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 Today


The Maritime Industry's original and most viewed E-News Service

Maritime Reporter April 2016 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

Tanker Trends

Crowley Christens Third LNG-ready Product Tanker

Crowley Maritime Corporation christened the third of four new LNG-ready Jones Act product tankers at a May 5 ceremony at the Julia Street Cruise Terminal in New Orleans.

UK Ship Named for BBC Naturalist, but Boaty McBoatface Lives On

A new 200 million pound ($290 million) polar research ship is to be named after veteran BBC naturalist David Attenborough but the government promised on Friday that "Boaty McBoatface",

Egypt to receive first LNG shipment from Rosneft in May

Egypt will receive the first of five agreed shipments of liquefied natural gas (LNG) from Russia's Rosneft this month, an official at the state gas board EGAS told Reuters on Thursday.

Finance

Moody's Dings Hurtigruten's Outlook Due to Newbuilds

Moody's Investors Service, (Moody's) issued a press release affirming the B2 corporate family rating (CFR), B2-PD probability of default rating, and the B2 senior

NOL Posts Q1 Net Loss of $105 Mln

NOL Group reported a first quarter 2016 net loss after tax of $105 million. Core EBIT (Earnings before Interest, Taxes and Non-Recurring Items) for the period was a loss of $84 million,

US Aims to Recover El Faro VDR in Next Few Months

The U.S. National Transportation Safety Board hopes to recover the voyage data recorder from the cargo ship El Faro, which sank during a hurricane killing all 33 crew on board,

News

Rolls-Royce Implements Shipdex for Tunnel Thrusters

Rolls-Royce Marine has implemented Shipdex as the data standard for its range produced in Ulsteinvik, Norway, representing the third Rolls-Royce Marine products to adopt the Shipdex standard.

IBIA Develops Bunkering Procedure Guidelines

A set of Standard Operating Procedures (SOP) for surveyors has been developed by the International Bunker Industry Association (IBIA) to help the industry manage new regulations,

Strikes Cause Stoppage in Greek Ports

A 48-hour strike by the Seamen’s Union in Greece is expected to affect all domestic and local ferry routes as well as commercial vessels calling at Piraeus, Aspropyrgos,

Government Update

IBIA Develops Bunkering Procedure Guidelines

A set of Standard Operating Procedures (SOP) for surveyors has been developed by the International Bunker Industry Association (IBIA) to help the industry manage new regulations,

Strikes Cause Stoppage in Greek Ports

A 48-hour strike by the Seamen’s Union in Greece is expected to affect all domestic and local ferry routes as well as commercial vessels calling at Piraeus, Aspropyrgos,

Coast Guard, Homeland Security Open Joint R&D Facility

Coast Guard Research and Development Center along with DHS Science and Technology Directorate officially open a new Science and Technology Innovation Center   The

 
 
Maritime Contracts Maritime Security Maritime Standards Naval Architecture Navigation Offshore Oil Pod Propulsion Salvage 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: 0.1439 sec (7 req/sec)