1. Ministers as ‘opportunistic followers’ in Brussels On a recent Monday morning I spoke via Zoom to the Polish politician Radek Sikorski. Sikorski, then Minister of Defense, later of Foreign Affairs, raised the alarm on April 30, 2006 at a security conference in Brussels – although you hardly noticed this in the Netherlands at the time. The media hardly paid any attention to his statements in those days: Sikorski compared the German-Russian cooperation in Nord Stream I, the pipeline that will carry Russian gas via the Baltic Sea to Western Europe, with the Molotov-Ribbentrop Pact, the non-aggression pact of the Nazis with the Soviet Union in 1939. At the time, the pipeline looked politically reassuring to the Netherlands – former German Chancellor Gerhard Schröder is in charge. And economically interesting – Gasunie may also be able to buy shares in it. But the Poles, who have been an EU member since 2004, are already sensing a double Russian agenda. “Russia wanted to supply gas directly to Germany and at the same time create the opportunity to close off Central and Eastern Europe – Ukraine, Slovakia, Czech Republic, Poland,” says Sikorski. As early as 2006, Pole Radek Sikorski compared the German-Russian cooperation in Nord Stream I with the Molotov-Ribbentrop Pact. Photo Getty Images His suspicions are partly fueled by the fact that Putin left Ukraine out in the cold earlier in 2006, in the middle of winter. “And with Nord Stream,” he says, “Russia could even start a war against Ukraine and continue to supply gas to Western Europe.” In 2007 Sikorski personally addressed Schröder’s successor Angela Merkel. “She said, well, this is just business.” A few weeks after Sikorski’s loaded comparison , Gasunie announces that it has ‘a strong chance’ for a share in Nord Stream as well. The participation, which according to the Court of Auditors will cost 1.6 billion euros, will be officially confirmed by Gazprom in the autumn of 2006. In the EU, where Sikorski, as the Polish foreign minister, has been in talks for seven years (2007-2014), after that he regularly protests against the German-Dutch participation in the Russian pipeline project. “The Netherlands also knew our warnings,” he says. It does not change The Hague’s mind. “The Dutch,” Sikorski scoffs, “were just opportunistic followers.” 2. The lone senator who sees the danger as early as 2000 The Dutch participation in Nord Stream is an indirect result of the liberalization of the energy markets. A European choice in which The Hague enthusiastically follows from 1995. As a result, the Netherlands decided to open the electricity market in 1998 and the gas market in 2000. For the general public, liberalization will come into effect from 2004: people can then decide for themselves from whom they buy electricity and gas. In principle, any company can now offer energy on the market. Foreign competitors are also welcome on Dutch markets. In short, energy has lost its utility function: it has primarily become a commercial product. However, it turns out to be abrasive. If gas prices rise from 2021, and go through the roof after Russia’s invasion of Ukraine in February 2022, politicians and voters will conclude that the government must intervene – as if the utility function still existed. In the course of this year, the estimated costs of intervention will rise to more than 40 billion euros. MPs want to put energy back into government hands, and I wonder: how did the Netherlands come to that choice for free markets at the time? I read back old debates and official notes, talk to concerned politicians, civil servants, companies and lobbyists – 21 people – and so I notice that this project has mainly remained a conversation between insiders. An introverted world of its own, in which voters and often politicians play only a minor role. A world of experts who know that the official government pursuit of sufficient energy in the long term, the so-called ‘security of supply’, will no longer automatically take priority after liberalisation. A world where they immediately see in 2000 that there will be too much dependence on Russian gas because politicians opt for a free gas market. It does not appear to have been insights that influenced politics. For example, the then minister Annemarie Jorritsma (Economic Affairs, VVD, 1998-2002) tells me that she does not remember from her term of office ‘that Russia played a role’. Yet one – unknown – senator at the time already named the danger: Marbeth Bierman (VVD), former government official and energy expert. In the debate in the Senate with Jorritsma about the opening of the gas market, 20 June 2000, she pointed to the possibility that the market ‘will soon have only one dominant player, namely Russia’. She predicts: “I can only conclude that in all likelihood we can expect a solid price development.” Nobody responds. 