Rejecting Iran deal could damage the dollar, support for Russia sanctions – Kerry

U.S. Secretary of State John Kerry © Brendan Smialowski
Rejecting the nuclear agreement with Iran could put the future of the dollar as the globe’s reserve currency at risk, US Secretary of State John Kerry said. The diplomat also mentioned that it could jeopardize European support for anti-Russia sanctions.

Speaking at a Reuters Newsmaker event Tuesday, Kerry said there would likely be negative consequences for the US if Congress decides to reject the Iran deal, especially since it was negotiated in coordination with world powers, including top American allies in Europe. Most notably, he said the dollar itself would suffer if America tries to unilaterally keep sanctions in place despite the finalization of the agreement.

“Are you kidding me?” Kerry said, responding to arguments suggesting unilateral US sanctions would bring the world along. “The United States is going to start sanctioning our allies and their banks and their businesses [who conduct business with Iran] because we walked away from a deal?”

Kerry said that President Barack Obama and the US have already spent a lot of political capital persuading countries such as China, India and others to back off buying Iranian oil while sanctions created an impetus to reach a diplomatic solution to the standoff over Tehran’s controversial nuclear program.

“Could you imagine trying to sanction them after persuading them to put in place sanctions to bring Iran to the negotiating table?" Kerry said. "And when they have not only come to the table but they made a deal, we turn around and nix the deal, and then tell them, ‘You’re going to have to obey our rules on the sanctions anyway.’”

“That is a recipe, very quickly … for the American dollar to cease to be the reserve currency of the world.”

If China, Russia and Europe all decide to resist American efforts to keep sanctions in place against Iran, Kerry said even negotiations over an international trade deal with the EU could be affected because countries may see the US not abiding by agreements that are negotiated by its own diplomats.

Kerry added that the US Treasury will also be evaluating the potential consequences for the US dollar in the event the Iran agreement is rejected, and that the results would be released to the public.

“The notion that we can just sort of diss the deal and unilaterally walk away as Congress wants to do will have a profound negative impact on people’s sense of American leadership and reliability,” Kerry said.

One potential scenario that Kerry outlined involved the future of sanctions imposed on Russia over the conflict in Ukraine. The US and EU have imposed an array of economic and financial penalties on Moscow, and Kerry said backing away from the deal with Tehran could cause Europe to rethink the continuation of those sanctions.

“That is a recipe, very quickly, my friends... for them to walk away from Ukraine,” he said, referring to the fact that sanctions are unpopular with several EU nations.

“They’re ready to say, ‘we’re the ones paying the price for your sanctions.’”

‘US bullying EU to keep up sanctions against Russia’

The anti-Russian sanctions are being forced on Europe by Washington, former US diplomat and independent media and government relations specialist Jim Jatras told RT, calling it a form of American political bullying. He also said some people were scratching their heads and speculating as to what kind of pressure the US could be applying to make Europe comply.  

“Unlike the Iran sanctions that were approved by Security Council, certainly none of the sanctions against Russia were approved by the Security Council. Other countries, China, India and so forth don’t agree with them. And I am sure many people in Europe are saying to themselves: Why are we doing this?” Jatras said.  

“Frankly I think some people are wondering what kind of threats, what kind of pressure are we giving to our European friends. Not a very friendly thing it seems to me, to force them to go along with sanctions that are clearly not in their interest. Certainly, it is a concern for businesses in Europe. But this is where you get a trade of between economic policy and self-interest, in what really is political bulling and ideology coming from Washington.”

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