Bad Debts
The World Bank props up the Iranian mullahcracy.

By Mohammad Parvin

Even as the Islamic Regime of Iran accelerated the number of arrests, tortures, and death sentences it carried out, on May 29, the World Bank awarded it with two loans totaling $369 million. As justification for granting the loans, the World Bank claims they were awarded to help the people of Iran. "In many countries we have enfranchised civil societies," the Bank's president, James D. Wolfensohn said at a luncheon. "Should we stop doing that and wait until we had perfect countries before we lend?"

Wolfensohn added: "The easiest thing for me, for the Bank, would be to say, just wait until these countries are democratic, but that is impracticable. The bank is not the United Nations. Its goal is economic development. Sometimes this must go hand in hand with democratic development."

These are fair points, but surely Wolfensohn is aware that in Iran, 70 percent of non-oil revenue and 50 percent of the economy is controlled by the "tax-exempt organizations" (bonyaads), which are accountable only to the Supreme Leader. The people of Iran, in other words, will not benefit from these loans.

Since May 2000, Iran has borrowed $801 million from the World Bank and another $276 million has been approved for two more projects.

Based on information provided by the Bureau of International Information Programs of the U.S. State Department, the U.S. has always opposed World Bank's assistance to Iran, but has been unsuccessful to block the approval of the loans to that country in recent years, mainly because other large Bank shareholders have sought to increase their engagement with Iran.

"I want to assure you that the Treasury Department and the U.S. Executive Director at the World Bank, while not fully successful, have consistently and actively sought to block all proposals for World Bank Group assistance to Iran," Deputy Assistant Secretary of the Treasury William Schuerch said in his October 29 testimony before a panel of the U.S. House of Representatives.

Although the United States is the Bank's largest shareholder, with a voting share of 16.4 percent, it cannot block lending decisions without support from other major member-countries, Schuerch said.

He said that from July 1993 to May 2000 the Group of Seven (G-7) worked together to stop lending to Iran, but added that this consensus unraveled when some members — notably, European ones — began supporting reengagement with Iran.

"Some of this reengagement was due to their expressed view that engaging with Iran's 'reformers' would support them in their efforts against Iran's hardliners — a view which is still evident as the Europeans negotiate with Iran over their nuclear program," Schuerch explained.

However, the need of the Islamic Regime to stabilize its bankrupt economy is not going to be satisfied by these loans. A recent International Monetary Fund (IMF) report on the Iranian economy predicted that Iran needs to mobilize $4 billion a year in foreign loans and in direct investments if it is to achieve a level of growth that stabilizes unemployment.

There is a lot at stake for the World Bank, as we expect more loans to be awarded to Iran in the future. But, the World Bank should realize that supporting the present regime by granting loans is to ignore the will of the people of Iran. The World Bank should know that as the people of Iran do not recognize this regime as their legitimate representative, and as these loans will mostly be used to support the mischief of the regime (such as acquiring weapon of mass destruction or sending terrorists across the border to Iraq), and because they are not the beneficiary of these loans, the World Bank is putting its investments at a great risk.

Every tyrant regime — including this one — comes to an end. The World Bank should have the vision of the future that, when the people of Iran have freed themselves from this monstrous regime, Iran under its future democratic government will not have any responsibility to pay back these loans.

Mohammad Parvin is an adjunct professor at the California State University and director of the Mission for Establishing Human Rights in Iran.


P.O. Box 2037
P.V.P., CA 90274

Tel: (310) 377-4590
Fax: (310) 377-3103

 MEHR is a tax-exempt, 501 C (3), organization and
all contributions are tax deductible


MEHR's Main Page