U.S. 'strongly opposed' to World Bank work in Iran
By Anna Willard
WASHINGTON, May 11 (Reuters)- U.S. officials said on Friday they are "strongly opposed" to any engagement by the World Bank in Iran, and registered their opposition with Group of Seven finance ministers and with the management of the bank.
The executive directors of the World Bank on Thursday approved the Washington-lender's proposal for a two-year interim economic strategy for Iran. The United States voted against the proposal because of the country's record on terrorism and human rights.
"It is U.S. policy to oppose multilateral lending to Iran for both terrorism and human rights reasons," said one Bush administration official. "We also continue to be concerned about the economic policy environment and believe it is premature to resume World Bank lending there."
Meanwhile a spokesman for the U.S. Treasury said that while it was pretty clear that a majority on the 24-member board of the World Bank favors the plan: "We don't think it's a rational move right now."
The spokesman added that the United States believes it is important to support "reformist elements," and that it does not believe the current proposal does that.
However, Merrell Tuck, a spokeswoman for the World Bank said that the proposed program is a cautious one which gives backing to reforms.
"The strategy proposes a cautious stand where the bank will fully monitor progress on governance, structural reforms and economic management," Tuck said.
She stressed that the World Bank board meeting on Thursday was not to approve a loan, only to approve a strategy for the country. However, the strategy would be backed by some $755 million in lending. But Tuck said that the bank does not foresee putting this lending to the board for a vote for at least another year. The lending would require a separate vote.
"Any lending would focus on basic needs and the environment," she said.
Even though it is the single largest shareholder of the global lender, the United States, on its own, cannot actually prevent a loan from going through. But one bank insider said that the board usually tries to move in a consensus style so there is usually an effort to negotiate the differences.
The United States has been under pressure from domestic politicians to oppose the plan for Iran. In a letter to Treasury Secretary Paul O'Neill, 89 members of Congress outlined their objection to the plan.
"The approval of lending of this type serves to undermine support for the World Bank and other international financial institutions," the letter said.
The United States has economic sanctions in place against Iran. While the Bush administration has said that it opposes a congressional move to extend these sanctions for another five years, President George W. Bush made it clear in April that he does not feel it is time to lift sanctions on Iran altogether.