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U.S. Sanctions Force World Bank To Halt Some Aid To Iran

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By STEVEN R. WEISMAN, The New York Times

Published: November 4, 2007

WASHINGTON - The World Bank, newly caught up in the Bush administration's campaign against Iran, has had to suspend payments for earthquake relief, sanitation and other projects there in response to new American sanctions on leading Iranian banks, World Bank officials say.

Only $5.4 million in payments has been suspended for four projects, involving earthquake relief, water and sanitation, environment management and urban housing, the officials said, and they do not expect the suspensions to be permanent.

But the bank has no plan to resume payments because it is having trouble finding banks in Iran through which to route them now that the United States has barred dealing with four of Iran's largest banks, accusing them of involvement in terrorism, or nuclear or missile programs.
American officials said they hoped the decision by the World Bank would increase pressure on Iran, not necessarily by stopping humanitarian projects but by dramatizing the country's economic isolation in light of its refusal to suspend uranium enrichment and negotiate with the West over its nuclear program.

The World Bank step, while small, illustrates the extraordinary reach of American sanctions, even though they were imposed unilaterally after the United States was stymied in its recent efforts to get the U.N. Security Council to approve wider penalties.

Some congressional critics of the administration's Iran policies have called on the United States to block World Bank aid programs for Iran altogether. The World Bank has nine active projects in Iran and, by last year, had financed 48 operations worth about $3.4 billion, according to the bank's Web site.

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