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U.S. objects, but Iran granted 2 loans

Despite U.S. opposition, the World Bank approved two loans to Iran totaling $232-million Thursday, demonstrating support for Iranian President Mohammad Khatami's reformist government. Iran last received bank loans in 1993.

World Bank president James Wolfensohn said several members of the 24-member executive board expressed "deep concern with current internal events in Iran" but others concluded the country's basic human needs took priority.

Wolfensohn said, "Executive directors have noted that, in accordance with the mandate of the bank, the consideration of economic and human needs underpins the approval of these loans as well as the expressed support of the board for the reform agenda of the government of President Khatami."

Secretary of State Madeleine Albright said she urged other governments to oppose the loans as inappropriate while Iran was conducting what she called a "show trial" of 13 Jews on charges of spying for Israel. The United States also voted against loans because Iran sponsors terrorism and has not adopted an economic reform program, Albright said.

Wolfensohn confirmed that the U.S. representative on the board, Jan Piercy, opposed the loans and that Canada and France abstained. But other U.S. allies, Britain, Germany and Japan, were among the majority supporting the proposals.

The loans are for $145-million for a sewage project in Tehran, and for $87-million for a health care project. The World Bank said the first loan will bring wastewater services to 2-million of the 8-million Tehran residents without access to sewerage services.

"The central mission of the World Bank is poverty alleviation, and its charter mandates only economic considerations to be taken into account in its lending projects," a bank statement said.

Wolfensohn said loan supporters made it clear that their votes did not mean they approve of the spy trials. He said Inaamul Haque, who represents Iran on the board, "would personally pass on to his authorities the sentiments expressed."

Wolfensohn said any future loans to Iran will be considered only after a "a review of concrete results of the reform program." That is expected to take between six and nine months, he said.