On trial in the Vatican

This is an audio transcript of the FT News Briefing podcast episode: On trial in the Vatican

Marc Filippino
Good morning from the Financial Times. Today is Wednesday, November 17th, and this is your FT News Briefing.

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Presidents Joe Biden and Xi Jinping agreed to hold talks to ease tensions over security issues. The Kremlin based Nord Stream 2 gas pipeline into Europe has stumbled over German bureaucracy, and an unusual court trial in the Vatican resumes today. One of the defendants is a cardinal.

Miles Johnson
He’s the cardinal. He’s the first cardinal to go on trial for a crime like this, you know, in over 300 years.

Marc Filippino
I’m Marc Filippino, and here’s the news you need to start your day.

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The presidents of the US and China have agreed to hold talks aimed at reducing nuclear tensions. China had been refusing to hold nuclear talks, partly because the US has a much larger weapons arsenal. The breakthrough came during Monday night’s virtual summit between Joe Biden and China’s Xi Jinping, and it comes amid a broader backdrop of rising anxiety in the US over China’s expanding nuclear arsenal. Beijing recently tested a nuclear capable hypersonic weapon. US-China relations are at their lowest point since the two countries normalised diplomatic ties in 1979.

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Germany yesterday suspended certification for the Nord Stream 2 pipeline. That’s the Kremlin-backed project that would deliver gas from Russia to Germany and elsewhere in Europe and avoid pipelines through Ukraine. The move came as Europe struggles with an energy crisis, and the move also caused gas prices to rise even further on Tuesday. Here’s the FT’s Berlin correspondent Erika Solomon on why the German energy regulator made the move.

Erika Solomon
So on the face of it, this is actually a bit of German bureaucracy more than necessarily a big geopolitical statement. But according to Germany’s energy regulator, the reason that they have done this is because Nord Stream 2 in the past few weeks has changed the way that they are applying for certification to run this pipeline from Russia to Germany. And therefore they’re saying, OK, well, you’re changing the system now we need to run you through a new accreditation process, get your paperwork in order and come back to us.

Marc Filippino
But we should remind listeners that this pipeline is very politically sensitive. Erika, can you remind us of the politics here?

Erika Solomon
So the Nord Stream 2 pipeline is actually a second pipeline that is going to run from Russia to Germany supplying gas to Europe. The problem is is that a lot of countries in Europe, particularly central or eastern European countries and most particularly countries like Ukraine and Poland, feel that this is actually more of a geopolitical move than a business move. And they believe that the gas pipeline is intended to cut Ukraine out of its traditional role as a transit country and could be used then to politically pressure Ukraine, which obviously is in a very sensitive situation because parts of Ukraine are occupied by Russian forces. So this is all a very, extremely sensitive situation, and it is now this particular moment is coming as there are increasing concerns over Russian troop movements around Ukraine so the whole timing couldn’t be worse, really. That said, we’re not actually sure that that’s the reason that the suspension happened.

Marc Filippino
And when, or if this current suspension is resolved, is the pipeline good to go or are there any other hiccups or hurdles that could appear on the horizon?

Erika Solomon
The issue with Nord Stream 2 is that Europe has basically like laws that they call unbundling laws, and that is to prevent a monopoly. Right now, the Nord Stream 2 pipeline is effectively run by Gazprom, which is in itself a Kremlin sort of controlled company. So if you were to choose to run it was as it was originally planned, it would basically violate new European anti-monopoly laws for gas pipelines. Nord Stream 2 has been asked to, what they call unbundle the system, so that there will be a different operator of the pipeline, a different owner of the pipeline and so on. But Nord Stream 2 doesn’t want to do that. Instead, what they said they’re going to do is for the last portion of this pipeline, the part that runs through Germany, they are going to create a subsidiary which will be German, and therefore it’s ostensibly it shouldn’t have to be subject to unbundling laws. There are a lot of questions as to whether that works legally. So what this effectively means is that we’re looking at an almost inevitable move to the European Court of Justice at some point. There will be a country in the European bloc that says this is not legal, we’re taking you to court. And then we find out whether or not Nord Stream 2’s interpretation will be seen as valid by the courts.

Marc Filippino
Erika Solomon is the FT’s Berlin correspondent.

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Today in a court inside the Vatican, a high-stakes criminal trial is set to resume. The case revolves around Vatican officials’ investments in a luxury property in London, using hundreds of millions of euros intended for the poor. To talk about the story and what’s at stake, I’m joined by our Rome correspondent Miles Johnson. Hi, Miles.

Miles Johnson
Hi.

Marc Filippino
So first of all, who did what and how did donations intended as relief for the poor end up invested in a luxury property development in London?

Miles Johnson
This is really a labyrinthine story. It’s very complicated and very, very contested. But broadly speaking, there was a unit of the Vatican, which is called the Secretariat of State, which is a sort of central administration office. And each year and there is a day where Catholics around the world make a donation to the Catholic Church to basically support the works of the church and people who are most in need. That collection is called Peter’s Pence. And this money was under the sort of authority of this unit called the secretariat of state. And really, this investigation focuses on the financial investments that that unit made with this money.

Marc Filippino
And in addition to the allegations that funds were misused, the Vatican also lost money on this investment. How could that happen when London property prices have soared in recent years?

Miles Johnson
That is a very good question. There are multiple different versions of events. There are multiple different protagonists who sort of play different roles in those investments. You know, the Vatican prosecutors allege they, that the Holy See was defrauded and that’s how they lost money. Whereas other participants argue that the Vatican made multiple mistakes in the way it handled its investment. So we just don’t know at this point, and we’ll have to sort of wait and see what the trial delivers in terms of being able to answer that question.

Marc Filippino
Now, from a reputational standpoint, Miles, what does this mean for the Pope and the Vatican and the Catholic Church?

Miles Johnson
Pope Francis has been seen as a reforming and, to a certain extent, an outsider Pope. He is someone who was brought in to make some changes, important changes to the way the Vatican had been run. And a really key part of those changes has been the management of the Vatican’s finances. And so Pope Francis has a lot of sort of political capital invested in the idea that he is going to reform those finances, bring transparency, bring good governance to the way in which these assets are being managed. And so what the outcome of all of this is will be quite important for his reputation as a reformer.

Marc Filippino
So really, what are the possible outcomes here?

Miles Johnson
At this point it’s just really too early to say how it’s going to play out. Obviously, the highest profile defendant is Cardinal Becciu, who was one of the most powerful men in the Vatican, a very close ally in some ways to Pope Francis, effectively sort of the pope’s chief of staff. He denies any wrongdoing. You know, he says that he’s committed no crime at all. He’s always acted in the interests of the church and always managed responsibly any assets which have come under his authority. You know, and I think what happens to him will be the deciding factor in this trial. You know, he’s the highest profile person by far. You know, he’s the cardinal. He’s the first cardinal to go on trial for a crime like this, you know, in over 300 years. What happens to him will sort of, I think, decide the outcome of how people see this trial as having an effect on the church at all.

Marc Filippino
Miles Johnson is the FT’s Rome correspondent. Thanks, Miles.

Miles Johnson
Thank you.

Marc Filippino
Before we go, remember a few weeks ago, we told you about Floki Inu? That’s the new crypto coin that was the subject of a big marketing blitz on London’s Underground. The coin was inspired by Elon Musk’s dog named Floki. Well, UK regulators are now investigating the ad campaign. This comes as London’s mayor is under pressure to crack down on crypto advertising on public transport. A Floki spokesperson said its ads complied with all laws and regulations.

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You can read more on all of these stories at FT.com. This has been your daily FT News Briefing. Make sure you check back tomorrow for the latest business news.

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