Hearing of the State, Foreign Operations, and Related Programs Subcommittee of the House Appropriations Committee - U.S. Treasury International Assistance Programs and U.S. Contributions to International Financial Institutions

Interview

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REP. KIRK: Thank you, Madam Chairwoman. I would just say, I would strongly support what you said that I share the chair's concern that there's too much foreign aid going through DOD. But this Treasury technical assistance is outstanding, and I think should remain at Treasury.

I also compliment to the chair, good work on the IDB, because I am concerned about the losses there as well. Just a couple of quick things.

I hope, as part of the SED which you're going to lead with China coming up, that you formally invite representatives of the McCain, Obama, and Clinton campaigns to begin to show the continuity with China and just put in that word. We haven't talked about the large IMF gold sale that may be underway, and so obviously that has some concerns to the U.S. Congress.

But I want to focus on Iran. The World Bank has sent a $49 million check to the Islamic Republic of Iran in FY '05, a $166 million in check to the Islamic Republic of Iran in FY '06, a $220 million check to the Islamic Republic of Iran in FY '07, and to date has spent $189 million on Iran. About $618 million going directly to the finance ministry of President Ahmadinejad and then is planning on sending him another $699 million.

Since we own about 20 percent of the World Bank, that's $240 million of the U.S. taxpayer going directly to the Finance Ministry of the Islamic Republic of Iran. Now, this supposedly supports some projects, but as you well know it, the money is not paid to support the projects. The money is paid to the finance minister of Iran.

And one of the things we've seen is this sort of tragic comedy with the World Bank trying to pay Iran that originally the World Bank paid through Bank Melli. But then you designated Bank Melli as a bankroller of proliferation and global terrorism, which then held up $5 million of U.S. taxpayer money and bank money, which was caught in that.

The bank's website says that the project supported are for sewerage, their word, sanitation, and water. But U.N. Security Council Resolution 737 and 1803 blacklist several entities involved in Iran's nuclear and ballistic missile program, including the Pars Trash Company and the Kalaye Electric Company, which may be directly involved in the sewerage, sanitation, and water projects supported by the World Bank.

Now my office asked if we could see who was being funded by the World Bank directed projects to review the prohibited entities under the U.N. Security Council resolution. And we were told to call the U.S. executive director of the World Bank. When we talked to the U.S. executive director of the World Bank, he said we have no access to that information, no transparency.

So here's my question. If the bank is operating in places and sectors of Iran in which we know are sanctioned by the U.N. Security Council resolution, how do we know that we aren't funding -- directly funding U.N. sanctioned entities in violation of 1737 and 1803?

Would you ask Secretary Rice and Ambassador Khalilzad to open this transparency up? I'm worried that we're headed into a lack of transparency that reminds me of the U.N. Oil for Food Program, where we're directly funding entities sanctioned by the U.N. Security Council. And I'm wondering, really, does the President of the United States know that three blocks from his office we just cut a check for $189 million to the Islamic Republic of Iran?

SEC. PAULSON: First of all, congressman, I very much respect your work on Iran a lot. If we have time, I'd love to tell you all the things that I've done, okay, and what we've done at Treasury here, because I think we've broken some new ground and Stuart Levey and the team are doing some things that make a difference.

Now again, when you look at the --

REP. KIRK: Let me just interrupt you a second. Stuart is doing an outstanding job of shutting down financing of Iran.

SEC. PAULSON: Right.

REP. KIRK: And his work is being directly undercut by money financing to Iran by the World Bank.

SEC. PAULSON: Well, to get to this, the last vote on a program to send money to Iran for humanitarian purposes came a couple of years before I arrived to Treasury. Treasury opposed that. That I can do a lot of things, but one thing I can't do is change World Bank law and U.N. law. And so I followed -- with support and interest to your questions, I read with interest Bob Zoellick's letter to you signed off on by the General Council of the U.N. and by the General Council of the World Bank saying that they have followed scrupulously the letter of the law.

And so I appreciate your question. I talk with the president frequently about Iran. The last time I talked with him was earlier this week about it. And so we're -- and I appreciate your frustration, but I don't run the World Bank. We're, as you point out, an important shareholder. We have a very strong leader there, and he needs to operate under the laws and the rules he's inherited.

There's a governance system, and he's had his general council look at it very carefully. They've looked at the U.N. resolution carefully. The General Council has looked at that carefully. I'm going to tell you I'm going to continue to be vigilant, and -- (crosstalk) --

REP. KIRK: (Crosstalk) --

SEC. PAULSON: -- chance to have any breakthroughs on Iran before I leave, I'd love to do it.

REP. KIRK: Let me just conclude to agree with my colleague from Minnesota, Betty McCollum. She points out that we are roughly $700 to $800 million behind on IDA. Wouldn't it be great to transfer the $700 million from the IBRD pending for the Islamic Republic of Iran to IDA so that we were helping the poorest of the poor countries and not helping Iran?

SEC. PAULSON: Yeah.

REP. KIRK: Thank you, Mr. Chairman.

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