[Congressional Record Volume 148, Number 66 (Tuesday, May 21, 2002)]
[House]
[Pages H2809-H2810]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




        WORLD BANK PLANS MORE LOANS TO IRAN OVER U.S. OBJECTIONS

  The SPEAKER pro tempore. Under a previous order of the House, the 
gentleman from California (Mr. Sherman) is recognized for 5 minutes.
  Mr. SHERMAN. Mr. Speaker, where you sit now or stand now, the 
President of the United States told this Nation right after September 
11 that there are those who are with us and those who are with the 
terrorists. I was not surprised to hear our President indicate that the 
government of Iran is on the side of the terrorists. Yes, it is true 
that there is a nominal, though impotent, figurehead reformist posing 
as President of Iran, but, of course, the real power is exercised by 
unelected officials who take the most extreme pro-terrorist views. So I 
was not surprised when our President used the term ``axis of evil'' and 
included the government of Iran, not the people of Iran who have given 
us one of the world's great civilizations, but the current unelected 
real power in the government of Iran.
  I was not surprised today when the United States State Department 
identified the Iranian government as the number one sponsor of 
terrorism, but there was something that surprised me. I am surprised 
that we are about to finance those who finance terrorism. Yes, we do 
not have to comb the mountains of Afghanistan to find Mohammed Omar, 
because here in Washington down on K Street are those who are ready to 
finance those in the government of Iran who are the number one sponsors 
of terrorism.
  This entity does not only enjoy the protection of the American 
government, but surprise further, they are about to receive over 800 
million of our tax dollars this year, just as they did in prior years. 
I refer to the World Bank, an organization that does many worthy 
projects. Of course, Osama bin Laden built hospitals as well. Now they 
are about to fund the number one sponsor of terrorism.
  Let us reflect that money is fungible. The government in Tehran 
spends the minimum they have to on domestic affairs in order to secure 
their power. Whatever is left over goes for nuclear weapons development 
and to finance terrorism, and to help meet those domestic needs the 
World Bank financed by our taxpayers.
  I want to skip a little ahead in my speech to make sure I identify 
this point. I am currently working on legislation, and I hope others 
will join me in drafting it, not as mere cosponsors, but as genuine 
coauthors, to say to the World Bank: Enough is enough. That if you make 
further loans to Iran, you will not be allowed to receive any 
additional monies from the United States and, perhaps further, that if 
you make additional loans to Iran, we will withdraw the capital that we 
have already invested. This is because weak protests, a mere vote and 
voice, virtually guarantees that the World Bank will send over $700 
million, $755 million, to be more precise, over the next year to the 
government in Tehran.
  Two years ago when the World Bank proposed a loan, we weakly voted 
against it. We told them we were against it. We voted all of our 
shares. It did not matter. And if this House is willing to settle for 
nothing more than a weak protest, then let us remember that when Iran 
develops nuclear weapons, they are not going to be smuggling them in to 
Paris or Rome; those nuclear weapons, scarcely the size of a human 
being, will be smuggled into Washington or New York or Los Angeles. And 
those European governments that stood with Tehran and demanded that 
they get funded will not be the immediate targets of Iranian nuclear 
terrorism. We will.
  So perhaps we need to do more than weakly protest and get outvoted 
than have tea with the diplomats who are sending our money to Tehran.
  Now, we will be told that the World Bank is 5 different entities and 
we are funding the right hand and the money to Tehran is coming out of 
the left hand. Let us not be fooled. There is one staff, there is one 
president, there is one group of directors making one group of 
decisions, and if we are going to send over $800 million this fiscal 
year alone in this upcoming appropriations bill, not the supplemental, 
but the annual, if we are going to send that money to the very people 
who delight in the financing of the Tehran regime, and we can get 
outvoted as to how it is spent, a mere change in the bylaws, then even 
the right hand could send money to Tehran or to Khartoum in Sudan.
  Mr. Speaker, let us hope that this Congress has the courage to upset 
the diplomats at their tea parties and say no money for the World Bank 
if that World Bank is financing the government in Iran.

