Strike on Iran could hurt world economy, US says

HALIFAX, Nova Scotia Thu Nov 17, 2011 8:32pm EST

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HALIFAX, Nova Scotia (Reuters) - U.S. Defense Secretary Leon Panetta said he would raise American concerns about the unintended consequences of any military action against Iran during talks with his Israeli counterpart on Friday, including its potential impact on the world economy.

Tension over Iran's nuclear program has increased since the International Atomic Energy Agency (IAEA) reported last week that Tehran appeared to have worked on designing a bomb and may still be conducting secret research to that end.

Panetta, speaking to reporters traveling with him to Canada, said the United States believed the most effective way to confront Iran still was to use diplomatic pressure and sanctions to try to curb the Islamic state's nuclear program.

"Obviously to go beyond that raises our concerns about the unintended consequences that could result," Panetta said.

He pointed to a U.S. analysis that a strike on Iran would set back its nuclear program, which Iran says is only for peaceful purposes, by one or two years at most. It would also have implications for U.S. forces in the region.

"And I have to tell you, thirdly, there are going to be economic consequences to that, that could impact not just on our economy but the world economy," Panetta said.

"So those things all need to be considered."

Panetta is due to attend a security forum in Halifax, Canada, where he will also hold bilateral talks with Israeli Defense Minister Ehud Barak on Friday.

"I've made those points before and I'll discuss them again," Panetta said, asked about what message he would deliver to Barak.

There has been concern that if the world powers cannot settle their differences over how to nudge Iran into serious nuclear negotiations, then Israel, which feels endangered by Iranian nuclear aspirations, will attack it.


Iran has warned that it will respond to any attacks by hitting Israel and U.S. interests in the Gulf. Analysts say Tehran could retaliate by closing the Strait of Hormuz, the waterway where about 40 percent of all traded oil passes.

"The United States feels strongly that the way to deal with that is to work with our allies, to work with the international community to develop the sanctions and the diplomatic efforts that would further isolate Iran," Panetta said.

"That is the most effective way to confront them at this point."

The six powers involved in diplomacy on Iran - the United States, Russia, China, France, Britain and Germany - hammered out a joint resolution in intense negotiations and submitted it to the 35-nation board of the International Atomic Energy Agency (IAEA), a Vienna-based U.N. body, which is expected to debate and vote on it on Friday.

It aims to increase pressure on Iran to address fears about its atomic ambitions. But it is not expected to satisfy those in the West and in Israel, who had hoped IAEA document would trigger concrete international action, such as an IAEA referral of its case to the U.N. Security Council.

(Editing by Eric Beech and Eric Walsh)

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Comments (13)
Lanche wrote:
So the question that is on everyone’s mind is what happens when they attack Israel? Don’t you think its going to get to that point anyway. They are already using puppet countries to attack Israel. So instead of being proactive with a radical regime hell bent on attacking our ally. We sit and watch them get the bomb? What will that do to the economy when that occurs?

Nov 17, 2011 10:32pm EST  --  Report as abuse
2ctruth wrote:
Israel is the greatest destabilizing force in the world. All wars in the middle east since 1948 can be traced back to them.

Their goal is to destabilize and disarm neighboring states as they use force to theive, murder, and dehumanize the population under their control. They embody a stunning injustice that is unnatural and will not stand the test of time.

Nov 17, 2011 10:35pm EST  --  Report as abuse
OrganicGerry wrote:
Panetta fails to mention that NOT striking Iran will hurt the world economy. Not striking Iran will create a nuclear weapons race. Not striking Iran will cause immediate nuclear terror and the real fear of a massive nuclear first strike on one side or the other. Panetta is guessing wildly when he says that a strike on Iran will only set Iran back 1-2 years. It really depends on the goals of the attack and the risks nations will take now to deter near future catastrophic problems.
Neville Chamberlain thought he was doing the world a favor. Wrong, wrong, a thousand times wrong!
On the contrary, there is the possibility that after the initial conflict, the strike on Iran could cause economic growth as world terror and the threat of a more protracted war of nerves with Islamofacists recedes. Gas prices might actually drop as OPEC nations work more closely with the west instead of hedging their bets.

Panetta is simply a puppet for Obama, with is talking the talk of leaving all options open, but putting out through Panetta the rationality for allowing Iran to achieve the bomb.

Where is the new Winston Churchill when the world desperately needs a hero.

Nov 17, 2011 10:42pm EST  --  Report as abuse
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