Transcript: What new US aid means for Ukraine

This is an audio transcript of the FT News Briefing podcast episode: ‘What new US aid means for Ukraine’

Sonja Hutson
Good morning from the Financial Times. Today is Thursday, April 25th, and this is your FT News Briefing.

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Meta’s financial forecast spooked investors, and the EU stormed the offices of a Chinese company. Plus, the US has started shipping military aid to Ukraine, and Kyiv knows it needs to make the most of it.

Chris Miller
I think that nobody in Ukraine is under any illusion that the United States is just going to keep this aid flowing and that it’s going to be easy just because it got over this hump.

Sonja Hutson
I’m Sonja Hutson and here’s the news you need to start your day.

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Meta’s revenues jumped by more than 25 per cent in the first quarter and beat expectations, but that wasn’t enough to impress Wall Street. Shares dropped by double digits in after-hours trading. That’s because the social media company forecasted it would spend more money this year than it initially thought. The extra cash is going to go towards beefing up infrastructure to support its artificial intelligence plans. The fall in Meta share price highlights the tough position that CEO Mark Zuckerberg is in. He’s been trying to keep investors happy and cut costs, while at the same time investing in the AI race.

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The European Union raided the offices of a Chinese company in Poland and the Netherlands. Nuctech manufactures baggage security scanners for airports, and it’s owned by the Chinese government. Brussels is investigating the company for violating anti-foreign subsidy rules. It’s likely to inflame trade tensions between China and the EU. Here with me to discuss is the FT’s Brussels bureau chief, Henry Foy. Hi, Henry.

Henry Foy
Hi, Sonja.

Sonja Hutson
So can you lay out exactly what Brussels is investigating Nuctech for?

Henry Foy
So this is the first time that they’ve raided a foreign company under these rules, which allow them to investigate companies they believe are getting unfair subsidies from foreign governments. What they believe is that Nuctech is benefiting from subsidies from the Chinese government, Chinese banks that would not be allowed under EU laws, and that other EU companies could not get from their own governments. And so what they’re saying is with these subsidies, Nuctech is able to do business at a price point or in markets that other EU companies can’t, and therefore that’s distorting the market.

Sonja Hutson
How has China reacted to this? I mean, I can’t imagine that they’re all too happy about it.

Henry Foy
That’s right. The commerce ministry in China said that it would, quote, take all necessary measures to resolutely safeguard the legitimate rights and interests of Chinese enterprises and called the investigation into Nuctech protectionist and essentially making the EU business environment less attractive at the same time. The Chamber of Commerce to the EU said that the EU was weaponising these kind of tools to try to suppress Chinese companies.

Sonja Hutson
And what’s the background on Nuctech? Is this kind of odd coming out of left field, or have regulators been looking at it for a while?

Henry Foy
So there’s been quite a lot of controversy around this company in the past. There has been campaigns by European lawmakers to not buy these products, to use them in airports, because what they say is these are Chinese products. We don’t know where the information is going. And on national security grounds, we shouldn’t be using them. Some countries have banned the use of them. Lithuania in the EU, Canada is another. This is the first move when the EU has sort of taken on Nuctech on an anti subsidies platform, rather than national security one. And I think we’ll see in the weeks and months whether or not the two things are linked or whether this is a pure subsidies investigation and not one related to security.

Sonja Hutson
Yeah. Going back to the subsidies and trade investigation, what’s the larger context there? I mean, is this just one move in a bigger back-and-forth between the EU and China?

Henry Foy
It’s one of a slew of measures and certainly a direction of travel here that Brussels is toughening up in its response to Beijing and what it sees as unfair trade practices. In recent months, we’ve seen the launch of an investigation into a Chinese train manufacturer for using unfair subsidies as an investigation into whether China is using electric vehicle overcapacity to dump those products on European markets. There’s been a long, long battle over things like solar panels and other products that the Europeans say, look, China is not playing fair here and it is pumping these products into our markets and they’re unfairly subsidised.

Sonja Hutson
What kind of impact will this strained relationship have on trade between China and the EU, do you think?

Henry Foy
That’s a great question. China is, of course, the most important trading partner for the EU, and despite the geopolitical tensions that we’ve seen over recent years, both sides have tried to protect that. Olaf Schultz, the German chancellor, was in China just last week where a lot of the noises coming out of that trip, we’re all about making sure that trade with China and Chinese trade with the EU was protected from other political headwinds. What is very interesting is that Chinese President Xi Jinping is expected to be in Paris next month for a big state visit to see President Emmanuel Macron. I’m pretty sure that that will lend something of a souring to that trip.

