FirstFT: Surging exports to Russia’s neighbours prompt sanctions-dodging worries

The EU and its allies are investigating a surge in exports to economies in Russia’s vicinity, as they seek to prevent companies from evading western sanctions via a back door to Moscow.

David O’Sullivan, the EU’s newly appointed sanctions envoy, told the Financial Times that trade flows to Russia from the bloc have dropped, but countries in Russia’s vicinity have seen “unusual spikes”. “Have they suddenly developed a lot of new needs for this material, and it’s all staying there, or is some of it leaking into Russia in one form or another?”

O’Sullivan did not name countries, stressing that he started with a “presumption of innocence”. But Armenia and Kyrgyzstan are among those with sharp increases of western imports and spikes in exports to Russia, according to analysis by the European Bank for Reconstruction and Development. Turkey’s exports to Russia have also surged.

The EU and partners including the US and UK are set to share intelligence on possible sanctions dodging at a meeting today as they seek to push for tighter controls, O’Sullivan said.

Meanwhile, Russian president Vladimir Putin and China’s top diplomat Wang Yi vowed yesterday to strengthen ties between their two countries despite “pressure from the international community”. Wang’s visit to Moscow, the first by a senior Chinese official since the start of Russia’s invasion of Ukraine, highlights the two countries’ deepening relationship.

The FT will hold an exclusive webinar today at 1pm GMT for subscribers to discuss the future of Russia’s brutal war on Ukraine with FT correspondents and special guests. Register here for free.

Five more stories in the news

1. UK public services need more cash, says report After almost 13 years of austerity and damage caused by the pandemic, the UK’s public services will not recover before the next election and may require significant cash injections to prevent further decline, according to the Institute for Government. “The situation will be even harder for whoever forms the next government,” the non-partisan think-tank said.

2. Most Fed officials backed quarter-point rate rise The vast majority of Federal Reserve officials supported slowing the pace of US interest rate rises to 0.25 percentage points last month, according to minutes from their most recent meeting. But officials also said that insufficiently restrictive policy could “halt” recent progress in moderating inflation.

3. Eskom chief ousted after TV broadside South Africa’s power monopoly Eskom has removed its chief executive André de Ruyter with immediate effect, after a television interview where he accused senior politicians of corruption and said the company had been infiltrated by crime cartels. De Ruyter departed yesterday just a month before he was scheduled to leave following a resignation.

4. Google claims quantum computing breakthrough Google has marked an early but potentially significant step in overcoming the biggest technical barrier in today’s quantum computers, where information is lost too quickly to be useful. The company’s findings, published in the journal Nature, mark a “milestone on our journey to build a useful quantum computer”, said Hartmut Neven, head of Google’s quantum efforts.

5. Hacker group targets thousands of networks A mysterious and unidentified group of hackers dubbed the Nevada Group has sought to paralyse the computer networks of almost 5,000 victims across the US and Europe, in one of the most widespread ransomware attacks on record. Authorities have yet to identify the perpetrators, suspected to be from Russia and China.

The day ahead

Turkey interest rates Turkey’s central bank holds its monthly rate-setting meeting. Economists expect policymakers to revive a rate-cutting cycle in a bid to boost economic activity after this month’s devastating earthquakes.

Economic data The US releases gross domestic product for the fourth quarter last year and weekly jobless claims. The EU publishes its harmonised consumer price index for January, and Norway has unemployment figures for the same month.

UN meeting The United Nations Security Council convenes in New York to discuss co-operation with the EU.

Earnings Alibaba, Anglo American, BAE Systems, Budweiser, Deutsche Telekom, Dr Pepper Snapple Group, Newmont, Rolls-Royce, Telefónica and Warner Bros Discovery are among the companies reporting. See the full list in our Week Ahead newsletter.

What else we’re reading

The insular decision-making that led to Putin’s invasion The Financial Times spoke to longtime confidants of Vladimir Putin as well as people involved in Russia’s war effort for this account of how Putin blundered his way into the invasion — and then doubled down rather than admit his mistake. Since the war began, the Russian leader has become even more isolated, consulting only a small circle of advisers.

Nigeria votes: Tinubu still confident despite setbacks Bola Tinubu, governor of Lagos state from 1999 to 2007, is viewed as a political godfather in Nigeria’s sprawling economic capital. Analysts say the ruling party candidate retains a slight edge ahead of this weekend’s presidential polls despite suffering setbacks, thanks in part to a powerful electoral machine.

Opinion: Illiberal democracy comes to Israel The programme of Prime Minister Benjamin Netanyahu’s latest government is of evident importance for the future of Israel. But it is also of wider significance, argues Martin Wolf, and raises questions about how a democracy can turn into an autocracy via unbridled majoritarianism.

Adani’s ties with Modi spur scrutiny of overseas deals The Adani Group, whose owner Gautam Adani has longstanding ties with Indian prime minister Narendra Modi, has in recent years clinched deals in countries from Myanmar to Israel as part of an ambitious overseas expansion. Following a short seller’s allegations of fraud at the Adani Group, which the Indian conglomerate has denied, the opposition in India is now scrutinising Modi, who they say enabled the foreign deals.

Opinion: Conservatives and the sorry state of public patronage If you seek proof of the malaise in British public life, the appointment to BBC chair of a Conservative donor who helped facilitate a personal loan for the prime minister will do nicely, writes Robert Shrimsley. But Richard Sharp’s situation highlights a bigger issue: the consequences of severely narrowing the talent pool for public jobs.

Take a break from the news

Quality time — an Amy Hwang cartoon. See more of her work here.