3. The minister who is squarely against The interesting thing is also: at first The Hague sees nothing in free energy markets. The then minister Koos Andriessen (Economic Affairs, CDA, 1989-1994), who died three years ago, has been squarely against since 1990. The European Commission has taken a first step towards a European energy market, which will require countries to dismantle their energy monopolies to facilitate trade between EU Member States. The Netherlands will then have two closed energy markets. The electricity market consists of regional monopolies such as Essent and Nuon, owned by municipalities and provinces. The gas market is a national monopoly in the hands of Gasunie, of which the government is then the shareholder, together with Shell and Exxon. In both markets, the suppliers determine the price unilaterally. There are big differences. The electricity market, which then mainly runs on coal, gas and nuclear energy, is globally self-sufficient. The gas market produces formidable reserves: the Groningen field makes Gasunie a global player in gas exports; the state benefits lavishly for decades. But Gasunie was already taking the finiteness of the Groningen field into account in the early 1990s. So the management at the time sent a young, enterprising employee, Geert Greving, to Moscow, among other places, to find out whether the Netherlands could import Russian gas in the new century. “Looking around and making contacts – I couldn’t believe my eyes,” Greving tells me. As a result, Gasunie concluded a twenty-year import contract in 1996, as a result of which Russia supplies gas to the Netherlands from 2001. This type of long-term contracts was standard in the gas world at the time. It’s called security of supply. Think of it as stockpiling: in this way governments can ensure that they will have enough gas available in a few decades. Minister Koos Andriessen (1989-1994) is firmly against liberalisation. Photo Vincent Mentzel As early as the early 1990s, officials at the time told me, Andriessen, a conservative former employer chairman, feared that liberalization would affect that certainty. Because in a free market, buyers look for the lowest price, and you will find it on the daily market, the so-called spot market. Only: day contracts do not offer long-term securities. In addition, there is the prospect that the scarcity of gas in Europe will increase due to the finite nature of the Groningerveld. If the Netherlands disappears, only Russia and Norway will be left as suppliers. The gas market as an oligopoly: selling countries have the power. So a free market, Andriessen argues, will end in higher prices and less security of supply. “That’s what Koos was about,” says Gertjan Lankhorst, then an official at Economic Affairs and Director-General for Energy in 2003-2005. “He saw that scarcity was going to determine the gas market and thought: you cannot put the security of gas supply at risk because you want a market so badly.” At the time, it took little effort for the minister to convince the Lubbers III cabinet of his position, says former minister Hans Alders (Environment, PvdA, 1989-1994). “We didn’t need much discussion in the Council of Ministers for that.” It also explains why Andriessen receives broad support from the House in 1992 when he says : “We think – that is really a fundamental objection – that these proposals were only made from a market approach.” 4. One man opens up the debate But Andriessen’s successor at Economic Affairs, Hans Wijers (1994-1998, D66), changes The Hague’s mind in a few years. Wijers is a former consultant with a progressive entrepreneurial profile. The young civil servant Kajsa Ollongren, now Minister of Defence, is responsible for contacts with the House of Representatives. These are optimistic years. “The Cold War was over, the world opened up,” Wijers tells me one morning in cafe Americain in Amsterdam. Free energy markets are in keeping with the zeitgeist: “You should never overestimate the originality of your own views.” In his first proposals, in 1995, he wants to simultaneously liberalize the electricity and gas markets. Gasunie strongly resists. A former civil servant remembers that then chief director George Verberg shoots at the ceiling when Wijers tells him about it. The former minister agrees that Gasunie objected, but says that his busy legislative agenda (including anti-cartel rules, extended shopping hours, a new Mining Act) was the deciding factor: “I couldn’t do everything.” So Wijers decides to give priority to the liberalization of the electricity market. It doesn’t give much excitement. Energy is a tough structural theme, unsuitable for exciting journalism: television makers notice that viewers give up as soon as they show drab power plants under plumes of smoke. Hans Wijers (1994-1998) is still liberalizing the electricity market. Photo ANP Wijers remembers that his Shopping Hours Act, which allows supermarkets to open in the evenings and on