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Daily Newscasts

Threat of Iran War Hurting Weak U.S. Recovery

March 26, 2012

INDIANAPOLIS - Concerned that Iran may be building nuclear weapons, some in Congress are pressing for the U.S. to bomb Iran's nuclear facilities, or to help Israel carry out such an attack, but economists warn that even the threat of war is hurting the economic recovery.

Mark Weisbrot, co-director of the Center for Economic and Policy Research, says the standoff in the world's most important oil-producing region is what's driving up the price of crude. And he says any conflict would probably have a terrible impact on the frail European economies, which in turn, could damage what is still weak growth here.

"Oh, very easily. We're only growing 1.8 percent for this year. The threats against Iran, the threat of war, could easily tip the U.S. economy into a recession."

Gasoline prices in Indiana average around $3.90 a gallon, and are well over $4 a gallon in the northwestern part of the state, in the Chicago area.

Economists say there are numerous factors behind the price of gasoline: a bottleneck at refineries, and the exporting of gas to Europe are two of them. But Weisbrot says the threat of war is the single reason crude oil has gone up $6 to $10 a barrel since the beginning of the year. And since it's a global market, he says, drilling or building pipelines here wouldn't make much difference.

"Any kind of oil production here, or in Canada, would have very little impact. What we're looking at really has nothing to do with whether the President wants to drill anywhere, or build a pipeline."

He notes the European economies are in an even more vulnerable situation than the U.S., and says a new crisis there could easily spread across the Atlantic.

"Just as it could tip the U.S. economy into recession, you know, Europe is already in recession. And Europe is more fragile as well, because of the financial problem."

Estimates vary widely on how far Iran may be from producing nuclear weapons, and it's even uncertain if that's the Teheran regime's intention. Most experts agree that Israel already has nuclear weapons, although the Israeli government refuses to confirm or deny it.

Leigh DeNoon, Public News Service - IN