Tags: Katusa | oil | Russia | ruble

Economist Katusa to Newsmax TV: Oil Price Drop 'Painful, But Not Terminal' for Russia

By    |   Wednesday, 17 December 2014 02:50 PM

While plunging oil prices have sent Russia's economy and the ruble reeling, they aren't a death knell for the nation by any means, economist Marin Katusa told Newsmax TV.

"It couldn't be farther from the truth. That's what the American mainstream media wants to say," the author of "The Colder War: How the Global Energy Trade Slipped from America's Grasp" told Newsmax TV's "America's Forum."

"Russia has about $400 billion in reserve currencies. They've got hundreds of billions of dollars worth of gold, they annually have trade surpluses over $200 billion, and there's a lot of powder President Vladimir Putin still has."

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Bottom line: "there's no question that the drop in oil has been painful, but it is by no means terminal," Katusa said, noting that Russian stock prices surged in dollar terms Wednesday.

"Putin definitely has a lot of cards to play in this colder war."

As for Western sanctions on Russia, they're "definitely" having an impact, Katusa argued. "But it's more the price of oil. If you're a producer, you want your currency to decrease at a greater rate than your commodity."

And that indeed is happening here, with the ruble falling faster than oil prices are, he noted. "So the cost of producing Russian oil and Russian natural gas has now significantly decreased. This makes the Russian oil and Russian natural gas very promising and very interesting for the Chinese."

This is worrying for German Chancellor Angela Merkel, because it's pushing Russia away from Germany, which is highly dependent on its neighbor for imports and exports, and toward China, Katusa maintained. So the sanctions have backfired on the West.

The ruble's plunge has led Apple to suspend online sales in Russia, and more U.S. companies may follow suit, he predicted.

"You're seeing a real anti-Western sentiment in Russia. I'd expect not just the people to revolt, but also the Western companies may face new rules that the regular Russian companies won't, maybe new tax. This is just the beginning. It's going to get worse."

As for the U.S. decision to resume full diplomatic relations with Cuba, "this is a great opportunity for America to put a wedge in a historical ally of Russia," Katusa said.

"With the weaker ruble, it's going to be more expensive for Russia to do anything internationally. It's still the early days, so buyer beware. But this is a great opportunity for the West."

In the short run, the U.S. move will strengthen the Castro brothers, "because the corruption will work through its system," he stated. "But in the long run as more companies come in, the resorts and the casinos and all that comes with that, it's going to be great for the average Cuban and for western interests."

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While plunging oil prices have sent Russia's economy and the ruble reeling, they aren't a death knell for the nation by any means, says economist Marin Katusa, author of "The Colder War: How the Global Energy Trade Slipped from America's Grasp."
Katusa, oil, Russia, ruble
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2014-50-17
Wednesday, 17 December 2014 02:50 PM
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