If US drops Iran deal, dollar could suffer

If the United States cancels the Iran nuclear deal, as some members of Congress urge, the blow to its credibility may be such as to hasten the end of the dollar's reign as the world's reserve currency, Secretary of State John Kerry warned Tuesday.

Kerry said in New York that if the United States is not able to uphold its end of the deal to rein in Iran's nuclear program in exchange for sanctions relief, this could revive an attack on the dollar's status "which is already bubbling out there."
And he warned that such a diplomatic turnaround would alienate even America's traditional allies, not only "with respect to the sanctions, but we will lose their support if we have to use military action."

Kerry was the principal US negotiator of the accord, signed last month in Vienna, that dramatically curtails Tehran's nuclear program in exchange for a gradual and conditional lifting of international sanctions.

The deal has been publicly and vocally opposed by many members of the US Congress as well as by Israel, and has raised concerns among US allies in the Gulf.

Kerry's comments continue a month-long public defense of the deal by members of President Barack Obama's administration.

But it is the first time he has tied the fate of the US dollar to the deal.

"I mean, the complications that will grow out of that are enormous and there will be an increase in this notion that there ought to be a different reserve currency because the United States is misbehaving, and not in fact, you know, living by the agreements that it negotiates itself," he said.

"So it has broad implications," he said, speaking at a forum organized by the Reuters news agency, promising that more details on this threat would be released by the US Treasury.

The US opponents of the deal have a slim but unlikely chance of being able to block the deal in Congress.

Congress will vote in September on a resolution to stop the president suspending sanctions against Iran.

Obama has said he would veto that resolution. A two-thirds majority in both chambers of Congress -- which, for now, appears unlikely -- would be required to overturn that veto.
Source: AFP