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 August 2014 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

Tanker Trends

GTT Earns Five AIPs for Multi-gas Membranes

Gaztransport & Technigaz (GTT), designer of membrane containment systems for the maritime transportation and storage of LNG (Liquefied Natural Gas) announced five

Steel Cut for Yamal LNG Project’s Lead Tanker

A steel-cutting ceremony was held on September 29 for the lead gas tanker ordered by SCF Group for transportation of liquefied natural gas (LNG) under the Yamal LNG project.

GasLog Closes First Option Vessels Dropdown

GasLog Ltd.  announced today the closing of the sale of two modern liquefied natural gas (“LNG”) carriers, the Methane Jane Elizabeth and Methane Rita Andrea,

Ports

Cove Point LNG Export Facility Gets US FERC Approval

U.S. federal regulators on Monday approved construction of Dominion Resources Inc's liquefied natural gas export project in Cove Point, Maryland. Cove Point is the fourth U.

DMR Examines Container Terminal Congestion Issues

Container port congestion has been hitting the headlines recently, but the reasons for it vary widely and in many cases it is only a short term issue. Certain world

Fire at Milazzo Refinery Impacts Docks

Inchcape Shipping Services  is advising of extensive disruption after a fire broke out Friday afternoon (27 September) at Italy’s energy giant Eni and Kuwait Petroleum’s

Finance

Norvestor to Become PG’s Largest Shareholder

Norvestor VI, L.P., a fund advised by Norvestor Equity AS, announced it has signed an agreement to invest in Ing Per Gjerdrum AS including its subsidiaries PG Hydraulics AS and PG Construction AS.

GasLog Closes First Option Vessels Dropdown

GasLog Ltd.  announced today the closing of the sale of two modern liquefied natural gas (“LNG”) carriers, the Methane Jane Elizabeth and Methane Rita Andrea,

Brent Holds Above $97, Eyes Worst Quarter Since 2012

Brent crude futures hovered above $97 a barrel on Tuesday, aided by firm U.S. and Chinese data, but the oil benchmark was on track for its deepest quarterly drop

Energy

Louisiana to Get Natural Gas Liquefaction and Fueling Facility

Tenaska Bayou LNG expected to meet growing marine, transportation and oil and gas exploration and production demand on the Gulf Coast Tenaska NG Fuels, LLC and Waller Marine, Inc.

ABB WinsTunisia's Gas Treatment Plant Bid

ABB, the leading power and automation technology group, has been awarded a $216 million contract to deliver a gas treatment plant to the South Tunisian Gas Project (STGP).

GasLog Closes First Option Vessels Dropdown

GasLog Ltd.  announced today the closing of the sale of two modern liquefied natural gas (“LNG”) carriers, the Methane Jane Elizabeth and Methane Rita Andrea,

News

NY Harbor Supply & Distribution Fall Reception/Buffet

More than 600 attendees are expected at the 52nd annual New York Harbor Supply & Distribution Fall Reception/Buffet for the energy and energy related industries

Kounalakis Joins OW Bunker N. America

OW Bunker, a reseller and physical supplier of marine fuels, announced the appointment of Georgia Kounalakis to its physical supply operation in North America.

Louisiana to Get Natural Gas Liquefaction and Fueling Facility

Tenaska Bayou LNG expected to meet growing marine, transportation and oil and gas exploration and production demand on the Gulf Coast Tenaska NG Fuels, LLC and Waller Marine, Inc.

Government Update

Cove Point LNG Export Facility Gets US FERC Approval

U.S. federal regulators on Monday approved construction of Dominion Resources Inc's liquefied natural gas export project in Cove Point, Maryland. Cove Point is the fourth U.

Port Firm Fined £650,000 for Health, Safety Breach

A port operator has today (Monday 29 September) pleaded guilty to health and safety breaches, following the deaths of three crew members of a tug which capsized on the River Clyde in 2007.

IRPT, Community College MoA on Maritime Training

The Inland Rivers, Ports and Terminals (IRPT) Trade Association announced today that it has entered into a memorandum of understanding with Lewis & Clark Community

 
 
Maritime Careers / Shipboard Positions Maritime Standards Navigation Offshore Oil Pipelines Pod Propulsion Port Authority Ship Repair Sonar Winch
rss | archive | history | articles | privacy | terms and conditions | 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: 0.1975 sec (5 req/sec)