Identifier
Created
Classification
Origin
05THEHAGUE3055
2005-11-09 19:04:00
CONFIDENTIAL
Embassy The Hague
Cable title:  

NETHERLANDS/RUSSIA: PUTIN VISIT FOCUSES ON ENERGY

Tags:  ECON ETRD EINV PREL PGOV PHUM NL RS 
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C O N F I D E N T I A L SECTION 01 OF 03 THE HAGUE 003055 

SIPDIS

STATE FOR EUR/RUS AND EUR/UBI

E.O. 12958: DECL: 11/08/2015
TAGS: ECON ETRD EINV PREL PGOV PHUM NL RS
SUBJECT: NETHERLANDS/RUSSIA: PUTIN VISIT FOCUSES ON ENERGY
AND HUMAN RIGHTS

REF: THE HAGUE 2942

Classified By: ACTING DCM ANDREW SCHOFER, REASONS 1.4 (B) AND (D)

C O N F I D E N T I A L SECTION 01 OF 03 THE HAGUE 003055

SIPDIS

STATE FOR EUR/RUS AND EUR/UBI

E.O. 12958: DECL: 11/08/2015
TAGS: ECON ETRD EINV PREL PGOV PHUM NL RS
SUBJECT: NETHERLANDS/RUSSIA: PUTIN VISIT FOCUSES ON ENERGY
AND HUMAN RIGHTS

REF: THE HAGUE 2942

Classified By: ACTING DCM ANDREW SCHOFER, REASONS 1.4 (B) AND (D)


1. (C) SUMMARY. A handful of substantive exchanges
punctuated Russian President Vladimir Putin's November 1-2
state visit to the Netherlands, which otherwise was dominated
by protocol. Putin's meetings with PM Balkenende, Dutch
Parliamentary leaders, senior government officials and
industry and business leaders yielded a number of tangible
results: Putin and Balkenende voiced joint support for
linking the Netherlands to the new gas pipeline to be
constructed between Russia and Germany. The Russians signed
two agreements with the Dutch Foreign Ministry calling for
cooperation in fields including education, economic affairs,
transport, environment, and defense as well as
industry-specific agreements on export credit insurance and
nanotechnology, aerospace, agriculture, and biomedics. The
Mayor of Amsterdam invited a Russian trade delegation to
visit the Netherlands' capital and Rotterdam in 2006.
Balkenende enjoyed an "open dialogue" with Putin about human
rights in Chechnya, a topic reportedly also discussed during
the Russian President's meetings with Dutch Parliamentarians.
Putin reportedly did not share Balkenende's positive view of
the Chechnya discussion, and may have withdrawn an earlier
offer to return a disputed art collection to the Netherlands
from Russia in response. END SUMMARY.


2. (U) As anticipated reftel, Russian President Vladimir
Putin's November 1-2 state visit to the Netherlands was
primarily a protocol affair, including a state banquet hosted
by Queen Beatrix at Noordeinde Palace in The Hague, a
traditional wreath laying at the World War II monument at Dam
square in Amsterdam, and a visit to the house in Zaandam in
which Peter the Great resided during his years in the
Netherlands. On the substantive side, the visit included a
bilateral meeting with Prime Minister Jan Peter Balkenende,

discussions with Parliamentary leaders, an informal gathering
hosted by Amsterdam Mayor Job Cohen with senior government
and Dutch industry and business leaders, and a separate
meeting with Royal Dutch Shell representatives.

ENERGY TOPS AGENDA
--------------


3. (C) According to Dutch Economic Ministry (MEA)
officials, Putin raised with Shell CEO Jeroen van der Veer
the company's Russian investments, including the beleaguered
Sakhalin II exploration venture. Van der Veer reportedly
urged Putin to accept a revision of the current profit
sharing agreement (PSA),in light of the project's schedule
delays and UDD 10 billion cost overrun. MEA officials
described Putin as cordial but noncommittal. Putin
apparently noted that other companies in the region were not
experiencing similar setbacks and suggested that discussions
on the issue should continue. According to media reports,
Putin also urged Shell to reach agreement with Russian
company Gazprom on its recent share swap. (NOTE: In July,
Shell traded Gazprom 25 percent ownership of Sakhalin II for
a 50 percent stake in Gazprom's Zapoliyarnoye gas field.
Gazprom now asserts that, because of Sakhalin's problems, the
trade is no longer equal. END NOTE.) Van der Veer told the
press that Shell would continue to seek a solution.


4. (U) During a joint press conference, Putin and
Balkenende both indicated support for the linking of the
Netherlands to the West European pipeline system that Russia
and Germany have agreed to construct under the Baltic Sea.
Gas from this pipeline could be distributed via the
Netherlands to other countries, including the UK.

PUSHING TRADE AND INVESTMENT
--------------


5. (SBU) During a roundtable discussion at the residence of
Amsterdam Mayor Cohen, Putin expressed hope that his visit
would result in increased trade and investment between the
two countries. Dutch businesses represented at the meeting
included Royal Dutch Shell, ABN Amro, Rabobank, Unilever,
Nederlandse Gasunie, Stork, KLM, DSM, and Akzo Nobel. Other
participants included Minister of Economic Affairs Laurens
Brinkhorst, Crown Prince Willem-Alexander, and VNO-NCW
(employers association) Chairman Bernard Wientjes. Putin
later told the press that Dutch-Russian trade in 2004 totaled
$16.5 billion, making the Netherlands Russia's second-largest
trading partner after Germany. (NOTE: According to official
government statistics, Dutch exports to Russia in 2004
totaled $3.76 billion, while imports totaled $7.12. The
higher Russian trade figures probably reflect goods that are
exported to the Netherlands and then shipped further to other
destinations in Europe. Total accumulated Dutch investment
in Russia was estimated at $6.1 billion in 2004, with Russian
investment in the Netherlands at about $153 million. END
NOTE.)