Sundays, elicits many more reactions. “That touched people right away.” As a result, this energy debate also takes place ‘in a small circle of mainly stakeholders’, says Wijers. Then it concerns multinationals who point out to him that prices are falling on the liberalized energy markets in the US and the UK. For companies that generate electricity from heat themselves, a sustainable form that they cannot sell because the electricity monopoly does not allow this. It also concerns consumer organizations that expect liberalization to bring lower prices and less bureaucracy. For municipalities and provinces that can earn billions with the sale of their regional energy companies. The support is so broad that when the EU adopts a directive in 1996, with Wijers’s cordial approval, which obliges member states to achieve a free electricity market in the new century, Andriessen’s objections have almost been forgotten. “The reasons have disappeared to approach the electricity sector as a whole as a utility sector in which companies should take monopoly positions,” Wijers wrote to the Council of State in 1997. Almost the entire House, 140 of the 150 MPs, voted in 1998 for his law. Only GroenLinks, SP and the radical right-wing CD are against. From a democratic point of view, this is a special history. None of the coalition parties at the time – PvdA, VVD and D66 – mentioned it in their 1994 election manifesto, and the 1994 coalition agreement does not mention it either. The EU and The Hague have chosen the voters. The lack of voter involvement is also apparent when the consumer market opens in 2004. After less than a year, the ANP reports that 8 percent of consumers have switched electricity suppliers. Research by the competition authorities at the time shows why: most Dutch people know nothing about it. 5. Governments walking in on power companies The power companies now foresee that they will be sold, and are aggressively working on their brand awareness. “They hired handy PR agencies, of course that didn’t help,” says Wijers. The best-known example is Nuon, which in 2000 appears to have burned 60 million guilders in sponsorship money in the Vitesse football club. The electricity companies remain partly dependent on The Hague for their valuation. Most produce electricity and deliver it to the customer. They do the latter through widespread networks. After years of debate, the House of Representatives decided in 2005 that these networks should retain their utility function: the government will take over their management. The companies and their shareholders hate it: this reduces their market value. Other EU countries, such as France and Germany, will keep some of their electricity production in national hands. Wijers, who left politics after the formation of 1998, also tried as minister to protect the four regional electricity companies from foreign takeovers through a national merger. It fails. “Local governments, especially some provinces, had dollar signs in their eyes, I couldn’t get through that,” he says now. And so the companies go up for sale. The Japanese Mitsubishi buys Eneco for about 4 billion euros. Essent will transfer to the German RWE for 7.3 billion euros, Nuon to the Swedish Vattenfall for 9.5 billion euros. Especially the owners of the last two, the provinces of Brabant (Essent) and Gelderland (Nuon), are coming in. 6. A little French influence The liberalization of the gas market – in retrospect the most influential decision in this dossier – ends up on the plate of Wijers’ successor Annemarie Jorritsma. She argues that there is no fundamental difference between the opening up of the electricity market and the gas market, and parliament follows her almost unanimously. The two currently sitting MPs, Kees van der Staaij (SGP) and Geert Wilders (then VVD, now PVV), also voted in 2000 for this liberalization. Yet they were hesitant at the time at Jorritsma’s ministry, says former top official Gertjan Lankhorst. Electricity can be generated with numerous resources – coal, oil, gas, nuclear, heat, wind, sun, etc. – so the free electricity market is not dependent on a few countries or suppliers. “But with gas we knew: if the Groningerveld is empty, we can only buy gas in Russia and Norway,” says Lankhorst. “That never became an open market.” But Jorritsma perseveres and in 2000 opts for a stepped way out. The market is opening: companies and governments are no longer obliged to buy their gas from Gasunie. At the same time, it leaves the existing balance of power in the gas sector – with a major role for NAM (Shell and Exxon) and Gasunie – intact, and ensures that the government continues to benefit from gas sales. With gas we knew: if the Groningerveld is empty, we can only buy gas in Russia and Norway Gertjan Lankhorst former top official And Jorritsma wants more. When she left the Ministry of Economic Affairs in 2002, there was a detailed plan to sell Gasunie’s