been put in place since I have been down here. I know this is something that (World Bank President) Bob Zoellick is very much focused on and he has his own governance and his own rules to deal with,” Paulson said.
In a response posted under “current events” on its Web site, the World Bank said loan disbursements totaling $745 million for Iran were delayed in late 2007 because “of difficulties in issuing the funding “as a result of certain banks being placed on sanctions lists.”
The bank said UN Security Council resolutions on Iran exempt humanitarian and development activities conducted by global financial institutions.
It said nine projects approved by the World Bank board of member countries between 2000 and 2005 covered earthquake relief, environmental issues, water and sanitation for Iran but those disbursements were temporarily delayed in late 2007.
“Arrangements have been put in place to ensure disbursements under project agreements are utilizing banking channels that are not subject to sanctions lists.”
It also said a political-risk guarantee for a foreign company in Iran approved by the bank’s guarantee agency MIGA in December 2005 “did not provide or infuse cash”.
The guarantee was MIGA’s fist private-sector project in Iran and issued $122 million 15-year guarantee for a petrochemical plant being developed by Asian investors.
The World Bank also said its private-sector lender, the International Financial Corp, has $28 million invested in four projects in Iran approved between 2002 and 2005, which support small and medium businesses. (Reporting by Lesley Wroughton; Editing by Richard Satran)