6. (U) Prior to the meeting, Mayor Cohen announced that he
had extended via Putin an invitation for a Russian trade
delegation to visit Amsterdam and Rotterdam next year.
Brinkhorst also announced the establishment of Dutch-Russian
"Business Councils" to promote further trade between the two
countries. VNO-NCW Chairman Wientjes told Charge in a
November 8 meeting that he was very impressed with Putin, and
that while the roundtable discussion focused on energy
issues, there was also considerable Dutch interest in
investment in the agriculture sector in Russia. Despite
participation by ING CEO Michel Tilmant and Philips Smits,
Chairman of the Board of the Aalsmeer Flower Auction, the
roundtable reportedly did not include any discussion of ING
financial losses following the GOR's dismantling of the
Russian oil company Yukos and Russia's temporary ban last
year of Dutch flower imports.


7. (C) Brinkhorst remarked to the press after the
roundtable that "a country with a president like Putin can
only be viewed as a reliable trading partner." Dutch Foreign
Ministry officials were less effusive, however. While many
international businesses, including Russian ones, incorporate
in the Netherlands, this process does not always include the
investment of Dutch funds. That said, these officials
acknowledged that Dutch investment in Russia was growing.
They expected that this trend would continue. Russia was not
a "easy market" but access was improving. Putin's visit had
shown that Russia was working to facilitate better access to
its markets, especially for medium-sized businesses.
COOPERATIVE AGREEMENTS SIGNED
--------------


8. (U) During the visit, Dutch Foreign Minister Bernard Bot
and his Russian counterpart Sergey Lavrov signed two
agreements: a "Common Action Program" for 2005-2007 and
cooperation accord on education. The "Common Action Program"
calls for cooperation in the area of technological and
natural disasters, the fight against infectious diseases such
as HIV/AIDS, and the exchange of information on
counter-terrorism efforts. The program also calls for
collaboration in the areas of political dialogue, economic
affairs, transport, environment, taxes and customs, judiciary
and police, defense, social affairs, education and culture.
Other industry-specific agreements included an accord signed
between the Russian Sberbank and Atradius Dutch State
Business (DSB) on export credit insurance and a separate
accord signed between the Russian Academy of Sciences and the
Netherlands Organization for Applied Research (TNO) in the
area of nanotechnology, aerospace, agriculture, and
biomedics.

FRANK TALKS ON CHECHNYA
--------------


9. (C) Despite Putin's legendary prickliness regarding
Chechnya -- he once threatened to circumcise a journalist
critical of his policy -- the Dutch raised concerns about
human rights in Chechnya during talks with the Russian
president. At the joint press conference, Balkenende said he
conveyed Dutch concern about reports of disappearances and
heavy-handed treatment of Chechnyan human rights activists,
but tempered his remarks by acknowledging the necessity to
strike a balance with counter-terrorism efforts. Putin added
that he and Balkenende discussed coordinating Russian
counter-terrorism activities with those undertaken by the EU
and the Netherlands. Balkenende approvingly characterized
the discussion with Putin as "open and honest," adding that
he raised the Council of Europe's Special Representative for
Human Rights Gil-Robles' recommendations regarding Chechnya.


10. (C) Though MFA counterparts praised Balkenende's
measured criticism, some Parliamentarians complained it was
overly restrained. Parliamentary leaders reportedly
discussed Chechnya with Putin during separate meetings.

KOENIGS COLLECTION
--------------


11. (C) A Ministry of Culture contact confirmed to Econoff
that recuperation of the Koenigs Art Collection was raised
briefly during Putin's meeting with Balkenende. (See reftel
for background on the case.) This contact said that Putin
stated he was in favor of returning the collection. However,
Putin, apparently angered by the tone of the questioning on
Chechnya during the press conference with Balkenende and in
talks with Dutch parliamentarians, later sent his personal
assistant to inform the Prime Minister's office that a return
of the collection now was "not so likely." The Dutch
Ministry of Culture had sent an official letter requesting
the return of the collection and had expected a reply from
the GOR as early as November 15. This contact said the GONL
now was not optimistic about receiving a positive response.


COMMENT
--------------


12. (C) As a state visit, Putin's trip predictably addressed
matters more of protocol than of substance. With regard to
the latter, the visit may be considered some steps forward
and a little stumble backward in terms of Russian relations
with the Netherlands. The visit yielded a number of
promising agreements, but Putin's apparent revocation of his
offer to return the Koenigs Collection in response to mild
scolding over Chechnya will do little to improve cultural or
political relations.


13. (C) On the economic side, the visit underscored the
increasingly important role played by Dutch investors in
opening Russian markets for businesses from the West. Over
the past year, Dutch business leaders have repeatedly told us
of their serious concerns over the operating environment for
business in Russia, while simultaneously indicating that they
see it as a market they cannot ignore. Growing Dutch
dependence on imported natural gas, as its own gas fields are
depleted, means that the Dutch will have to look to Russia as
an important energy supplier in the years ahead.
BLAKEMAN