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 "If we turn around and nix the deal and then tell them, 'You're
going to have to obey our rules and sanctions anyway,' that is a
recipe, very quickly ... for the American dollar to cease to be the
reserve currency of the world," U.S. Secretary of State John Kerry
said at a Reuters Newsmaker event.
Defending the July 14 Vienna agreement between Iran and world powers
that he helped to negotiate, Kerry deployed a new argument in a
feverish battle to prevent lawmakers from killing it. Congress has
until Sept. 17 to act.
Kerry warned of a potential loss of U.S. financial and political
clout. He said this was not something that would happen overnight
but many countries were "chafing" under the present international
financial arrangements.
He said U.S. Treasury experts "are doing a full dive on how this
works and what the implications are. But 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."
 New York-based Boris Schlossberg, managing director of FX Strategy,
BK Asset Management, challenged Kerry's reasoning. He said the
dollar’s status could be compromised only if the United States was
unable to compete economically on a global scale.
“The reality of the situation is that the U.S. dollar hasn’t been
this strong in decades. The thought that it could be replaced as a
reserve currency is laughable at this point on a geopolitical basis
and nothing in the Iran deal even remotely touches upon that issue,”
he added.
Economists and financial analysts have often conjectured that a
competing currency like the euro or the Chinese yuan will eventually
dethrone the dollar as global trade and financial patterns shift.
But the U.S. currency’s position has been largely immune - mostly
for lack of any good alternative.
KERRY, POINT BY POINT
In an hour-long moderated discussion, Kerry also:
* Acknowledged that the tone of the Iran debate had taken on a
political edge.
President Barack Obama last week accused critics of the deal of
making common cause with Iranian hardliners who chant “Death to
America” and said some had beaten the drum for the Iraq war.
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"You can squabble maybe with the choice of words," Kerry said when
asked about Obama's comments. He stressed his view that the Iran
deal should be argued on its merits. "I think the merits are very,
very strong and I think the president does too," he said.
* Said it would be impossible for Iran to create a secret program
for developing atomic fuel without the United States being able to
detect it under the deal.
* Said the Iranians were open to discussing disputes in the Middle
East, where Washington and its allies accuse Tehran of backing
proxies in Iraq, Lebanon, Syria and Yemen.
"They said to me, 'If we can get this deal done, then we're ready to
sit down and talk about the regional issues and we may be able to
work things in different places,'" Kerry said. Iranian Foreign
Minister Mohammad Javad Zarif is currently in Lebanon and had
already visited Kuwait and Qatar in a bid to reach out, he said.
* Said violations by Iran of an arms embargo or restrictions on its
missile program would not force an automatic return or "snapback" of
United Nations sanctions under the nuclear deal, although other
options would be available.
The agreement gives Tehran some relief from economic sanctions in
return for strict limits on a nuclear program that the West has
suspected was aimed at creating a nuclear bomb.
Tehran has long denied seeking a nuclear weapon and has insisted on
the right to nuclear technology for peaceful means. Obama has never
ruled out military force if negotiations failed, and has said that
he and future presidents would still have that option if Iran quit
the agreement.
(Additional reporting by Howard Schneider, David Storey and Lesley
Wroughton; Editing by Howard Goller)
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