Netherlands Despairs Justice for Murdered in Russia Trade

In the Netherlands, first came the shock, then the rage and now this question: Can the nation go back to business as usual with Russia if investigators conclude that Vladimir Putin’s government supported pro-Russian separatists in Ukraine who killed Dutch citizens?

On July 17, the Netherlands learned that Malaysia Airlines Flight 17 had crashed in eastern Ukraine, killing all on board, including 194 Dutch citizens. Among them was the temporary owner of a popular children’s book by Gerard van Gemert called “Between the Posts,” checked out from a Dutch library and found in the wreckage.

U.S. and Ukraine intelligence said they believed rebels had fired a surface-to-air missile, possibly Russian-supplied, and had mistaken the civilian aircraft for a military transport plane. Then came reports of pro-Russian rebels rifling through belongings of the dead for valuables, while rescue workers were prevented from accessing the site to recover and transport victims home.

“You first get the news that your husband was killed, and within two or three days you see images of some thug removing the wedding band from their hands,” Netherlands Foreign Minister Frans Timmermans said in a speech at the United Nations on July 21. “To my dying day, I will not understand why it took so long for rescue workers to be allowed to do their difficult jobs.”

Pieter Broertjes, the mayor of Hilversum, meanwhile, apologized for suggesting on a Dutch radio station that Vladimir Putin’s daughter, Maria, should be deported, even though it’s not clear she currently lives in the country. The remark, he said in a tweet, came from a “feeling of impotence that many people will recognize.”

Needs Putin

When the victims were finally brought home, the Dutch went into their first day of national mourning in more than 50 years. Nilva Martina, a 63-year-old retired teacher who lost a close friend and relative, Kevin Jesurun, in the tragedy, expressed both anger and a sense of powerlessness.

“In the beginning I was angry,” she said while attending an evening memorial march in Amsterdam on July 23. “I said, ‘Netherlands and America, throw bombs, destroy everyone, destroy Putin.’”

Now, Martina says she is less angry and more resigned to the idea that nothing much will be done at all.

“There is no alternative,” she said. “Europe needs Putin.”

Seeking Justice

Dutch Prime Minister Mark Rutte told reporters in The Hague on July 24 that “we will make sure that justice will be done for all people who lost their lives” and the downing of the plane was “a crime against humanity.” In addition, an opinion poll after the crash in the daily De Telegraaf said 78 percent of the Dutch want to impose sanctions on Russia even if that harms the economy. The percentage of the Dutch population that perished on the plane was greater than the equivalent of U.S. citizens killed in the September 11 attacks.

It’s far from clear how tough the Dutch will be in the months ahead. This small nation is heavily dependent on its trading and banking ties to Russia and, as a founding member of the European Union, is limited in its freedom to impose unilateral economic sanctions.

The Dutch pride themselves on their cultural openness and commercial pragmatism. The Netherlands’ $800 billion economy punches well above its weight class and the country is one of the world’s richest nations on a per-capita basis.

Bernard Bot, a former Dutch Foreign Affairs minister, doesn’t consider confrontation with Russia wise or justified. For one thing, there’s no evidence the rebels intentionally targeted the Malaysian flight, let alone Dutch citizens. In addition, “Russia will remain our neighbor, we share our borders, we depend on Russian gas,” he said. “There are a 101 reasons why we have to figure out how to resolve this issue.”

Hanging Tight

Unilever Chief Executive Officer Paul Polman, a Dutchman who was in India’s Taj Mahal Palace & Tower hotel in Mumbai during a 2008 terrorist attack, told Bloomberg TV the problems in Ukraine and elsewhere “have their roots in poverty and in exclusion.” Polman said his company, which gets about 3 percent of revenue from Russia, has no plans to pull back from the country.

“We have our long-term plans in every country, including Russia, and they are not changing right now,” Polman said.

