IRAN, THE ADB, AND THE IBRD

C O N F I D E N T I A L TOKYO 04774


TREASURY FOR HENNESEY/OASIA/IDB

MANILA FOR USADB

E.O. 12356: DECL:OADR
TAGS: EFIN JA
SUBJECT: IRAN, THE ADB, AND THE IBRD

REF: (A) STATE 69132 (B) TOKYO 3330
(C) STATE 97814


1. CONFIDENTIAL - ENTIRE TEXT.


2. FINATT CALLED ON HIROSHI TOYODA (DIRECTOR, DEVELOPMENT
INSTITUTIONS DIVISION, MINISTRY OF FINANCE) TO ASCERTAIN
WHETHER GOJ HAD FINALIZED ITS VIEW ON IRAN JOINING THE ASIAN
DEVELOPMENT BANK.


3. TOYODA SAID THE MATTER IS CURRENTLY BEING DISCUSSED
INTERNALLY WITHIN THE FOREIGN MINISTRY, BUT AS FAR AS THE
FINANCE MINISTRY OF JAPAN IS CONCERNED, THEY WILL SUPPORT IRAN
JOINING THE ADB. TOYODA NOTED THAT EVEN BEFORE FINATT HAD
MADE EARLIER DEMARCHE (REF B),MOF HAD INFORMALLY COMMUNICATED
ITS SUPPORT OF IRAN TO THE ADB. A FORMAL POSITION WON'T BE
ANNOUNCED UNTIL MOFA HAS COMPLETED ITS INTERNAL DELIBERATIONS,
BUT ON MATTERS OF THIS TYPE MOF TYPICALLY PREVAILS OVER MOFA
UNLESS THERE ARE EXCEPTIONAL POLITICAL REASONS WEIGHING IN
MOFA'S FAVOR.


4. MOF'S DECISION IS BASED ON IRAN BEING A MEMBER OF OTHER
IFIS (IMF, IBRD) AND ITS INCLUSION AS A REGIONAL COUNTRY UNDER
ESCAP. TOYODA SAID MOF SYMPATHIZES WITH USG ON NOT WANTING A
SPONSOR OF STATE TERRORISM TO HAVE ACCESS TO IFI RESOURCES,
WHICH MAY THEN ALLOW DIVERSION OF FUNDS TO TERRORIST
PURPOSES. BUT GIVEN THE ESCAP DEFINITION OF REGIONAL
COUNTRIES, AND IRAN'S OTHER IFI MEMBERSHIPS, MOF FEELS IT
APPROPRIATE TO SUPPORT MEMBERSHIP IN THE ADB.


5. ON THE OTHER HAND, MOF WILL NOT LOBBY OTHER COUNTRIES TO
SUPPORT MEMBERSHIP.


6. TOYODA SAID NONE OF THIS HAS BEEN COMMUNICATED TO THE
IRANIANS.


7. WITH RESPECT TO IBRD LENDING, AND POSSIBLE FUTURE LENDING
BY THE ADB IF IRAN BECOMES A MEMBER OF THAT INSTITUTION,
TOYODA SAID MOF WOULD BE FLEXIBLE, AND POSSIBLY OPPOSE LOANS
"A LA THE PRC" FOLLOWING THE TIANANMEN SQUARE INCIDENT AND THE
G-7 AGREEMENT. HOWEVER, IF THE ECONOMIC VIABILITY OF A
PROJECT IS SO OVERWHELMINGLY CONVINCING, MOF WOULD HAVE
DIFFICULTY OPPOSING SUCH A LOAN FOR IRAN IN IBRD OR ELSEWHERE.


8. ON RELATED MATTERS, TOYODA CONTINUES TO ASK "WHO" ASKED US
ABOUT NORTH KOREA'S OBSERVER STATUS AT THE ADB. FINATT SAID
HE WOULD INQUIRE. WITH REGARD TO THE MULTILATERAL INVESTMENT
FUND OF THE EAI, TOYODA NOTED THAT JAPAN'S DIET CLEARED THE
WAY LAST FRIDAY (MARCH 27) FOR JAPAN TO PARTICIPATE IN THE MIF
UP TO $500 MILLION OVER 5 YEARS. MOF ASKS THE STATUS OF USG
APPROPRIATIONS.

ARMACOST