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US: Strike on Iran could hurt world economy

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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.

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.

Iran has warned that it will respond to any attacks by hitting Israel and U.S. interests in the Persian 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.”


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