Global Politics

A Horrified Netherlands May Rethink Its Economic Ties With Russia


Dutch Prime minister Mark Rutte gives a press conference in The Hague, on July 20, concerning the crashed Malaysia Airlines flight MH17 in eastern Ukraine

Photograph by Evert-Jan Daniels/AFP via Getty Images

Dutch Prime minister Mark Rutte gives a press conference in The Hague, on July 20, concerning the crashed Malaysia Airlines flight MH17 in eastern Ukraine

The Netherlands, a nation of traders, generally doesn’t like to let politics interfere with business. The death of 193 Dutch nationals in the Malaysia Airlines (MAS:MK) jet crash could change that.

Prime Minister Mark Rutte is coming under attack in the Dutch press for his generally restrained response to the crash. “Enough is enough—intervene!” reads a front-page headline on Monday in the country’s biggest newspaper, De Telegraaf. It’s calling for NATO intervention against Ukrainian separatist rebels who are suspected of having shot down the plane and are now hindering the repatriation of bodies.

Major Dutch companies with business interests in Russia also are drawing fire for their relations with President Vladimir Putin. “In April of this year, when the crisis over Crimea was at its height, [Royal Dutch Shell Chief Executive Officer] Ben van Beurden made a point of visiting Putin and saying that no matter the political situation, Shell and Russia had great plans for the future,” Bas Heijne, a columnist for the newspaper NRC Handelsblad, writes in a commentary for Politico. Heijne also fingers corporate giants Unilever (UL), Philips (PHG), and Heineken (HEIA:NA) for “dancing with the dictator in Moscow.”

Adding to the controversy is a report over the weekend that Rostec, a Russian state-controlled conglomerate that includes the maker of the Buk missile suspected in the attack, has domiciled at least one of its subsidiaries in the Netherlands to take advantage of the country’s low corporate income taxes. “This is how we are helping Rostec pay less tax on its profits,” says the report on the news website 925.nl. The Dutch-domiciled subsidiary isn’t involved in the weapons business, though.

(Rostec includes a company that makes anti-aircraft systems including the Buk missile. Rostec CEO Sergey Chemezov, as well as the company’s Kalashnikov rifle unit, have been placed on a sanctions list by the U.S., but not by the European Union.)

Although the Dutch suffered far greater losses in the crash than any nation, Prime Minister Rutte has stopped short of suggesting tougher sanctions against Russia, as British Prime Minister David Cameron and some other leaders have. “There is a sort of behavior of good cop, bad cop,” says Jan Melissen, a diplomacy expert at Clingendael, the Netherlands Institute of International Relations. “The strong words are left for the great powers.”

Melissen says he thinks most Dutch support Rutte’s approach. “Dutch society is still in a state of shock. The focus is still on getting the bodies back to the Netherlands.” He says that if the evidence shows that Russia was involved in the attack on the jet, however, Europe would push for stronger sanctions “and Dutch society would go along.”

The Netherlands has deep economic ties with Russia, ranging from Shell’s (RDS/A) investment in the Sakhalin-2 oil and gas project, to breweries operated by Heineken in several cities. The country also has positioned itself as a tax haven for Russian companies and billionaires. Unlike some of their European neighbors, though, the Dutch don’t import much gas from Russia. Norway is the Netherlands’ key gas supplier.

In his commentary for Politico, columnist Heijne says business interests lobbied the government to keep “moral preaching” out of foreign policy, when tensions arose in 2013 over the arrest of Dutch Greenpeace protesters in an Arctic port, and later over an assault on a Dutch diplomat in Moscow, 10 days after a Russian diplomat in The Hague was arrested for allegedly mistreating his children.

Heijne also says the Dutch government kowtowed to Putin by sending a “preposterously heavy delegation” to the Sochi Olympics, including Rutte and the country’s king and queen. “After the Dutch team won their first of many gold medals, they were visited by Putin in the Holland Heineken House, where the Russian president was photographed informally toasting with the Dutch king and queen,” he writes.

Matlack is a Paris correspondent for Bloomberg Businessweek.

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