News brief: West vs. Russia oil profits, FTX founder speaks, Macron state dinner
STEVE INSKEEP, HOST:
The United States and its allies hope they can finally find a formula to choke off Russia's funding of its war in Ukraine.
A MARTÍNEZ, HOST:
Russia's economy depends on selling oil. Next week, Europe plans to stop buying it for the most part. Europe also has a plan that would make it harder for Russians to sell it to anybody else. Therein lies the rub because Russian oil is part of the global supply. So how can the world block it without a massive rise in prices?
INSKEEP: NPR's Jackie Northam is trying to figure this out. Jackie, good morning.
JACKIE NORTHAM, BYLINE: Morning, Steve.
INSKEEP: How would the plan work?
NORTHAM: Well, you know, this is part of a sanctions package that the European Union passed in June. And what it's going to do, as you say, is going to ban any seaborne imports of Russian oil, and that's the majority that Europe buys. And if you remember, before the war, Europe was Russia's largest customer.
NORTHAM: But it's been trying to wean itself off ever since. But, you know, there's another part of the sanctions package, Steve, and that's banning all European maritime services on any tankers carrying Russian oil. And by that, I mean insurance, financial services, shipping, anything like that. Ninety percent of the world's maritime services are European or are based in the U.K., so this ban would virtually stop tankers worldwide from carrying Russian crude.
NORTHAM: And you can only imagine what these two bans, you know, if they came into place, what that would have done to prices. So the U.S. has stepped in to just try to soften the blow of these bans.
INSKEEP: Soften the blow, but the U.S. also would like to cut off Russian oil profits, of course. So what's the alternative?
NORTHAM: Right. So the U.S. Treasury Department developed the idea of a price cap, and it's never been tried on oil before. And the other G-7 nations and the EU have signed on to this plan. And what it does is it allows tankers to carry Russian crude if it's at or less than a price cap that's being set by the G-7 and EU, and that will allow Russian oil to continue to flow around the world but at a reduced price. The challenge right now is figuring out what that price will be, and EU members cannot agree on one. And, you know, all this has to be figured out by Monday, when the EU's bans on oil insurance are due to kick in.
INSKEEP: OK, let's assume they figure out the details. They figure out a price. They use this leverage of insurance to say you can't carry oil, Russia, unless you charge such a low, low price you don't have any money for your war in Ukraine. Is this going to work?
NORTHAM: You know, on paper it looks pretty good, but there are some loopholes. First of all, not all nations are signing on to it. You get powerhouses like China, India and Turkey. They've been on a buying spree of, you know, cheap Russian crude since the war began. And I spoke with Ben Cahill. He's an energy specialist at the Center for Strategic and International Studies here in D.C. And he said countries like China and India are wary of joining in.
BEN CAHILL: I think there's also some irritation with Western sanctions and the idea that, you know, the U.S. and the EU are really pushing countries to do this, and they're interfering with the global oil market.
INSKEEP: OK. So they're irritated, Jackie, but you said that Europe controls the insurance industry for the most part. They can block these tankers from moving by refusing them insurance. How could China or India do business with Russia even if they want to?
NORTHAM: Well, Russia's trying to set up its own insurance system, and they're, you know, trying to put its own tankers out on the waters. They could try to trade oil illicitly, and that happens a lot already. The other thing is President Vladimir Putin is threatening not to do oil business with any country participating in this price cap. But, you know, Steve, he needs this oil to fund his war in Ukraine. But, you know, you cannot take his threats lightly.
INSKEEP: Because he could do something that causes the price of oil around the world to shoot up.
INSKEEP: Jackie, thanks so much.
NORTHAM: Thanks, Steve.
INSKEEP: That's NPR's Jackie Northam.
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INSKEEP: OK, suppose you did something that really, really annoyed an old friend. You might try to make amends by inviting them to dinner.
MARTÍNEZ: And that is roughly what President Biden is trying with the president of France. He's hosting Emmanuel Macron for the first state dinner of the Biden administration. France was offended when the U.S. cut a deal to sell submarines to Australia and cut the French out of the action.
INSKEEP: NPR White House correspondent Franco Ordoñez is here to talk about this. Franco, good morning.
FRANCO ORDOÑEZ, BYLINE: Good morning, Steve.
INSKEEP: Why give the special attention?
ORDOÑEZ: Well, you know, France is the U.S.'s oldest ally, and Macron was also the first guest for a state visit in the Trump administration. That says something. But, you know, the White House says France is also at the center of some of the biggest global issues of the day - the Russian war in Ukraine, China and the Indo-Pacific and climate change. And Macron, who just won his second term, has become one of the most experienced leaders in Europe, even though he's young. He's become Biden's go-to person on trans-Atlantic matters, especially since German Chancellor Angela Merkel retired and Britain's Boris Johnson resigned.
INSKEEP: So Biden is saying, OK, you're important, but this is about money and power. The French were upset to be cut out of this submarine deal with Australia. Does this make the deal any less bad from a French perspective?
ORDOÑEZ: I mean, you know, it's a sign of better times. The deal the U.S. made, you know, to help Australia build nuclear submarines, along with the U.K., essentially ended France's own arrangement to build submarines for Australia. And France - you're right - was so mad it recalled its ambassador from Washington, which is just something that doesn't really happen among allies. You know, there are some lingering reservations, but Russia's invasion of Ukraine really put that into perspective. Here's Celia Belin, a former policy adviser in the French foreign ministry, speaking about that.
