Trading Dutch Well Placed to Pursue Russia Sanctions

Posted by Eric Haun
Wednesday, July 23, 2014

The seafaring Netherlands prides itself on being a trading nation, reluctant to let politics get in the way of a good deal.

But since the downing, allegedly by Moscow-backed rebels in eastern Ukraine, of Malaysian Airlines flight MH17 with the loss of 193 Dutch lives, a growing Dutch chorus has called for the country to use its trade power to hit Russia in the wallet.

Dozens of Russian firms have chosen to incorporate in the Netherlands to save money on tax, taking advantage of an extensive network of double taxation treaties. The country is also one of Russia's largest trade partners.

Rotterdam, the world's fourth largest port, is a major distribution hub for fossil fuels and minerals and was the single largest destination for Russian exports in 2013, importing $70 billion of goods excluding gas, according to the United Nations and the World Trade Organisation.

Crude oil accounted for $22 billion of the total, followed by coal and metal ores. Much of it was re-exported, either raw or after refining or processing - Rotterdam is the entry point for a big slice of imports to Germany, Europe's largest economy.

"The trade in mineral fuels is very important in the trade relationship between the Netherlands and Russia and that dominates," said Marjolijn Jaarsma of the national statistics agency Statistics Netherlands.

"Almost two thirds of that is for re-export," she said. "It's the Rotterdam effect."

That suggests the Dutch economy is less dependent on Russian imports than the trade figures indicate.

According to a report last year by U.N. agency UNCTAD, the Netherlands was one of the top three jurisdictions, along with Cyprus and the British Virgin Islands, for the "round-tripping" of Russian investment money.

Under that technique, money that looks like foreign investment abroad is sent to a low-tax offshore financial centre and then comes straight home, giving the owner legal protection against expropriation or arbitrary acts by government.

An opinion poll published on Wednesday in the daily De Telegraaf said 78 percent of the Dutch want punitive sanctions taken against Russia even if it harms the Dutch economy.

Politics Before Trade?
Once the world's greatest maritime power at the centre of a 17th century trading empire that spanned the globe, the Netherlands may be minded to turn its back on centuries of tradition and put politics before trade.

"Nobody, absolutely nobody gets the better of us," Foreign Minister Frans Timmermans wrote in a Facebook post on Wednesday, shortly before the first bodies from the crash arrived back in the Netherlands.

One Moscow-based financial source said the Netherlands was popular for structuring Russian offshore investments.

"I would expect there are very significant investments going through the Netherlands," the source said, speaking on condition of anonymity.

"There will be a push to look at this (but) people (will also be) thinking about the business implications - they may lose jobs if Russian investment pulls out," the source said.

Dutch Prime Minister Mark Rutte has said all options "whether political, economic or financial" are on the table. Lawmakers are taking an increasingly hard line, with several opposition politicians saying targeting Russian offshore companies should be a priority of Dutch policy.

Several plan to raise the issue in a parliamentary committee meeting on Friday. Others say it would be wise to wait with sanctions until the bodies of victims are safely returned and investigations are out of the way.

"If Russia's complicity or responsibility is proven beyond doubt, every measure, whether economic, trade-related, personal or related to the delivery of weapons should be considered," said Sjoerd Sjoerdsma, foreign affairs spokesman for the liberal D66 party, which according to polls would win an election today.

Bram van Ojik, parliamentary leader of the Green party, said the government should make a priority of targeting "mailbox companies" - postal addresses with no permanent employees acting as a front for a much larger business located abroad.

"There are thousands of mailbox companies here in the Netherlands and some of their businesses are pretty shady anyway," he said.

A hint of the scale of the capital flows generated by such companies comes from the foreign direct investment figures published by the Central Bank of Russia (CBR).

Flows to and from the Netherlands are among the most volatile, and in some years orders of magntitude larger than flows to much larger economies like France or the United States.

In 2012, the net FDI outflow from Russia to the Netherlands reached $2.6 billion. In 2013, flows were reversed, with a net $3.5 billion flowing from the Netherlands to Russia. The equivalent figures for France were a $1.4 billion outflow in 2012 and a $449 million outflow in 2013.

Net Russian FDI outflows to the United States were just $688 million in 2012 and $763 million in 2013.

But some politicians cautioned against acting in haste, even putting aside the harm sanctions could cause the Dutch economy.

"Not all the bodies are home yet," said Harry van Bommel, foreign affairs spokesman for the left-wing Socialist Party.