trading arm to Shell and Exxon. As a network operator, Gasunie would then become fully publicly owned. “The idea was: the government should leave commerce to commerce,” says Noé van Hulst, then director-general of Energy at EZ. Jorritsma’s successor at Economic Affairs, Laurens Jan Brinkhorst (D66, 2003-2006) makes a different choice. In 2004, he decided that the government would retain half of the shares in Gasunie’s trading arm, while Gasunie, as network operator, would become fully publicly owned. Gasunie will also be given the financial scope to invest billions in transport networks at home and abroad, together with others. The later participation in Nord Stream is a consequence of this. It means that the state indirectly holds a grip on the gas market. I speak to Brinkhorst about it in his office in The Hague. He thinks, he says, “a little French” about the government-market relationship. “I think liberalization is fine – but not without a strong government.” 7. The gas trader being shadowed After the fall of the Soviet Union, the interconnectedness of the national gas sector with the new Russia has grown rapidly. In the 1990s, Gasunie concluded the aforementioned contract, whereby Gazprom would export Russian gas to the Netherlands in the new century. And Shell, which exploits the Groningerveld in NAM with Exxon, has aspired to participate in similar participations in oil and gas projects in Russia, especially Siberia, since Boris Yeltsin took office as president in 1991. In 2000, the multinational eventually bought the largest oil and gas project in the world: Sakhalin 2. In 2002, the University of Groningen, together with Gasunie and Gazprom, opened the Delta Energy Institute, a training institute for energy management, where dozens of Gazprom managers will be trained. According to Geert Greving, then still at Gasunie, two members of the current Gazprom top were trained there. “One of them speaks fluent Dutch.” In the meantime, experts know that Vladimir Putin, president since 2000, wants to play out the Russian dominant position on the gas market. He already described it in so many words in an article for the St. Petersburg Mining Institute in 1999. Geert Greving says that he is a good acquaintance of the family of the then mayor Anatoli Sobchak of Petersburg, for whom Putin previously worked. Thus it is clear to him that the basis for energy liberalization in the EU, the assumption that you have to separate politics and trade, is sheer nonsense according to Putin. “Putin saw gas trading primarily as an instrument for building political power.” Greving also notices how the atmosphere in Moscow is changing. He is being shadowed. After he has eaten in a restaurant, a stranger appears at his table and pays the bill. His home in Groningen is broken into. “I was extremely watched,” he says. “It was clear: you had to be careful from now on.” Greving also notices how the atmosphere in Moscow is changing. He is being shadowed. After he has eaten in a restaurant, a stranger appears at his table and pays the bill This is how the mental distance between Moscow and The Hague is growing. While The Hague has been conducting fundamental structural debates about energy liberalization for years and allows governments to cash in through the sale of electricity companies, it pays little attention to the reverse movement in Russia. The country that will become the EU’s largest gas supplier due to the finite nature of the Groningerveld. I’ll take it up with Brinkhorst. “It is true that we have focused too long on the economic side of liberalization,” he agrees. “And have paid too little attention to the geopolitical consequences.” 8. The true Putin in Amsterdam Then the authoritative Netherlands will come into direct contact with those consequences. In the official residence of the Amsterdam mayor Job Cohen, the top of the business community on 1 November 2005 experienced what dependence on Putin means. Ministers, top officials and Crown Prince Willem-Alexander look on. “I especially remember Putin’s fantastic file knowledge,” Cohen says now. Afterwards, employer chairman Bernard Wientjes speaks highly of the high-ranking Russian guest. “A country with a president like Putin can only be considered a reliable trading partner,” he says. Indoors, four people present tell me, things are less courteous. Putin is on a state visit and has a meeting with twenty Dutch businessmen. Tensions have been going on between the Kremlin and Shell for some time over financial setbacks in the Siberian energy project Sakhalin 2. Putin is reacting to the increased project costs, which means that profits are lower and the Russian state receives less profit tax. And in the official residence it appears that Putin is aiming for a confrontation with Shell in the eyes of the authoritative Netherlands. In advance, attendees, including Shell CEO Jeroen van der Veer, submitted a question for the