Japan Agrees to Delay Loan to Iran, U.S. Officials Say : Diplomacy: Decision is seen as victory for Clinton. Move could further sap Tehran’s troubled economy.

In an important victory for the Clinton Administration, Japan has quietly informed the United States that it has put on hold a $450-million loan package to Iran that Tehran has been counting on as its single most important source of international credit, U.S. officials say.

Japan postponed the loan after Administration officials supplied Tokyo with extensive intelligence about Iran’s activities. U.S. officials would not say what information had been provided, but the Clinton Administration repeatedly has claimed that Iran is supporting terrorism and undermining the Middle East peace process.

Japan’s delay could damage the economically strapped Iranian government’s ability to obtain other money from abroad. “It (the Japanese loan) has become a symbol of whether Iran can get access to new loans and credits,” one U.S. government analyst recently said.

Since mid-1994, top Administration officials, including President Clinton, Secretary of State Warren Christopher and Walter F. Mondale, the U.S. ambassador to Japan, have urged top Japanese officials to delay the loan to Iran. Only a month ago, the President pressed the issue during a meeting here with Japanese Prime Minister Tomiichi Murayama.

In the days after that session, Japanese officials suggested that--despite the U.S. appeals--they were going to go ahead with the loan by the end of January. It was originally supposed to be disbursed last summer.

“We cannot put off the decision any longer,” Japanese newspapers quoted Murayama as saying after the summit.

During a visit to Washington two weeks ago, however, Japanese Deputy Foreign Minister Hiroshi Fukuda notified U.S. officials that the loan would be held up, Administration sources said.

But the loan has not yet been killed.

“We still have it (the loan) under consideration,” Hiroshi Hashimoto, deputy chief of mission at the Japanese Embassy in Washington, told The Times this week. “We haven’t reached any decision yet.”

Still, the protracted delay could itself further crimp Iran’s economy, which is suffering from mounting debt and declining oil prices. U.S. analysts said that in a speech in Tehran this week, Iranian President Hashemi Rafsanjani blamed some of his nation’s economic difficulties on pressure that the United States is applying to countries that otherwise would provide aid.

Japan’s loan was to be the second of three installments worth a total of about $1.5 billion. The three-part loan package, which is offered at low interest rates, was first approved in 1993 and represents Japan’s first aid to Iran since the 1970s. The first installment of the loan was for $368 million.

Japan granted the three-part loan to help finance construction of a dam and hydroelectric project on the Karun River in southern Iran. U.S. officials have complained that such financing would support the Tehran government and allow it to spend more of its money elsewhere.

“We see an Iran very strapped financially, being forced to make hard decisions on where to spend money and forced to slow down its military modernization program,” one U.S. government analyst said.

Tokyo has justified the loan package by making essentially the same arguments that the Ronald Reagan Administration once made when it supplied arms to Iran--that help from abroad might serve to keep channels open and to support less extreme factions within the leadership in Tehran.

“Iran is not made up only of radicals, and it is necessary to support the moderates,” Murayama told Japanese reporters after the White House meeting last month, according to the newspaper Yomiuri Shimbun.

U.S. officials now acknowledge that stopping the loan to Iran was one of the Administration’s main objectives at top-level meetings with Japanese officials during last July’s gathering of the leaders of industrial nations in Naples. It also was at issue at a meeting of Asian and Pacific leaders in Jakarta in November.

The subject has become such a staple in high-level talks between U.S. and Japanese officials that at a session with Japanese Foreign Minister Yohei Kono in Jakarta, according to one participant, Christopher said he had one subject he wanted to discuss in detail.

“I-R-A-N,” Christopher said, spelling out the word in English. According to the participant, officials on both sides laughed.

It is not clear what concessions, if any, the United States has had to give to Japan to win delay of the loan package.

Over the last six months, the Administration has begun to shift focus away from economic issues with Japan and to place greater importance on diplomatic and strategic concerns. After his recent White House meeting with Murayama, for example, Clinton sought to play down the importance of Japan’s continuing $60-billion-a-year trade surplus with the United States.

Japan is not the only nation that the Administration has approached in its effort to block international credits to Iran. Clinton also raised the subject with German Chancellor Helmut Kohl during his visit to Washington last week, U.S. officials said. So far, Germany has rolled over some of Iran’s existing debts but has refused to provide it with any new loans.

Last month, in a speech at Harvard University’s John F. Kennedy School of Government, Christopher declared: “Those industrialized nations that continue to provide concessionary credits to Iran cannot escape the consequences of their actions.” He did not mention any country by name.

As oil prices have declined over the last five years, Iran’s international debt has shot up from about $5 billion to $35 billion, U.S. officials said. One result has been that Iran has less money to spend on its military.

Three years ago, then-CIA Director Robert Gates testified that Iran was in the midst of a five-year, $10-billion program to build up its armed forces by buying weapons from abroad.

But U.S. officials now believe that Iran has been forced to cut back on military modernization programs over the last two years.

Japan’s $1.5-billion loan package for the Karun River dam is the only significant bilateral aid project that any major industrial nation has with Iran.