Russia sanctions ‘not really effective’ outside west, says Dubai trade hub chief

Good morning. We have an exclusive interview today with the chair of Dubai’s main trading hub, who has said that sanctions on Russia are “not really effective” outside the west.

“Sanctions slow the economy, never stop it,” said Hamad Buamim, chair of the Dubai Multi Commodities Centre, a leading United Arab Emirates free trade zone that says it hosts more than 24,000 businesses. He is also president of Dubai’s chamber of commerce. “Trade continues flowing, it just flows in a different way,” he told the Financial Times in an interview.

Dubai is seen as a beneficiary of US and European attempts to isolate Russia’s economy, as oil traders relocated from Geneva to the UAE after Switzerland joined the sanctions imposed on Moscow. Energy is the most important sector for the DMCC, according to Buamim, with some 3,000 energy companies registered in the zone.

However, in recent months the UAE, along with other countries, has been under pressure from the US, EU and UK to act against companies trading with Russia. Read the full interview.

• War in Ukraine: French President Emmanuel Macron has called for restrictions on Ukraine using western weapons in Russia to be eased, the most senior Nato leader to do so.

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

• Economic data: Consumer confidence figures are due from Germany and France. Germany also has its preliminary consumer price index for May. The US Federal Reserve publishes its Beige Book on economic conditions.

• Trump ‘hush money’ trial: Jurors could deliver a verdict after closing arguments which saw the former president’s defence call the prosecution’s star witness “the greatest liar of all time”.

• South Africa elections: Voters will decide whether to hand the governing African National Congress another five years in power. We trace its three decades of rule in charts.

• Companies: BHP faces a deadline to make a formal bid for rival Anglo American before 5pm today. HP, JD Sports Fashion, Pets at Home, Impax Asset Management and Salesforce report results.

Five more top stories

1. Exclusive: UK water regulator Ofwat is planning to cut fines for Thames Water and other financially stressed utility companies in a bid to avoid nationalisation. Companies with this special “recovery regime” status could receive fewer or no regulatory penalties to encourage them to invest in infrastructure improvements instead, people close to Ofwat and the water companies said. Gill Plimmer has more details on the plan.

2. The Bank of England’s vast sale of government bonds is causing a shortage of cash in corners of the money markets and may need to end, investors have warned. Over the past two years, the BoE has shrunk its balance sheet from nearly £1tn to about £760bn largely by reducing its holdings of government debt. This process of quantitative tightening is draining the liquidity that has flooded markets in recent years.

3. PwC China has been shunned by more high-profile clients in the country as the accounting firm braces itself for penalties related to its audit of distressed property developer Evergrande. Top retail lender China Merchants Bank and state-owned construction group China Railway have both ditched the Big Four firm for its rival, Deloitte. Read the full story.

4. Hess shareholders have approved a $53bn takeover by Chevron, advancing a controversial acquisition at the heart of a high-profile brawl between America’s leading oil companies. Investors accepted the offer despite concerns over an arbitration process launched by rival ExxonMobil, which argues it has a right of first refusal over any sale of Hess’s stake in a prize oil find off the coast of Guyana. Here’s what comes next for the deal.

• More Big Oil: Scott Sheffield, the former chief of Pioneer Natural Resources accused of colluding with Opec to restrict oil production, said he had been “unjustly smeared” by regulators.

5. Leading UK companies have refused to back either of the main parties ahead of the country’s general election. While 120 business executives backed Labour in a letter published by The Times on Monday, only one — JD Sports chair Andrew Higginson — was a sitting chair or CEO of an FTSE 100 company. Beyond what one headhunter called the “has beens”, here’s how the index’s other 99 companies responded.

• UK elections: The FT has identified four crucial battlegrounds where parties will vie for victory ahead of the vote on July 4.

• Predictions: Use our interactive model to estimate the result in every constituency using the latest polls or what you think the result will be.

With several MPs stepping down before the elections, how will each party select new candidates? Read Stephen Bush’s latest Inside Politics and sign up for the newsletter here.

The Big Read

More young Europeans are succumbing to the siren song of rightwing populist parties, with their seductive mix of ethno-nationalism, anti-wokery and conservative values. More than 30 per cent of 18-24-year-olds in France and the Netherlands support far-right parties. A recent survey found 22 per cent of Germans aged 14-29 backed the AfD, up from 12 per cent last year, with no other party enjoying such support in this age group. With many set to vote for the first time in this year’s European parliament elections, how is the far right winning over young people?

How will the elections change the EU? Join FT journalists and experts on June 12 for a subscriber-exclusive webinar. Register here.

We’re also reading . . . 

• Israel: The country’s foreign minister, Israel Katz, has shunned tried-and-tested diplomacy to lampoon critics with cartoonish social media posts.

• Private equity: Employee share schemes could help a sector being squeezed by higher interest rates and a sluggish listings market, writes Brooke Masters.

• Public health: Patients in England are being forced to ration life-saving drugs as a supply crisis hits availability of at least 30 different types of medication.

• Sunak’s net zero gamble: If weakening climate policies pays off for the Tories, the consequences will be far-reaching, writes Pilita Clark.

Chart of the day

Leading online food delivery groups in Europe and the US have racked up more than $20bn in combined operating losses since they went public, after a fierce battle for market share. Following a period of pandemic lockdown-fuelled growth, the groups are now contending with a tougher macroeconomic environment that has hit consumers.

Take a break from the news

Why has perfume become so expensive? The answer lies in the rise of niche fragrances, which are made with rare and expensive ingredients for a more exclusive market. “This category of perfume is driven by passion — not what we think is [rational] or not,” said one fragrance maker.

Additional contributions from Benjamin Wilhelm and Leah Quinn