Netherlands Court of Audit: strategic stocks not always kept
The COVID-19 pandemic and the war in Ukraine have demonstrated how scarce raw materials and essential products can become. The Netherlands Court of Audit has investigated the strategic buffers maintained by the government and whether they can be drawn on in an emergency. The government keeps operational and strategic stocks of petroleum, medicines, medical aids and cash money. It does not keep strategic stocks of gas or food. Furthermore, little progress has been made with the designation of national groundwater reserves.
Petroleum and petroleum products
The Netherlands comfortably satisfies the international obligation to maintain a stock of petroleum. However, it can be drawn on for only a short period of time. The Ministry of Economic Affairs believes the forthcoming sanctions against Russia may lead to a shortage. Vital sectors of the economy – such as transport and logistics – could then be disrupted by the shortage and resultant high prices. Diesel is needed during a crisis to supply food and power emergency generators. There is currently no national oil crisis plan (as there is for gas and electricity).
The government does not maintain strategic gas stocks and the Minister for Climate Policy and Energy has no plans to do so. The minister says the Netherlands’ gas stock is an operational stock that provides the country with a significant amount of the gas it needs in the winter. This gas is not kept for Dutch consumers but is sold to the highest bidder at home or abroad. Under EU law, a country’s strategic stocks may not be maintained for its own consumers only. Since the middle of this year, the government has provided financial support to keep the gas storage tanks full, as there have not been enough financial incentives for market parties to fill them. Several other EU member states do keep a strategic gas stock.
Unlike, for example, Germany and Switzerland, the Dutch Ministry of Agriculture, Nature and Food Quality (LNV) does not maintain a strategic food stock that can be drawn on during a food crisis. A study by Wageningen University and Research concluded that the Netherlands is self-sufficient in food. Nevertheless, production might be difficult or even impossible in some circumstances, such as severe drought or flooding. The Ministry of LNV began preparing a food security manual and a food distribution agreement between the government and the market in the middle of this year. The Court of Audit’s investigation revealed that there was a lot of uncertainty about the first emergency food aid; the government, security regions and municipalities are all tasked with its distribution but precisely who must do what and when is unclear. According to the ministry, a lot must still be done to raise crisis preparedness to an acceptable level.
Drinking water companies are obliged by law to take a variety of measures in anticipation of emergencies. Moreover, the provinces have designated additional strategic water stocks to secure drinking water supply until 2040. In 2014, the Ministry of Infrastructure and Water Management undertook to designate national groundwater reserves to supply drinking water after 2040 and during large-scale emergencies. The Court of Audit found that actual designation of these reserves had made little progress. On an annual basis, the Netherlands has sufficient drinking water, but regional or seasonal shortages can arise.
To date, traders must hold ‘sufficient’ stocks of prescription medicines. The Minister of Health, Welfare and Sport (VWS) wants to introduce a 10-week stock obligation. The Health and Youth Inspectorate foresees problems enforcing it.
During the COVID-19 pandemic, the Minister of VWS formed a stock of personal protection equipment and medical aids. In 2021 the minister said the temporary rules would be made more permanent. This has not yet happened. Finally, some national institutions maintain various stocks such as smallpox vaccines and iodine tablets.
De Nederlandsche Bank (DNB) aims to keep a stock of coins worth about €50 million. It does not have a strategic stock of banknotes. The European Central Bank does have such a stock; the value and storage sites are secret. DNB and the Minister of Finance are studying digital payment alternatives for emergencies. It is not clear whether the Dutch will have enough money if, for instance, a power cut or network disruption prevents cash withdrawals.