[mgj-discuss] World Bank story from Fox 5 in DC

[Potter]

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

02/02/2008  --

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 
has learned.

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 
particular.

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 
$24 million.

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 
industrial facilities."

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 
international threats.

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 
months.

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