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Energy Expert: Russia-China Deal '1st Battle of Petrodollar'

By Courtney Coren   |   Friday, 30 May 2014 06:01 PM

The natural gas deal signed by Russia and China marks "the beginning of the end" of the petrodollar, which is exactly what Russian President Vladimir Putin wants, says Marin Katusa, chief energy investment strategist for Casey Research.

"It's not going to go away abruptly overnight, but this is the first battle of the petrodollar, and the Americans have lost this round," Katusa told J.D. Hayworth on "America's Forum" on Newsmax TV Friday.

"This is a significant deal, and it's exactly what Vladimir Putin wants to do to the American dollar," he added.

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Russia signed a long-term $400 billion deal to sell its natural gas to China on May 21.

It's a deal that Russia felt like it need to make to reduce its dependence on Europe as its customer base, especially in light of increasing sanctions over the conflict in Ukraine, Katusa explained. And China is also looking for "a true significant alliance" due to its own "brewing controversy" with Japan.

Katusa said that what was "more significant" in the deal is that "after this deal was signed, the president of China said, 'We need, we as in Asia, especially China, need a new security model that includes Russia and Iran.'"

The energy expert described it as "basically, a new United Nations that is Asian focused, that is not dominated by America and the Europeans."

And 48 hours later, Katusa explained, Russia also signed a deal with Iran to build up to eight nuclear reactors in the Middle Eastern country.

"We may look at it as an axis, but they’re looking at us as the axis. We're the old axis," Katusa said.

"It's important to understand that there's new boundaries, new alliances being drawn here and the new growth, where everything is going toward where China goes," he added. "The world economy is depending on China.

"Vladimir Putin and the Russians have situated themselves to provide the energy to the engine of future growth," Katusa said. "Do not underestimate what the Russians are doing right now. It is significant."

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