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According to MIT’s Observatory of Economic Complexity (www. atlas.media.mit.edu) country profile of the Netherlands its top 3 imports and exports are: crude petroleum, refined petroleum and computers.
Imports Exports

Crude Petroleum (14%) Refined Petroleum (11%)
Refined Petroleum (11%) Crude Petroleum (5.4%)
Computers (4%) Computers (3.3%)

Germany and Belgium-Luxembourg are the top two destinations for the Netherlands imports and exports. After these two, the Netherlands imports the most from Russia (8%), but Russia is only it eleventh export trading partner (1.5%). In contrast, the Netherlands is Russia’s top export trading partner (9.2%) and the Netherlands its 13th import trading partner (2.3%). Russia’s three principal exports are crude petroleum (39%) and refined petroleum (15%) and petroleum gas (9.2%). Russia’s 4th largest export partner after China (8.1%) and Germany (6.5%), is the Ukraine (5.7%). Belarus is close behind at (5.4%), from whom it imports (4.4%). Russia is the 2nd largest exporter of crude petroleum after Saudi Arabia.

The Netherlands is Europe’s second largest producer of natural gas, and is self-sufficient for residential heating at least through 2020. Nonetheless, it has substantial imports of natural gas with about 40% of the total volume imported being used domestically. Natural gas is principally imported from Norway, but 11% is from Russia. Its oil stock reserves from net imports are 90 days (mostly stored in Germany). Industry (40%) and transport (42%) account for about 80% of oil used in the Netherlands (see http://www.iea.org 2014 country profile), with transformation (mostly oil refineries) accounting for about 12%. Petrochemical use (naphtha) is the principal industry use, with diesel being the principal transport use. Residual oil mostly goes to fueling international shipping. The petrochemical industry drives the Netherlands imports from Russia in the form of fuel oil and naphtha. The Netherlands through Rotterdam (and inland bunkering) and regional pipelines (to Germany and Belgium) transits oil from imports at about four times the volume of its domestic need. It also is a major regional supplier of refined petroleum, with about 63% of refinery production being exported (principally gas/ diesel oil and naphtha).

The Netherlands is one of the most fossil fuel dependent countries in Europe (95%), but much of this is transitional as it is a regional hub, principally for Germany, Belgium and Luxembourg. It has a substantial trade imbalance with Russia on a gross basis. Outside of transport, its petrochemical industry, accounts for about 20% of domestic consumption and is 15% of all of Europe’s petrochemical activities. As with crude oil, refined petroleum will gravitate to supply of China. This co-dependency will be accentuated in the Russia-China relationship, as pipelines come online and Arctic transport becomes more feasible. The co-dependency is heavily weighed in favor of China, as Russia’s economy is strictly commodity based. In the interim, political upheavals that translate into higher oil prices is beneficial to Russia and oligarchs connected to Mr. Putin. With U.S. energy independence, in the longer term, this will not benefit China. Any European disruptions with Russia, that fosters U.S. exports of its excess supplies to Europe, and deplete its reserves is also politically beneficial to Russia and China.

The Netherlands, like other EU member countries are targeting more renewable fuel usage beginning about 2020. Biomass alternatives, may reduce some petrochemical usage, but substation of less fossil fuel dependent transport will be transformative. China too is moving in this direction, but has a much longer curve than the EU.

From a political leverage standpoint, the key to bringing Russia to heal, is a reduction in oil price. Sanctions by the U.S. are only playing into China’s hands of having the Yuan become the world’s currency. Short-term switching is not meaningfully feasible for the Dutch, but they need to move more aggressively to implement plans to enable this.

To honor their citizens lost in the downing of the Malaysian airline, they should be leveraging their economic relations with Russia. It might also enable them to correct its trade imbalance with Russia at the same time. Their citizens cannot be hurt by any supply reduction, because residential usage is self-sufficient through natural gas. Its leaders just seem to be lacking the will power to use their historic relationship with Russia, and the Netherlands economic power against it.

Mr. Putin’s reluctance to admit the error is peculiar, given that it is remote that Russian military, either directly or indirectly would have ordered the downing of a civilian plane, particularly connected with its major trading partner. It is perhaps a lesson learned about weapons being supplied, and a known cautionary tale for all major powers. The more unresticted access to the site is obstructed; expert review of the aircraft and recovery delayed; and prosecution thwarted; the more unnecessary damage will be done to Russia’s trading relations with its necessary economic partners. Russia playing the German 1930s card is not in its mid-term nor long-term interest.

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