FirstFT: EU goods worth $1bn vanish in Russia ‘ghost trade’

A Financial Times analysis has found that more than $1bn of EU exports targeted by sanctions have disappeared in transit to Russia’s economic partners, a flow of “ghost trade” western officials say has helped prop up Vladimir Putin’s wartime economy.

Only about half of a $2bn sample of controlled “dual use” items shipped from the EU actually reached their stated destinations in Kazakhstan, Kyrgyzstan and Armenia, according to public data analysed by the FT.

These goods, which are deemed by the EU to have potential uses for military or intelligence services and are subject to export controls, may have entered Russia directly from the EU under the pretence that they were only passing through.

The items were dispatched in 2022 after Russia’s full-scale invasion of Ukraine, when sensitive EU trade with Kazakhstan, Kyrgyzstan and Armenia — three ex-Soviet states now in an economic union with Russia — surged to unprecedented levels.

You can find more of the FT’s analysis of Russia’s war on Ukraine here. Here are two other related reads I recommend:

And here’s what I’m keeping tabs on today:

• Bank of England: The central bank’s Monetary Policy Committee is expected to raise interest rates to their highest level since 2008.

• Results: 3i Group, Bayer, Deutsche Telekom, Foxconn, ING, News Corp, Pirelli, RWE and SoftBank Group report. Rolls-Royce holds its general meeting for shareholders.

Join us today for the final day of the Future of the Car summit with visionary CEOs and thinkers. Register here.

Five more top stories

1. Exclusive: Blackstone is talking to US regional banks about lending partnerships, which would involve lenders making or “originating” loans that the private equity group can funnel to its insurance customers. Read more about the proposal.

2. Exclusive: UK ministers are drawing up plans to curb visas for family members of overseas students at British universities, as Rishi Sunak braces himself for record migration numbers expected in official data this month. Here’s why this is a politically thorny issue for the prime minister.

• Related: More than 2,500 EU-derived rules are set to remain on the UK statute book beyond the end of this year, as the government climbs down from its promise to review or repeal all such legislation.

3. Donald Trump has urged Republican lawmakers to let the US default on its debts unless Democrats capitulate to demands for “massive” spending cuts, in comments made yesterday in the critical early voting state of New Hampshire. Read more from the former president’s televised town hall.

4. UK house prices are falling less sharply as sales pessimism eases, suggesting the property market is stabilising after a surge in mortgage costs. The Royal Institution of Chartered Surveyors said today that its house price balance rose from minus 43 in March to minus 39 last month, the highest figure in five months.

5. Google has launched a revamped search engine powered by artificial intelligence to rival Microsoft’s Bing, as it rushes to make up lost ground in the race to bring powerful new language models to the internet search business. Read more about the new feature’s capabilities and view a demonstration of the tool.

Deep dive

With investors expecting the US Federal Reserve to stop raising interest rates, perhaps it’s time to dust off the “what happens when the Fed is done hiking” playbook. There’s just one problem: the playbook has had many different (and diverging) chapters over the history of rate rise cycles, writes Liz Ann Sonders, chief investment strategist at Charles Schwab.

We’re also reading . . . 

• Energy: Trading profits are bolstering returns for Europe’s energy majors but doing little to narrow the valuation gap with US peers, writes David Sheppard.

• Border ‘chaos’: Cities along both sides of the US-Mexico border are steeled for a surge in migrant crossings as pandemic-era immigration controls are set to expire tomorrow.

• The Melrose model: The group has called time on its 20-year history as the London market’s very own private equity operator, signalling the end of an era, writes Helen Thomas.

Chart of the day

Jemima Kelly has found Americans poking fun at Britain with increasing regularity. But their mockery may mask a growing anxiety about problems at home, she writes.

Hear Hillary Clinton live in conversation with the FT’s US national editor Edward Luce on May 20 at our FTWeekend Festival. Register now and get $20 off as a newsletter subscriber with the promotion code NewslettersxFestival at ft.com/festival-us.

Take a break from the news

Sir Elton John has described photography as his greatest passion outside music, though he is less enthusiastic about being in front of the lens. Yet at 76, several career-defining occasions have required chronicling — including this year, when the musician wraps up his last-ever tour after 50 years of performing.

Additional contributions by Gordon Smith and Emily Goldberg