Americans, Natural Gas: Pillars of Dutch Foreign Policy

The Arctic Princess harbors at the LNG terminal in Rotterdam, the Netherlands

The Arctic Princess harbors at the LNG terminal in Rotterdam, the Netherlands (Gate)

The balance of power in Europe is shifting. The fault line isn’t merely one between north and south, although the differences in economic culture have recently become apparent. The euro crisis is a temporary one but one that could wreck the European project.

The European Union is an artificial construct. Member states have subjected their own interests to the ideal of a united Europe that would be able to match a powerful America and China in a globalized world order.

Germany in particular has paid dearly. Two generations since the end of World War II, resistance is mounting there. The old guard cries “Nie wieder Krieg!” but fear of war has largely subdued.

At the same time, Germany holds the key. It is difficult to imagine that it will continue to subsidize Mediterranean countries that systematically breach their agreements and refuse to liberalize their economies at a rapid pace. Germany benefits from the currency union as it facilitates German exports but the electorate is grumbling. It isn’t prepared to tolerate a “transfer union” that sees a constant flow of German funds southward.

Perhaps more important than all the summits about the future of the euro this year was Germany’s decision to shut its nuclear power plants. The country will be even more dependent on Russian gas imports. The Germans even have their private pipeline to the north: Nord Stream, across the Baltic Sea, so it’s not dependent on transfer countries like Poland and Ukraine.

Poland, like the Baltic states and Romania, is anti-Russian and a fervent member of NATO. It is economically dependent on Germany but relies on the United States for its security.

Ukraine is split between a “pro-Western” (anti-Russian) electorate in the west and a pro-Russian east. Secession of either part is not unlikely. In the short term, Europe cannot rely on the country for stable gas supplies.

The Netherlands, more than Poland, are economically interwoven with Germany. Half of its economy services the German industrial corridor that stretches from Hamburg in the north through the Ruhrgebiet to Munich in the south (and can be stretched further to Baumgarten in Austria where Russian gas flows in from the south).

Just like Poland, the country has had an unkind experience with Germany in terms of security. Hence it abandoned neutrality after the war in favor of NATO.

The Netherlands positioned itself as a loyal ally of the United States’ and was one of the founding nations of the European community. Its postwar politicians recognized that both unions would keep Germany at bay and give them leeway. The country cooperated with both the Germans and the United States in trade and militarily. In neither regard, it wants to be dependent on either one.

Through the past twenty years, the Netherlands have nevertheless moved in that direction. It relies on the Americans for defense and purchases almost exclusively American military hardware while it tamely follows the German line in Europe. The former is often in Dutch interests but when it isn’t, the country could have a trump card up its sleeves.

Which brings us back to natural gas. Since last year, the port of Rotterdam operates the Gate (“Gate access to Europe”) terminal. Liquified natural gas is gasified here and put directly into the pipeline. A similar terminal should be built in the Eemshaven in the north. Hamburg craves a similar capacity but doesn’t have it yet.

Fortune has it that the Americans recently discovered that they are floating on gas. Thanks to horizontal drilling techniques (or “fracking”), they are able to extract natural gas from shale. Drilling stations are popping up across the northeastern United States where shale gas is ample. American LNG ports are mostly situated on the east and south coasts of the country.

There are plans to export to China but that would require port facilities in California and Washington state. The left wing state legislatures there are wary of the new drilling techniques and altogether opposed to fossil fuels. Permits have been lodged for the construction of a pipeline to the west coast as well as the expansion of ports in Washington state to export natural gas to Asia on a large scale but those applications face resistance from environmentalists.

That suits Holland. Europe wants to decrease its dependence on Russian gas imports. The United States are happy to export. American energy companies are able to get a better price for natural gas abroad than at home where supply is outpacing demand.

The objective of Dutch foreign policy is clear: what is called the gas rotunda. The country imports natural gas from the Middle East and, most notably, from the United States to sell to the Germans and unshackle itself from the Berlin-Moscow axis that threatens to dominate Europe. That way, the Netherlands will keep their foreign relations in balance as will they the distribution of power in northern Europe.

This article originally appeared in Dutch at De Dagelijkse Standaard, July 9, 2012.