[mgj-discuss] World Bank story from Fox 5 in DC
potter at riseup.net
Sat Feb 2 14:12:29 PST 2008
This was the lead story on the local Fox Affiliate, Fox 5. I just
thought it was interesting that it was their big story. It's got a
healthy dose of Fox sensationalism without a lot of substance, but none
the less an issue to keep aware of...I wouldn't mind discussing it with
some folks in person or via e-mail sometime. I'm just curious to hear
more...perhaps not from Fox.
World Bank Using U.S. Funds To Boost Iranian Industry, Gas Sectors
Last Edited: Saturday, 02 Feb 2008, 4:43 PM EST
Created: Friday, 01 Feb 2008, 11:13 PM EST
By James Rosen
The World Bank is using millions of dollars in American taxpayer funds
to help Iran build up its industrial and natural gas sectors, FOX News
This comes at a time when the United States and the United Nations are
actively working to discourage the international community from
conducting commercial transactions with Iran and its energy sector, in
The World Bank's Multilateral Investment Guarantee Agency (MIGA)
provides financial guarantees to secure foreign investments in
developing countries, and the U.S. government is one of the agency's
largest contributors. U.S. contributions since 2000 have totaled nearly
Documents and public filings obtained by FOX News show the MIGA has
issued $122.2 million in guarantee coverage for three companies from
Thailand and Japan, that have in turn invested a total of $42.8 million
in a state-owned Iranian petrochemical company.
The MIGA guarantees insure the three investors — Cementhai Chemicals
Company and National Petrochemical Public Company Ltd., both of
Thailand, and Itocho Corporation, of Japan — against the risk of "war
and civil disturbance," and any potential breach of contract by the
government of Iran.
In addition, Itocho is providing the Iranian company, Mehr
Petrochemical, with a $96 million shareholder loan, which also is
underwritten by MIGA.
Iran's National Petrochemical Co. chairman Kazem Vaziri Hamaneh serves
on the board of Mehr Petrochemical, according to Middle East financial
industry-watch site, www.Zawya.com. The National Petrochemical is a
subsidiary of the Iranian Petroleum Ministry.
First-Time Aid to Iran
The project marks the first time MIGA has provided such coverage for
foreign investment in Iran. The infusion of cash by foreign investors,
according to MIGA documents, will enable the Islamic republic to mine
the South Pars gas field, a giant offshore gas reserve in the Persian
Gulf, and to construct and operate a nearby high-density polyethylene
plant, where the gas will be processed for industrial uses.
These projects, a MIGA summary states, will help Iran "diversify the
country's exports away from oil" and "contribute to government revenues."
The South Pars project is not MIGA's only thrust into Iran, however. The
agency's paperwork for a separate project shows a $5 million equity and
loan guarantee provided to a Turkish company whose plants in Iran
produce and export polypropylene containers. The documents say Iran's
economy is "over-reliant on oil," and boast the Turkish venture will
"help diversify Iran's economy ... while introducing state-of-the-art,
lean manufacturing techniques that can be replicated for use in other
At Odds With U.S. Policy?
American and allied officials at the U.N. have been working for years to
discourage foreign investment in just such kinds of projects in Iran,
fearing they will directly or indirectly aid the Islamic republic's
nuclear and ballistic missile programs, as well as the regime's support
for terrorist groups across the Middle East.
Last October, the Bush administration designated the Iranian
Revolutionary Guard Corps (IRGC) and its elite Quds Force as terror
organizations — the IRGC for weapons proliferation, and the Quds Force
for support of terrorism. At the time, Treasury Secretary Henry Paulson,
with Secretary of State Condoleezza Rice standing by his side, told
reporters "it is increasingly likely that if you are doing business with
Iran, you are doing business with the IRGC."
Paulson also called on "reputable institutions" not to serve as "bankers
to this dangerous regime" and concluded "many banks around the world
have decided as a matter of prudence and integrity that Iran's business
is simply not worth the risk."
Assistant Secretary of State Sean McCormack disclosed last June that the
State Department had been contacting multinational firms and state-owned
companies around the world, counseling them against financial
transactions with the Iranian regime and its subsidiaries.
"We've talked to Shell Oil," McCormack told reporters June 12. "We've
talked to the Chinese national oil company. There have been several
others as well ... giving them informational briefings and talking to
them about whether or not, really, this is the right time to be making
those sorts of big bets on the Iranian energy sector when you have a
country that is already under [U.N. Security Council] Chapter 7
resolution," referring to a U.N charter section that deals with
McCormack continued: "And it raises the question of, well, is this the
kind of investment climate that you want to enter into? These are big
bets of billions of dollars that people are calculating they're going to
get returns over a significant number of years. And if you have that
level of uncertainty, I think the business end will make their own
calculations about whether or not that's the place where they want to
invest their money."
The World Bank has apparently decided otherwise, according to U.S. Reps.
Steve Rothman, D-N.J., and Mark Kirk, R-Ill. — a former Bank staffer.
They say the global lending institution has "transferred at least $50
million in U.S. and allied taxpayer funding to Iran" over the last six
In a letter to Rice and Paulson dated Jan. 30 and obtained by FOX News,
Rothman and Kirk argued the World Bank is "undermining the Iran policies
of the U.N. Security Council, the United Kingdom, France, Germany and
the United States by giving technical assistance, loans and investment
guarantees directly to the government of President Mahmoud Ahmadinejad."
The letter urges the Bush administration to "align the World Bank board
to the policy" of the U.N. Security Council, by suspending all World
Bank loans to Iran and all guarantees on foreign investment in the country.
Contacted by FOX News, a World Bank spokesman noted that MIGA's $127
million in guarantees was approved by the agency back in 2005, and that
such guarantees do not involve disbursement of funds unless a claim is
made by a foreign investor.
"The World Bank Group complies with UN sanctions on Iran," the Bank's
website states, adding: "Arrangements have been put in place to ensure
disbursements under project agreements are utilizing banking channels
that are not subject to sanctions lists."
A World Bank spokesman later said, "There are no plans to approve any
new loans to Iran. These loans ... were designed to help Iran's poorest
people and meet basic humanitarian needs."
McCormack told Fox News the State Department only just received the
Rothman-Kirk letter, and will be replying to it shortly.
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World Bank Using U.S. Funds To Boost Iranian Industry, Gas Sectors
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