plenary session, so that Putin can prepare. The Shell CEO emphasizes in the session that countries must comply with contracts for a good investment climate – an apparent reference to the conflict over Sakhalin 2. The conflict between Russia and Shell over Sakhalin 2 escalates in 2005-2006. CEO Jeroen van der Veer must come to the Kremlin in 2006. Photo EPA/Alexander Nemenov/POOL To Van der Veer’s surprise, Putin responds in a biting speech lasting about ten minutes. Attendees see that the president has prepared his swoop: his points are on paper. An insult. “Jeroen thought he could negotiate with Putin, given Shell’s position in Sakhalin,” said Brinkhorst, who chairs the plenary session. “In hindsight, this was not wise.” During the plenary session, Van der Veer sends Brinkhorst a note: can the minister arrange for him and Putin to discuss this among themselves afterwards? Brinkhorst organizes that the president and the chairman of the board meet in Cohen’s office, the minister is there first, the two then talk in German privately, and afterwards it is clear that the conflict is not over. Within Shell, the fear is that Putin wants to nationalize Sakhalin 2; the president has been saying publicly for some time that Gazprom must have a majority stake in all gas and oil projects on its own territory. In negotiations that followed the following year, this also became apparent: Shell sells its majority stake in Sakhalin 2 to Gazprom for $7.7 billion, writes New York Times journalist Stephen Lee Myers in his biography of Putin, The New Tsar (2016). . Incidentally, at Shell they are certainly not dissatisfied with the financial settlement itself, which will turn out favourable. Nevertheless, the controversy goes down in history as proof that Putin, the autocrat, is subject to the same laws in gas trading as in the exercise of political power. And that he has no hesitation in using his power to the detriment of another country or company: the EU liberalizes, Putin nationalizes. 9. The Peace Pact with the Aggressor After this, some CEOs decide not to make new investments in Russia. “You saw there: that country is not a market economy,” says a chairman of the board at the time. “The president takes you as soon as you depend on him.” But it is not so simple for the government. The Netherlands will also depend on Russian gas in the future. And if Gasunie wants to survive as a significant network operator, it must continue to do business with Gazprom. For example, according to the analysis in the Balkenende cabinets II to IV (2003-2010), the Netherlands has no choice but to further refine the interrelationship with Russia. So even if Putin blocks the gas supply to Ukraine two months after his Amsterdam performance, Gasunie will simply enter Nord Stream in the autumn of 2006. A year later, Prime Minister Jan Peter Balkenende attends the festive contract signing in Moscow. As a top official at the time says: “Continuing down the road was our only option.” Nord Stream was a peace pact with an aggressor Radek Sikorski Former Polish Minister The Netherlands follows the German idea: curb Putin with trade. But the former Polish minister Sikorski, now a MEP, tells me that he referred to the Molotov-Ribbentrop Pact in 2006 because the Russian ambassador to Belarus at the time openly said that thanks to Nord Stream, Russia had the opportunity to get Eastern European countries off gas. without blocking its gas supplies to Germany. “Nord Stream was a peace pact with an aggressor,” he says. And the frustrating thing, says Sikorski, is “that Western Europeans kept putting our concerns into perspective.” 10. Warning after warning In retrospect, it is also striking how frequently experts and advisers in The Hague continued to point out that the combination of energy liberalization and Russian dependence would endanger the security of supply. At the beginning of 2005, the General Energy Council (AER) noted in its report Gas for Tomorrow that the EU had surrendered itself to Russia through energy liberalisation. This is especially urgent for the Netherlands, according to the document, because the ‘very high dependence of Dutch households and small consumers on gas (> 98%) means that the public interest in security of supply is greater than elsewhere’. At the end of 2005, the Advisory Council on International Affairs (AIV) urged the government to make security of supply ‘a subject of national security’. In 2008, the AER writes: “The market is failing to ensure long-term security of supply.” In 2014, the AIV noted ‘that Europe is in a politically vulnerable position due to its dependence on Russian gas’. In 2017, the The Hague Center for Strategic Studies and TNO wrote that the Netherlands “may change from net exporter to net importer of natural gas at various times in the coming period”. Rutte, together with Merkel and Medvedev, takes Nord Stream I into use, in Lubmin, 2011. Photo ANP/Jerry