WASHINGTON: The World Bank has suspended $5.4 million aid scheduled for projects in Iran because of US financial sanctions against the Islamic republic, a senior bank official said on Wednesday.

“The disbursements to these projects are delayed until the World Bank finds alternative financial institutions to handle the transactions,” said the official, confirming a recent report in The New York Times. He spoke on condition of anonymity.The payments, for four of nine World Bank projects in Iran, were to have been made by Bank Melli, he added.

The US government on Oct 25 slapped sanctions on three of Iran’s largest state-owned banks, cranking up pressure on Tehran over its alleged nuclear weapons drive and terror financing.

The sanctions targeted Bank Melli, Iran’s largest bank, and Bank Mellat, for their alleged support of Iran’s nuclear programme.

A third bank, Bank Saderat, was designated “a terrorist financier”. The US had imposed other sanctions against the bank in September 2006.

The sanctions forbid any financial transactions between a US citizen or private organisation with the targets, and froze all the targets’ assets under US jurisdiction.

The suspension of World Bank payments affects four projects in Iran: emergency aid after a deadly earthquake in Bam, in the south of the country; water treatment, environmental management; and urban renewal.

The World Bank has awarded nine loans to Iran, totalling $770 million, the senior bank official said.—AFP