[[Page H2810]]

           [From Dow Jones International News, May 17, 2002]

        World Bank, Over US Objections, Plans More Loans To Iran

                          (By Joseph Rebello)

       Washington (Dow Jones).--The World Bank, undeterred by 
     President George W. Bush's condemnation of Iran as part of an 
     ``axis of evil, arming to threaten the peace of the world,'' 
     is pressing ahead with a plan that would provide as much as 
     $755 million in loans to the country over the next two years.
       Since the bank began preparing the plan, Iran has mostly 
     disappointed Western expectations that political reformers 
     would succeed in making it more democratic and liberal. 
     Reformers were silenced, and public executions and public 
     floggings increased last year, according to Human Rights 
     Watch. Iran remained the world's ``most active'' state 
     sponsor of terrorism, according to the U.S. government.
       But inside the bank support for more loans to Iran has only 
     grown, officials say. In January, just as Bush identified 
     Iran as a key threat to U.S. security in his State of the 
     Union address, a team of bank directors returned from a visit 
     to Tehran. Its recommendation: ``deeper and faster 
     involvement of the bank'' in Iran, said Jean-Louis Sarbib, 
     the bank's vice president for the Middle East and North 
     Africa.


          Staff Expects To Seek Approval For New Loan By Dec.

       ``We have been quite impressed with the way they have gone 
     about some of their macroeconomic reforms,'' said Sarbib, 
     citing the country's success in building its foreign 
     reserves, in reducing poverty and in ensuring basis education 
     for all Iranian girls. ``What we see on the economic side are 
     people who are really trying to build economic democracy, who 
     are trying to build a market system.''
       The bank's staff intends to seek approval for a new loan--
     worth about $150 million--by the end of the year. That loan 
     is an element of a tentative plan, endorsed last year by the 
     bank's board of directors, that advocates the approval of 
     $755 million in loans to Iran in fiscal 2002 and 2003. Iran 
     could eventually be eligible for more than $500 million a 
     year, if it continues to satisfy the bank's requirements, 
     officials said.
       For the U.S. government, the bank's biggest shareholder, 
     the courtship of Iran has been a lingering source of 
     embarrassment. The U.S. contributes 29% of the bank's 
     capital. It control 16% of the votes cast by the bank's 
     directors--usually a decisive share. It is forbidden by 
     Congress from supporting loans to Iran. But it has been 
     powerless to stop them in recent years.