Sonja Hutson
Henry Foy is the FT’s Brussels bureau chief. Thanks, Henry.

Henry Foy
Thanks a lot.

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Sonja Hutson
We finally got a look yesterday at how much Boeing’s mid-air accident in January cost the plane manufacturer. Short answer: a lot. The first-quarter earnings report showed that the company burnt through almost $4bn after slowing production. Boeing said it cut deliveries to focus on quality control. It also paid about $450mn in compensation to customers after a door panel blew out on an Alaska Airlines flight. Moody’s downgraded Boeing’s senior unsecured debt rating yesterday to one notch above junk.

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US President Joe Biden signed a bill yesterday that included roughly $60bn in aid to Ukraine. Officials said that shipments of weapons started right away, and it’s been a long time coming. Congress has debated for months on whether to send more military assistance to Ukraine in its conflict with Russia. Here to talk to me about how this funding will impact the war effort is the FT’s Chris Miller. Hey, Chris.

Chris Miller
Hey, there.

Sonja Hutson
OK, so what does Ukraine expect to be part of this aid package?

Chris Miller
Yeah, this is certainly the biggest aid package that the Americans have provided since the war began in February of 2022. So Ukraine is really hoping, and we know with some certainty that there are definitely going to be artillery shells that Ukraine’s frontline units are desperate to get in their hands, as well as interceptors for the US-made Patriot air defence missile systems, which will help Ukraine to shoot down Russian missiles and these attack drones that it sends into cities to strike critical infrastructure, civilian targets. The other things that we’re expecting are various armoured vehicles that can be used to take troops into battle, to take wounded troops out, basically equipment that is going to help frontline soldiers to better defend the front line against an increasingly offensive Russian military at the moment.

Sonja Hutson
Yeah. And can you just get us up to speed on what exactly Ukraine’s needs are right now? I mean, how’s the war going for them overall?

Chris Miller
Yeah. You know, Ukraine has been on the back foot now for at least the last six, seven months. Russia has since gained the momentum and seize the initiative on the battlefield. And while Congress was debating this military aid package, Russian troops were pressing ahead and Ukraine was forced to ration the dwindling supply of artillery and rocket shells that it had. When I was out on the frontline earlier this month, I was with some commanders who were saying, you know, we are essentially forced to fight with just one hand and the other tied behind our back. And so, you know, we’re seeing a Ukrainian military that is suffering from low morale, dwindling supplies, and really desperately needed this US aid package to pass.

Sonja Hutson
OK, so, Chris, once these weapons do get into position, what are analysts saying about Ukraine’s prospects going forward?

Chris Miller
Yeah. So these weapons are, in the words of a senior Ukrainian official, not silver bullets, right? There’s no magic weapon that’s going to turn the tide for Ukraine completely in its favour right now. It is still going to be outgunned and outmanned. And I think one important point to make is that even with these US weapons making it to the battlefield, Ukraine’s troops are still going to struggle because they face a manpower shortage. A lot of their soldiers right now are exhausted. They are taking heavy casualties. It really is on Ukraine to find a way to mobilise man. And if it can do that, with this military assistance coming into the country, then it stands a chance at stopping the Russians in their tracks this year, rebuilding its military and potentially start taking back the territory that it’s lost.

Sonja Hutson
Now, Chris, like we’ve been talking about it, it really wasn’t easy getting this US aid package over the finish line. Europe has also struggled at times to get funding to Ukraine. What are the expectations for more aid coming in the future?

Chris Miller
Yeah, that’s another big question. I think that nobody in Ukraine is under any illusion that the United States is just going to keep this aid flowing and that it’s going to be easy just because it got over this hump. Actually, on the contrary, many people are concerned in Kyiv that another aid package of this size may not come, and they’re going to have to rely more heavily on themselves and domestic production and really ramping that up and getting more assistance from Europe. But I think in terms of the United States and where Ukraine stands, the big question is what happens in November with the election?

Sonja Hutson
Chris Miller covers the war in Ukraine for the FT. Thanks, Chris.

Chris Miller
Yeah. Thank you.

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Sonja Hutson
You can read more on all these stories at FT.com for free when you click the links in our show notes. This has been your daily FT News Briefing. Make sure you check back tomorrow for the latest business news.