Frequently Asked Questions About Iran

February 2, 2008

Q: Does the World Bank Group Follow UN Sanctions on Iran?

Yes. As an independent United Nations specialized agency and a multilateral development bank, the World Bank Group fully complies with UN sanctions on Iran* and reviews payments under World Bank Group financed projects to ensure compliance.

Security Council resolutions on Iran exempt humanitarian and development activities conducted by international financial institutions. The Bank's General Counsel wrote a letter to the UN Legal Counsel in September and then met with the UN to ensure the Bank is in compliance and acts consistently with the sanctions framework, which prohibits financing items on the sanctions list or that benefit listed individuals and entities.

(* Note: UN Sanctions on Iran were passed in December 2006, and expanded in March 2007. The March 2007 Security Council Resolution calls upon all states and international financial institutions to refrain from making new commitments for grants, financial assistance, and concessional loans to the "Government of the Islamic Republic of Iran, except for humanitarian and developmental purposes.")


Q: What is the Multilateral Investment Guarantee Agency's (MIGA) involvement in Iran?

In 2005, the Multilateral Investment Guarantee Agency (MIGA) provided US $127 million in guarantees for two projects. No MIGA funding has been disbursed to Iran.

MIGA guarantees provide political risk insurance for foreign investment. MIGA does not provide or infuse cash. It is the insured party - the foreign company - that pays MIGA a premium for the guarantee, and it is to the insured party that MIGA would make payment in the event of a valid claim.


Q: What is the Status of World Bank Group Lending to Iran?

The World Bank Group has no plans to approve any new loans to Iran.

Nine IBRD loans to Iran for projects designed to help Iran's poorest people and meet basic humanitarian needs were approved between 2000 and 2005 by the Board of Executive Directors of the World Bank, which represents 185 member countries.

These loans to help the poor were in response to earthquake disasters and also address environmental issues, such as water supply and sanitation. The balance is for health care and nutrition. Funding for these loans is raised on the capital markets.

Some payments on these loans had been delayed. Undisbursed funds for IBRD projects in Iran totaled US $ 745 million as of December 31, 2007.

The International Finance Corporation's (IFC) program in Iran is focused on helping small businesses to create jobs and spur economic growth. IFC has US $28 million invested in four projects, approved between 2002 and 2005, supporting small and medium businesses.


Q: Why were World Bank Group payments in respect of the loans to Iran recently delayed?

Disbursement requests received on World Bank projects in Iran were temporarily delayed in the final months of 2007 because of difficulties in executing through the normal channels as a result of certain banks being placed on sanctions lists. Arrangements have been put in place to ensure disbursements under project agreements are utilizing banking channels that are not subject to sanctions lists.

Additionally, the World Bank strengthened screening mechanisms to ensure that project disbursements are screened in advance to prevent proceeds being paid to sanctioned entities or individuals. These procedures are being applied to all contracts.