Russian sabotage networks in Europe

Good morning from the Financial Times. Today is Tuesday, june sixteenth And this is your FT newews briefing Investors celebrated the news of a U. S. Iran deal and hedge funds are downbeat on European car makers Plus, we'll take a look at how Russia is recruiting unwitting foot soldiers in Europe This is a sign of a gig economy of people being recruited online, often paid via crypto to do actions in the real world. Filipino and here's news you need to start your day Global equities rallied and oil prices fell yesterday. That's after an agreement to reopen the Strait of Hormuz was announced over the weekend Investors are betting the U. S. Iran deal will reverse a surge in energy prices due to the conflict With inflation riding high, how long could it take for lower energy prices to actually make a difference Here with me now is the FT's US Markets editor Kate Doogood. Hi, Kate Hi So why are investors feeling so optimistic about this deal So I think that the reason why investors are optimistic about this deal is because we've heard from Iran as well as from the United States Previously, we had kind of only been hearing from President Trump in the White House and we have not been hearing from Tehran. So I think that that's the real reason that investors are taking this seriously. The reason that they think that energy prices are probably going to fall as the Strait of Hormuz is reopened and Iran goes about rebuilding some of the infrastructure that was destroyed. What does this mean for inflation overall? I mean, Kate, you how long could this change take to feed through the economy? especially given that the head of the world's biggest tanker operator said that ship owners probably won't go back through the strait for So I think that what you're hinting at, which is that we might have inflation for longer than just that these inflationary effects might persist is absolutely right. I think that we will continue to see higher energy prices for a little while, given that as you mentioned, the street itself is not completely open yet but also because like a lot of critical infrastructure has been damaged and will take time to rebuild. there are a number of different commodity markets that this is going to affect One thing that we saw is US wholesale inflation rose dramatically in April And so that tends to be a predictor of inflation to come in consumer prices It hasn't quite shown up in the CPI data yet, which has risen, but it's only been because of energy. It's not core prices have not really risen very much. And the wholesale inflation data kind of suggests that it might still be to come. Given the inflationary environment that we're in, I want to ask you about central banks because Reserve and the Bank of England are meeting this week The European Central Bank met last week and raised rates Could we see other central banks raise rates given what's going on with inflation don't think that we should expect a rate hike from either the BOE or the Federal Reserve Core inflation has not risen fast enough to justify an immediate hike. But what I will say is that I do think that the Fed statement will likely remove what's called the easing bias. And so that is an indication that the Fed is sort of is not looking to cut interest rates anymore, which is what was expected at the beginning of this year. At the Bank of England, Governor Bailey has signaled no immediate rush to raise rates despite higher inflation. But we are seeing splits emerging on the monetary policy commommittee. And I think that'll be interesting to watch. Certainly, I think from both banks, we could expect to see an interest rate hike later on this year Kate, as you've watched investors navigate this conflict and energy crisis that came out of it What's been your takeaway on investor thinking and behavior? We have seen investors continue to assume that Trump will sort of back down from his most radical claims One of the things that's been interesting to see has been that the market tends to rally and pretty strongly when there's good news, when there's news about you know a potential deal or progress in talks But it hasn't really fallen very much when fighting has resumed which has been a little bit surprising. But I think it's because really sort of this taco trade is still very much present in investors' minds. You know, the war is unpopular. There's, I think some sense that U. S. President Donald Trump has maybe reached his paining point That's the FTs, Kate Dooood in New York. Thanks so much, Kate Thank you Investors think that Chinese companies are going to eat European car makers' lunch Hedge funds are betting against the debt and equity of some of the continent's biggest car makers. That's Stalantis, Volkswagen, BMW, and Mercedes Benz Car makers equity is also taking a hit Tens of billions of euros have been wiped off the sector's market value this year The industry in Europe is struggling to deal with growing competition from China, plus there's sluggish demand, and don't forget US tariffs These are all long term threats to the industry One analyst told the FT that investors are realizing that this isn't a cyclical decline but a structural one Last year, there were several arson attacks on UK Prime Minister Kir Starmer's properties, including his home And yesterday, a culprit was convicted It turns out the Ukrainian man who lit the fires didn't know much about who he was targeting A Russian sabotage network recruited him online and gave him assignments without disclosing details This is one of two recent exclusive stories from the FT about Russian online recruitment in Europe The FT iss Helen Warall is an investigative reporter for the FT. She's here to tell us more about these operations. Hi, Helen Hi So let's start with these attacks against the Prime minister who carried them out and how So one of the attackers who we've written about is a young Ukrainian called Roman Lavranovich. who arrived in the UK around the time that Russia invaded Ukraine He worked in construction. It seems that he was sort of struggling to get regular work. He struggled with English and he posted regularly in Ukrainian language groups on telegram looking for cash in hand work And he was essentially recruited on telegram by a Russian speaking handler called E Munoney, who we have established was based in Russia and is affiliated with a Russian hacking network And tell me a little bit more about what he was hired for. How did he not know what he was doing. That part really struck me One of the interesting things about people who are recruited to do this sort of informal work online is that often it relies on either a level of naivety or a sort of willingness to believe that they're doing something completely different So first of all, Levonovich was asked to put up posters in London for a fake far right group. That was sort of part of a far right propaganda campaign Th then he did some reconnaissance around Starmer's house, looking at arson targets And he also did some anti Islamic graffiti on mosques around the capitol So he said in a police interview after the attack that he had absolutely no idea who he was targeting. He even claimed that he had no idea who Kir Starmer was. So clearly, whoever was tasking Lavanovich was benefiting from the fact that he was willing to do these actions without asking too many questions Helen, you wrote a whole thing earlier this month about Russia recruiting teenagers by on Europe, can you tell me more about some of the similarities that we're seeing Of course, yeah. so The piece that I wrote earlier this month looks at both Russia and Iran and similarities in how Essentially, they are recruiting proxies online to carry out work for them. They seem to be targeting miners across mainland Europe and also in Israel And often these are quite vulnerable people. that may be because they're young or because they are spending lots of time online, they're quite socially isolated. It might be easier to persuade them to do something that's potentially risky or difficult, and they may ask fewer questions about why exactly they're doing it or who they're doing it for This is so interesting, Helen. I'd love for you to give me a bigger picture here. What's most notable to you about these stories? Are we entering a new era of Russian meddling in European affairs I think this is definitely a new front in hybrid warfare. One thing I would point out very clearly is that in the case of the Ukrainian, we are not saying and are reporting that he was being directed by the Russian state. What we're saying is that the handler was resident in Russia and was affiliated with a Russian organized crime network But I think this is a sign of a sort of informal, almost like a gig economy of people being recruited online, often paid via crypto to do actions in the real world, whether that's sabotage, whether it's distributing propaganda. And I think one of the factors here is that the risk really lies with the person who's recruited rather than the hostile state or the criminal group that's asking them to do the work. For those people who are tasking them, it's very hard to trace the activity back to them That's the FTs, Helen Warrel in London. Thanks so much Helen Thank you You can read more on all these stories for free when you click the links in our show notes. This has been your Daily FT news briefing. Check back tomorrow for the latest businessiness newews