          U.S. Hasn't Been Able to Stop Loans To Iran Recently

       Two years ago, the bank's directors ended a seven-year lull 
     in lending to Iran and approved two loans worth $232 million. 
     The U.S. objected strenuously. Madeline Albright, the 
     secretary of state, lobbied leaders of other governments, 
     asking them to oppose the loans because of Iran's human-
     rights record. She made little headway: the U.S. cast the 
     sole no vote. Canada and France abstained.
       James Wolfensohn, the bank's president, told U.S. officials 
     at the time that the loans addressed ``basic human needs'' 
     and were designed to support the reform efforts of Mohammad 
     Khatami, a moderate cleric who had been elected Iranian 
     president in a landslide in 1997. But any future loans, he 
     told the bank's U.S. representative, would be considered only 
     after a ``review of all aspects of the economic and 
     governance programs of his government.''
       Iran's performance since then has been mixed. Khatami was 
     reelected to a second four-year term last June. His 
     government briefly warmed toward the U.S. after the terrorist 
     attacks of Sept. 11--it offered, at one point, to rescue U.S. 
     pilots downed in the war in Afghanistan. But Khatami's 
     influence soon faded amid a crackdown by the country's 
     conservative clerics, who control Iran's judiciary and 
     security forces.
       ``Even after his sweeping election victory in June, when he 
     increased his share of the popular vote, (Khatami) continued 
     to shy away from open confrontation with his opponents and 
     made no discernible progress in implementing his promised 
     reforms,'' Human Rights Watch said in a report in January 
     that warned of ``mounting'' social and economic problems. 
     ``Increasingly . . . he appeared to represent more of a 
     safety valve than an agent of tangible change,'' it said.
       The World Bank, however, measures Iran's performance 
     differently. It considers itself apolitical: The bank's 
     mandate, officials say, is simply to reduce poverty and 
     promote sustainable economic development among poorer 
     countries. In deciding to make loans, accordingly, it avoids 
     making official judgments abut the borrower's stance on human 
     rights, terrorism or nuclear weapons. Instead it keeps a 
     close eye on economic and social indicators and the speed 
     with which governments improve those statistics.
       By those measures, Iran has performed splendidly. The 
     poverty rate has fallen to 15.5% from 47% in 1978. The infant 
     mortality rate dropped to 26 for every 1,000 births from 47 
     in 1990. Iran has also built up $17 billion in foreign 
     reserves, partly because of the recent rebound in oil prices 
     and partly because it has paid off much of its debt. It has 
     lowered tariffs, removed most non-tariff trade barriers and 
     unified its system of multiple exchange rates--all well ahead 
     of schedule.
       ``We are seeing concrete results--in terms of economic and 
     social reforms,'' Sarbib said. Last year, the bank's staff 
     completed the review that Wolfensohn and the bank directors 
     had called for, and advanced a short-term plan calling for 
     the launch of a half-dozen development projects in 2002 and 
     2003. With the exception of the bank's U.S. representative, 
     all of the bank's 24 directors supported the proposal. The 
     bank's staff plans to present a long-term lending plan to the 
     directors next year.
       ``The general sense among executive directors is that they 
     are supportive of the bank's engagement with Iran, with the 
     exception of the U.S.,'' said one director who asked not to 
     be named. ``It's difficult to see how the U.S. position could 
     influence other countries. My sense is there is not 
     widespread support for the U.S. position.''


         U.S. Lawmaker Criticizes Bank; Says U.S. Lackadaisical

       At least one U.S. lawmaker is incensed, saying the loans 
     will merely bolster Iran's repressive leadership. ``Money is 
     fungible,'' said Rep. Brad Sherman, D-Calif. ``The money that 
     the World Bank is providing to Iran's government is not 
     particularly benefiting its people. That government will 
     engage in the minimum domestic expenditures necessary to 
     maintain power. Whatever is left over they'll spend on 
     terrorism and nuclear weapons.''
       Sherman said he has been trying to get the Bush 
     administration to take a harder line with World Bank, with 
     little success. ``Nobody's blood pressure is up on this,'' he 
     said. ``The problem is the U.S. bureaucracy. They say, `Oh, 
     gee, we'll vote no. If we get outvoted, que sera sera.' It's 
     as if they hadn't listened to the State of the Union address. 
     It's as if they were unaware of what happened on Sept. 11.''
       A Treasury Department spokeswoman, Michele Davis, said the 
     U.S. government has regularly expressed its displeasure with 
     the World Bank's plans for Iran. ``The U.S. opposes World 
     Bank lending to Iran and has consistently communicated this 
     position to Bank management, including in May of 2002, when 
     the World Bank approved two loans to Iran despite U.S. 
     opposition,'' she said.
       World Bank officials, meanwhile, said they can see no 
     reason why Iran should be deprived of loans. Sarbib rejects 
     the argument that World Bank loans for humanitarian and 
     development purposes allow Iran to spend its own resources to 
     develop nuclear weapons and promote terrorism. ``Look, they 
     have $17 billion of reserves,'' he says. ``If they want to do 
     all these things, they can do it. They don't need World bank 
     funds to do that kind of stuff.''
       Besides, he said, ``Iran is a member in good standing of 
     the World Bank. They are current on all their obligations. As 
     a member in good standing of the cooperative, they are 
     entitled to the services of the cooperative.''

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