U.S. Worried Over Japanese Loan to Iran

The Clinton Administration has expressed concern to the Japanese government over a $360-million loan to help Iran build an electric-generating plant, according to Administration officials.

The resumption of Japanese aid to Iran comes as the United States is increasing pressure on its allies to isolate Tehran because of its funding and arming of terrorists and its efforts to develop nuclear weapons. Japan has told the Administration that Tokyo views the financial aid as a means of moderating Iranian behavior.

The episode illustrates the difficulty that the Administration faces in trying to block Western assistance to Tehran without the force of U.N. sanctions.

“We have made isolating Iran a high priority,” said an Administration official, speaking on condition that his name not be used.

The official declined to say whether President Clinton will raise the issue when he meets with Japanese Prime Minister Kiichi Miyazawa at a gathering of the seven leading economic powers in Tokyo on July 7.

Iran is viewed as hostile to U.S. interests. Earlier this year, Secretary of State Warren Christopher called Iran an “international outlaw” for its pursuit of nuclear weapons and its support of terrorism.

CIA officials have expressed concern in recent briefings about Iran’s efforts to develop nuclear weapons and possibly to acquire them on the open market, according to people who attended the briefings. Iran’s military capabilities were depleted by its war with Iraq. The Administration hopes to keep it that way by restricting Western economic assistance.

Japan depends heavily on Iranian oil. As a result, there was strong pressure on Tokyo to resume aid.