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CELIA BELIN: The war has reminded everybody of what is really at stake and what is the most important, and the most important is trans-Atlantic solidarity.
ORDOÑEZ: But, you know, she also says that the war hasn't erased all the challenges the two countries face.
INSKEEP: OK, so pageantry in Washington is nice, I guess. I'm sure they'll have nice wine on the table. But the French already have nice wine. And Macron is here for three days, which is longer than dinner, so I assume that France wants something more substantive than dinner. What is it?
ORDOÑEZ: Definitely. I mean, France is particularly concerned about Biden's Made in America provisions, which are in the recent climate infrastructure bill that Biden signed, as it relates particularly to electric vehicles, which could put European carmakers at a disadvantage. Martin Quencez is the director of the Paris office of the German Marshall Fund, and he says the economic measures taken by the Biden administration make perfect sense from a domestic American perspective.
MARTIN QUENCEZ: But if it has damaging effects for allies, this has to be discussed. And this is something to be reconciled by the Biden administration.
ORDOÑEZ: You know, Steve, and he says otherwise European leaders will have to counter because they, too, face their own domestic pressures. And Macron has even warned that Europe may need some kind of Buy European provisions.
INSKEEP: NPR White House correspondent Franco Ordoñez talking with us on this day that Emmanuel Macron is coming over for dinner. Franco, thanks so much.
ORDOÑEZ: Thanks, Steve.
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INSKEEP: Sam Bankman-Fried's lawyers have told him to keep quiet, but the founder of the cryptocurrency exchange FTX is not.
MARTÍNEZ: Even though regulators and law enforcement are investigating him, Bankman-Fried sat down for an interview during a business conference in New York on Wednesday.
INSKEEP: Those listening include NPR's David Gura, who joins us now. David, good morning.
DAVID GURA, BYLINE: Morning, Steve.
INSKEEP: Wow. So you would think that your lawyer would tell you to keep quiet. How did he end up talking last night?
GURA: Yeah, so this happened at The New York Times DealBook Summit, a conference that takes place in this theater on Columbus Circle with a beautiful, sweeping view of Central Park and the New York City skyline. Executives pay thousands of dollars to be there to see people like Mark Zuckerberg of Meta and Treasury Secretary Janet Yellen. Bankman-Fried was booked to participate in this conference months before the bankruptcy. He used to do events like this all the time. And going in, everyone was wondering, one, is Sam Bankman-Fried going to appear? And two, why would he? Why would someone who is under investigation in the U.S. and elsewhere do this? And Andrew Ross Sorkin, the journalist who did the interview, asked Bankman-Fried, point blank, what are your lawyers telling you right now?
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ANDREW ROSS SORKIN: Are they suggesting this is a good idea for you to be speaking?
SAM BANKMAN-FRIED: No, they are very much not.
BANKMAN-FRIED: And, I mean, you know, the classic advice - right? - don't say anything. Recede into a hole. And it's not who I am.
GURA: Bankman-Fried claimed he has, quote, "a duty to explain what happened," Steve, and to do everything he can to try and do what's right.
INSKEEP: OK. So granting that he is out there talking, what did he have to say to explain himself?
GURA: Well, he said there was, quote, "a massive failure of oversight and risk management" at FTX. Over and over again, Bankman-Fried admitted to having made mistakes. But this is what he said when he was asked if this was a Ponzi scheme or a manipulation of the system.
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BANKMAN-FRIED: I didn't ever try to commit fraud on anyone. I was excited about the prospects of FTX a month ago. I saw it as a thriving, growing business. I was shocked by what happened this month.
GURA: And that sums up the image Bankman-Fried projected during this really extraordinary interview that lasted longer than an hour, that he's someone who was overextended, Steve, and maybe oblivious, just seemingly unaware that there were these massive issues with FTX.
INSKEEP: OK, so you make this general allegation - I didn't realize how bad things were. But then people are going to want to know the details, to see if the details check out. Did he give any new details about what he knew and when he knew it?
GURA: Yeah, Bankman-Fried said he was nervous about FTX's financials earlier than he first let on, all the way back on November the 2, which is surprising because a few days after that, he was still tweeting statements about the company that were pretty rosy. Bankman-Fried said his anxiety kept building through these massive customer withdrawals, what essentially was a bank run at FTX. And he said on November the 7 - so five days after Bankman-Fried first felt nervous - he was no longer confident that FTX would be able to get customers their money.
INSKEEP: November the 7 was just a few weeks ago, which reminds us how quickly this company has unraveled and how a matter of days might have cost some people millions and other people a little bit more even, conceivably. So what was his goal in talking about all this?
GURA: Bankman-Fried said explicitly he's not reckoning with his own future right now. He's not thinking about criminal charges he could face or where he might end up. But a couple of points I want to make here. First, if someone is accused of orchestrating a massive, complex fraud, it would not be the worst thing to come across as absent-minded, maybe incapable. And the second point is Bankman-Fried keeps saying he wants to get customers their money back, but he no longer works for FTX, Steve. He relinquished control of it. So not only is Bankman-Fried taking a personal risk talking as much as he is; he's also proving to be a big irritant to FTX's new management, who accused him in a court filing, Steve, of making erratic and misleading public statements.
INSKEEP: NPR's David Gura. Thanks for listening in. Really appreciate it.
GURA: Thanks, Steve. Transcript provided by NPR, Copyright NPR.