FirstFT: Erdoğan agrees to back Sweden’s Nato accession

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Good morning. Turkey’s president Recep Tayyip Erdoğan has agreed to support Sweden’s membership of Nato, the military alliance has said on the eve of its annual leaders’ summit in Lithuania. The move paves the way for the Nordic country to join the US-led bloc after more than a year of opposition from Ankara.

Erdoğan’s decision to lift his veto, after a last-ditch meeting with the leaders of Sweden and Nato on Monday evening, came after Turkey’s president linked his support for Stockholm’s accession to Turkey’s long-stalled EU bid.

The lifting of Erdoğan’s block opens the way for Turkey’s parliament to approve Sweden’s entry into the military alliance, a step seen as critical to increasing the defence of eastern Europe in response to Russia’s invasion of Ukraine.

Turkey’s president agreed to “forward the accession protocol for Sweden [to join Nato] to the Grand National Assembly as soon as possible and work closely with the assembly to ensure ratification,” Nato secretary-general Jens Stoltenberg said after hours of negotiations with the leaders of Turkey and Sweden.

Stoltenberg described the decision as a “clear commitment” from Turkey’s president, but said it was “not for me to go into the details of the timelines of the different political institutions in Turkey”, when asked how soon Sweden could become a member of Nato.

• Go deeper: The unity of Nato’s 31 members will be put to its biggest test since the beginning of the Ukraine war at this week’s summit, writes Gideon Rachman.

Here’s what else I’m keeping tabs on today:

• Economic data: July unemployment figures are due in the UK, while Germany reports the final June consumer price index and harmonised index of consumer prices, plus the ZEW economic sentiment survey.

• Asean meeting: Foreign ministers from south-east Asian countries will meet in Jakarta, Indonesia to discuss the crisis in Myanmar, tensions in the South China Sea and other regional issues. (Associated Press)

• Heat and flooding in China: Parts of eastern and south-west China are preparing for torrential rain, while employers across much of the country on Monday were ordered to limit outdoor work because of brutal heat. (Associated Press)

Five more top stories

1. Russian president Vladimir Putin met Yevgeny Prigozhin and other Wagner commanders a few days after their aborted mutiny, the Kremlin has revealed. The revelation is a further sign that Moscow is in no hurry to punish Prigozhin, who Putin had initially branded “a traitor”.

2. A top US banking regulator has announced tougher capital rules for a broader range of lenders in an effort to shore up a financial system rattled by the failure of several regional banks earlier this year. Here are more details on the regulatory changes for larger lenders.

• More US banks news: The largest US banks are this week set to report the biggest jump in loan losses since the onset of the coronavirus pandemic, as rising interest rates pile mounting pressure on borrowers across the economy.

3. A growing number of countries are bringing their physical gold reserves back home to avoid Russian-style sanctions on their foreign assets, while increasing their purchases of the precious metal as a hedge against high levels of inflation. Read more on the global demand for gold.

4. The asset management industry faces dramatic consolidation over the next four years as one in six companies could disappear because of a mix of market volatility, high interest rates and pressure on fees. Read more on the findings from PwC’s survey of 500 asset managers and institutional investors.

• More asset management news: Big money managers in China have cut fees on thousands of mutual fund products, in a swift reaction to government pressure to reduce rates across the country’s fast-evolving financial services sector.

5. A Singapore hedge fund has filed a petition in Hong Kong to wind up defaulted developer Kaisa, marking one of the first cases dealing with a Chinese developer’s mainland debt following a property sector meltdown in the country. Analysts say the case reflects creditors’ impatience with restructuring in China’s property sector.

The Big Read

As his battered troops continue to fight off a relentless invasion and attempt to claw back occupied territory in Ukraine’s south and east, Volodymyr Zelenskyy will this Wednesday be in Lithuania’s capital, Vilnius, with another strategic objective: to gain a seat at Nato’s table. But his bid poses difficult questions for the military alliance’s 31 members, from how prepared they are to fight Russia, to whether its mutual-defence clause needs to be earned before it is given.

We’re also reading and watching . . .

Chart of the day

China’s economy teetered on the brink of deflation in June, adding to calls for Beijing to launch a stronger stimulus package to sustain the country’s sputtering post-Covid recovery. The consumer price index was flat year on year and declined 0.2 per cent compared with the previous month, while factory gate prices fell at the fastest pace since 2016.

Take a break from the news

Feeling worn out? Take a nap. Employers are waking up to the advantages of snoozing on the job, as groups from law firms to banks seek help for the overworked.

Additional contributions by Tee Zhuo and Gordon Smith