"There has to be cooperation first of all with recovery of the bodies," he said. "It would be an irresponsible disturbance of this process if now, at this stage, sanctions were introduced."

(By Thomas Escritt and Harro Ten Wolde; Additional reporting by Tom Miles in Geneva and Megan Davies in Moscow; Editing by Paul Taylor)

Maritime Reporter March 2015 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

Tanker Trends

APM Maasvlakte II Terminal Opens

APM Terminals Maasvlakte II held a ceremony  to celebrate the opening of the world’s most automated container terminal.   The  event that was attended by Dutch

MISC Says AET Tankers Unit Not for Sale

MISC Berhad issued a statement today addressing recent market speculation that the company is set to sell its wholly owned petroleum tanker subsidiary AET Tankers.

Strong Tanker Market Extends Peak Season High Earnings

Tanker earnings for crude oil tankers have climbed to new strong levels in the first quarter of 2015, with averages not seen since 2008, the Baltic and International Maritime Council (BIMCO) reported.

Ports

APM Maasvlakte II Terminal Opens

APM Terminals Maasvlakte II held a ceremony  to celebrate the opening of the world’s most automated container terminal.   The  event that was attended by Dutch

Skangass Celebrates Topping Up

Nordic liquefied natural gas operator Skangass  has celebrated a topping out ceremony at its Pori LNG terminal. The company said it was making progress in the

Zim Offers Asia-US east coast service via Suez

Israeli liner carrier Zim Integrated Shipping Services is launching a new service between Asia and the U.S. East Coast via the Suez Canal at the end of May.   The

Finance

Norwegian Car Carriers to Buy Two from Hyundai Samho

Oslo-listed Norwegian Car Carriers (NOCC) has signed a contract with Hyundai Samho Heavy Industries for the construction of two 6500 ceu Pure Car Truck Carrier (OCTCs).

Long Beach, Los Angeles ports host forum to gather input

More than 100 cargo owners, trucking firm leaders, longshore labor, marine terminals and other goods movement industry representatives turned out Wednesday for

Venezuela Probes ex-minister accused of corruption in Ferry Deals

A former minister in President Nicolas Maduro's government denied in an interview published on Friday accusations of corruption during the purchase of three

Energy

Goliat FPSO in Norway

The Goliat FPSO was successfully floated off the heavy-lift vessel, Dockwise Vanguard, in the fjord outside Hammerfest, says Eni Norge    The Goliat platform has arrived in Hammerfest,

Skangass Celebrates Topping Up

Nordic liquefied natural gas operator Skangass  has celebrated a topping out ceremony at its Pori LNG terminal. The company said it was making progress in the

Falklands' Oil Drilling at Isobel Deep Suspended

Oil explorers drilling in the waters north of the Falkland Islands have suspended work on the second well of their 2015 current six-well drilling campaign after a technical problem.

News

Goliat FPSO in Norway

The Goliat FPSO was successfully floated off the heavy-lift vessel, Dockwise Vanguard, in the fjord outside Hammerfest, says Eni Norge    The Goliat platform has arrived in Hammerfest,

BIMCO Welcomes EU Decision on Migrants

BIMCO has stated today that it appreciates the new efforts by EU leaders to reduce increasing reliance on merchant shipping to rescue the growing numbers of

Long Beach, Los Angeles ports host forum to gather input

More than 100 cargo owners, trucking firm leaders, longshore labor, marine terminals and other goods movement industry representatives turned out Wednesday for

Government Update

Judge Orders Migrant Boat to Remain in Custody

An Italian judge on Friday ordered that the presumed captain of a migrant boat that sank with the loss of more than 700 lives should remain in custody after prosecutors

Iran Moves Ships, Reducing Tensions Near Yemen

A flotilla of nine Iranian military and cargo ships that U.S. officials feared was carrying arms to strife-torn Yemen sailed northeast in the direction of Iran on Friday,

Rescue Ships Head for Libya, as Migrants Die Also in Balkans

British and German warships made ready to sail for waters off Libya as Europe ramped up rescue operations in the Mediterranean after up to 900 desperate migrants

 
 
Maritime Security Naval Architecture Navigation Offshore Oil Pod Propulsion Port Authority Salvage Ship Electronics Sonar Winch
rss | archive | history | articles | privacy | contributors | top maritime news | about us | copyright | maritime magazines
maritime security news | shipbuilding news | maritime industry | shipping news | maritime reporting | workboats news | ship design | maritime business

Time taken: 0.1447 sec (7 req/sec)