Royal Dutch Shell Plc, which lost four employees in the crash, has declined to comment on whether its business in Russia will be disrupted by the incident. The company has about $6.7 billion of oil- and gas-producing assets in Russia, is exploring for shale gas, and plans to expand its Sakhalin-2 project there, according to research by Deutsche Bank AG.

Shell, the world’s eighth-biggest company by market value, employs 92,000 people worldwide, making it the fifth-biggest employer among companies listed and traded in the Netherlands. Its pension fund, which holds 22.4 billion euros ($30 billion) in assets, is the nation’s sixth-biggest. Shell’s production last year from Russia was about five percent of its total.

Royal Philips NV called the incident “unacceptable,” while saying governments should lead the investigation.

Tsar Peter

The commercial ties that bind the Netherlands and Russia go back to the days of Tsar Peter the Great, who spent part of 1697 learning shipbuilding while living in Zaandam. Two years later, the Russians set up a diplomatic mission in The Hague.

Today, Russia is the Netherlands’ seventh-biggest trading partner and a critical investment destination for Anglo-Dutch multinationals such as Shell and Unilever. In 2013, both countries celebrated their bilateral ties in a yearlong series of promotional events. At the Sochi Winter Olympics, Putin shared a beer with King Willem-Alexander of the Netherlands at the Holland Heineken House.

Russia’s biggest oil, gas, mining and retail companies -- including some run by billionaires close to Putin -- have moved tens of billions in corporate assets to the Netherlands or have used financial institutions in Amsterdam to route profits to low-tax, offshore financial centers like Bermuda and the British Virgin Islands.

Money Flow

The Netherlands, along with Cyprus and the British Virgin Islands, is a major transit point for the “round-tripping” of Russian investment money, according to a report last year by a UN agency. Under that technique, Russian money comes into the Netherlands, is moved out to low-tax offshore financial centers and then sent back to Russia, offering legal protection against expropriation or arbitrary acts by government.

“The Netherlands as a country will be juggling the fact that on the one hand it may want to hurt Russia in some way,” said Gerard Meussen, a tax law professor at Radboud University in Nijmegen. “On the other hand, we value our position as a country with an attractive tax climate. We are still merchants.”

Binding Ties

Winding back Russian commercial ties would be particularly painful now. The Dutch economy has experienced three recessions since the 2007 financial crisis. In 2012, it earned about one-third of its income from trade, according to the Netherlands Enterprise Agency. The Dutch port of Rotterdam is an important transport point for Russian energy exports to the rest of the world.

The Netherlands also has to pay heed to the EU’s broader policy response. That means taking into account Germany and France, which have different economic interests at stake. Instructing Dutch banks to withhold financing from Russian companies would have little meaning if other regional banks stepped into the gap.

“In practical terms, it’s almost impossible to do something outside of the EU,” said Louise van Schaik, a senior research fellow at the Clingendael Institute, a Dutch diplomatic think tank. “There is a lot of anger and calls for revenge, but that may not be a sound long-term strategy.”

Defense Budgets

Nor is ignoring Russia’s assertiveness and instability in the Ukraine, said Jaap de Hoop Scheffer, a retired Dutch politician and former secretary general of NATO. In an interview with Het Financieele Dagblad, he called on Europe to stop slashing its defense budgets. The current international situation is “without a doubt the most serious crisis since the Cold War and I don’t dare to predict how this will end,” he said.

In the meantime, this country of 16.9 million continues to cope with a grievous wound, and an effort is underway to identify the rebels directly involved in the downing of the Malaysian jet. Public prosecutors in the Netherlands could try foreign nationals accused of war crimes against Dutch citizens, according to Willem van Genugten, a professor of international law at Tilburg University. Yet even bringing the shooters to justice would be difficult if the suspects go into hiding in Russia.

Simone Veldhuizen van Zanten, who also attended the march in Amsterdam, said the crisis has left her “anxious” about the reaction of the Dutch government and other countries. “I feel powerless to do anything,” she said.

(A previous version of this story incorrectly identified Philips as Shell).

(Adds proportion of population affected in 10th paragraph)
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