Lampen But The Hague is never impressed. As an AER member, director Coby van der Linde of the Clingendael International Energy Program (CIEP) supports the advice. The reactions at the time were lukewarm. “The problem was not in anyone’s head,” she says. Geert Greving, then Gasunie, is involved in the AER paper from 2008. With his extensive Russian experience, he convinces the Energy Council that the Netherlands should keep its (Groningen) gas reserves longer as a weapon against Russian dependence. He wants the government to “take back control of the gas market”. “But at EZ they said: no, that is not possible in a liberalized market,” says Greving. As the Russian problem gets closer, politicians name it less. As if it doesn’t exist. For example, in 2018 Minister Eric Wiebes (Economic Affairs, VVD, 2017-2021) announced that he wanted to reduce the extraction from the Groningen field to zero due to the earthquakes. In his letter to parliament he does not mention the consequence: more imports of Russian gas. Nobody talks about it in the parliamentary debate either. Nevertheless, CBS concludes afterwards that the Netherlands imports more gas than it exports for the first time in the same year. Three years later, it is already 15 percent dependent on Russian gas, prices have skyrocketed since last year, and this spring the gas storages appear to be barely filled: security of supply has indeed disappeared. 11. The Painful Conclusions Not that you can blame all this on energy liberalisation. Earthquakes and war are not consequences of free energy markets. At the same time, no one can ignore the fact that since 2000 there have been extensive warnings about the risks of a liberalized gas market. That is why it is interesting that towards the end of my research I have telephone contact with Aad Correljé, affiliated with TU Delft, Clingendael and since 2013 the gas market expert of the Mijnraad. He knows the gas file like the back of his hand, and is aware of the objections raised by the late Minister Andriessen in the early 1990s. The advantage is: he can test these objections against reality on the basis of the market data. Russian President Dmitry Medvedev at Nord Stream I, which will transport Russian gas to Western Europe, in 2010. Photo AFP Rutte, together with Merkel and Medvedev, among others, takes Nord Stream I into use, in Lubmin, 2011. Photo Jerry Lampen/ANP Russian President Dmitry Medvedev at Nord Stream I, which will transport Russian gas to Western Europe, in 2010. Rutte, together with Merkel and Medvedev, among others, starts using Nord Stream I, in Lubmin, 2011. Photo AFP and Jerry Lampen/ANP “And then it turns out,” says Correljé, “that Andriessen was absolutely right.” Because the gas market has indeed changed, as the minister feared at the time: then the gas price was determined by long-term contracts, now for years by day trading: “As a result, the Netherlands did not build up more securities.” And indeed Russia has set the price as the minister feared at the time: “If Moscow turns off the tap, the price will skyrocket.” His conclusion: “We have simply forgotten that you have to fix a basic need such as gas for a long time. Otherwise no one will be able to complete their household book.” In addition to this economic reality, this dossier also helped me understand two political aspects better. It is precisely a tough structural theme such as energy that suffers from a political and media culture that is driven by conflict and current events (‘the talk of the day’). Who prefers to magnify incidents than deepens structures, who prefers to let familiar faces speak than experts. It is precisely the latter group that could have explained what went wrong here twenty years ago. Now that it is too late, many parliamentary groups want to tighten the government’s grip on energy, but the real question is, of course, why have we rarely heard from them about this in the last twenty years? The most painful political reality of this drama seems to me that almost all of The Hague has come to see EU membership as a pursuit of self-interest. Then it makes sense that your allies are constantly pointing out your desires, and are no longer really interested in their knowledge, analyzes and predictions. “I hear too often Western Europeans say: we have been cheated by Putin,” says Sikorski. “And a little too little: but we should have known that Putin would cheat us.” About this article This piece reconstructs thirty years of energy liberalization. Former ministers, former top officials and those involved with Van Gasunie, GasTerra, Shell, Vattenfall, Eneco, Clingendael, TNO and the Mijnraad have been interviewed. The archives of the House of Representatives and official notes were also drawn on . Books consulted Wendelmoet Boersema: Groningen gold (2021) Noud Köper: High Voltage (2008) Stephen Lee Myers: The New Tsar (2016) Roy on the Field: The Battle for Energy (2008)