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This is an audio transcript of the FT News Briefing podcast episode: Biden turns to autocrats for oil

Marc Filippino
Good morning from the Financial Times. Today is Tuesday, March 15th, and this is your FT News Briefing.

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What goes up must come down, and oil markets came down yesterday. Equities followed them, and the US is turning to unlikely countries in its search for oil supplies. But the response has been less than enthusiastic.

Anne-Sylvaine Chassany
All of a sudden, we realized that some of these countries are actually very close to the Putin regime, and this must be quite a realization for the US and Europe.

Marc Filippino
Plus, we’ll catch you up on the latest in the 1MDB corruption trial. I’m Marc Filippino, and here’s the news you need to start your day.

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The price of oil has been absolutely unreal lately. Brent crude was nearly 140 bucks a barrel last week on fears of a Russian oil ban. Yesterday, West Texas Intermediate fell below $ 100 a barrel as fears lessened and Opec members discussed opening the taps. Equities also dropped, especially tech shares. The Nasdaq ended the day more than 20 per cent down since the beginning of the year. Here’s the FT’s Nicholas Megaw with more.

Nicholas Megaw
The Nasdaq has had a pretty toxic combination of factors affecting it so far this year, and the upcoming Fed meeting is probably the biggest. It’s certainly the one that started the sell-off at the start of the year, and it was again the main kind of focus on Monday. That’s because, and this is true to an extent that the S&P 500, but the trends have been a bit more extreme in the Nasdaq because it’s dominated by more kind of fast growing tech stocks, and their value is based on kind of long-term promise rather than necessarily making loads of profits right now. And so when interest rates go up, it increases the income that investors can get, which therefore reduces the value that they place on that long-term promise.

Marc Filippino
Nicholas Megaw is the FT’s US capital markets correspondent.

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Joe Biden last year hosted a gathering of more than 100 countries and called it the Summit for Democracy. Not invited were countries like Russia, China and other autocracies. Now, Biden’s turning to the very countries it snubbed as it searches for alternative sources of energy to offset the embargo on Russian oil. I spoke to the FT’s world news editor Anne-Sylvaine Chassany for more about this.

Anne-Sylvaine Chassany
So we’re seeing, you know, for example, Nicolas Maduro in Venezuela who was really perhaps pariah number one for the US. Now, we’re seeing that the US is willing to engage. So we’re definitely seeing some sort of thawing in the relationship, and it definitely is because they are counting on more oil to be released. So we’re seeing that with Venezuela. We’re seeing that with Saudi Arabia. Joe Biden was not really keen on the de facto ruler of Saudi Arabia, Mohammed bin Salman, and now we’re seeing that he’s trying to reach out also because he’s hoping that the Opec member will be able to increase its output. So yes, we’re seeing a lot of oil diplomacy here.

Marc Filippino
It occurs to me that a lot of this is the US trying to curry favor with places that they’ve angered in the past. Is that possible at this stage of the game?

Anne-Sylvaine Chassany
So yes, so what we’re seeing now is that these countries are not really responding right away. Take allies, US allies like Saudi Arabia or the UAE. They’re not very quick to respond on the oil side of things. And obviously, because they have felt a bit castigated in the past few months. And so now the, you know, the US needs their help. But this broader realization for a lot of these countries that the dust needs to settle on this conflict to make an informed choice on whether or not to help the US or to stand by Russia or be neutral. There are a lot of countries assessing their own interest in the whole conflict, and all of a sudden we realized that some of these countries are actually very close to the Putin regime. And this must be quite a realization for the west, for the US and Europe.

Marc Filippino
Who’s looking at this and saying, I, as a country, can benefit from this right? The places that have soured relationships with the west are looking at this as an opportunity.

Anne-Sylvaine Chassany
The next few weeks are very, are going to be very crucial. China signed a partnership with Russia right on the eve of the invasion of Ukraine. And what we’re seeing now is Beijing is probably thinking that this, the wave of sanctions that the US and Europe have been willing to inflict, the price of energy, trade between these two regions, so I think Beijing is looking at this and saying, well, maybe it’s going to weaken the west and therefore I will, you know, come out stronger. I will have, you know, more leverage. Or similarly, they might see, OK, there’s really a big determination, big conviction from the west to really fight autocracies and so on, and they really are ready to inflict themselves so much pain that I should be careful about Taiwan, for example. But it’s not clear cut. So I think that’s why they’re sitting on the fence.

Marc Filippino
Anne-Sylvaine Chassany is the FT’s world news editor. Thanks, Anne-Sylvaine.

Anne-Sylvaine Chassany
Thank you.

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Marc Filippino
US justice officials have spent the past decade prosecuting one of the biggest corruption scandals in modern times, and finally, the case has reached a courthouse in Brooklyn. The Department of Justice accuses former Goldman Sachs bankers of pilfering billions of dollars from a Malaysian state investment fund called 1MDB. Last week, a star witness wrapped up testimony. The hefty US legal and enforcement correspondent Stefania Palmer has been following the case.

Stefania Palma
Just a few weeks ago, after years of waiting, we finally saw the start of a trial against Roger Ng, former Goldman Sachs banker. And essentially, he is one of the key individuals who have been essentially accused by the US of being part of this multibillion dollar embezzlement scandal linked to 1MDB, which is a Malaysian state investment fund.

Marc Filippino
And last week, we heard from a key witness named Tim Leissner. He was one of the Goldman bankers involved in the scheme, but he turned against his colleagues.

Stefania Palma
It really was sort of the critical moment that everyone who’s been following this trial has been waiting for. So there were very high expectations to see Tim Leissner, who has pleaded guilty to charges of conspiring to launder money and violate foreign bribery laws in connection with the scandal. There was great expectation to see him on the stand, especially because he has struck a co-operation agreement with the government in the hope, obviously, of receiving more lenient sentence. And he has now become the star witness for the government, which created a very interesting dynamic whereby he essentially was in a way kind of pit directly against his former colleague, Roger Ng, who is a defendant.

Marc Filippino
So what does this all mean for Goldman? Well, Stefania says they’ve already largely borne the brunt of the scandal.

Stefania Palma
It has always said that it was led to by sort of members of the former Malaysian government, 1MDB itself. Leissner on the stand testified to having lied to Goldman during the internal reviews of these transactions for 1MDB that the bank was involved in. Goldman, also important to say, it’s its Malaysian subsidiary pleaded guilty to a bribery charge. It already paid a record multibillion dollar global settlement. What Leissner has done is really paint a picture of all the people he is alleging were parts of one of the most complex, cross-border embezzlement schemes that we’ve seen come to light. And we also have to remember that Najib Razak, the former prime minister, he was the founder of 1MDB. He has already been convicted to 12 years in prison sentencing, but he is appealing. But he also is facing several other trials as well. So in no way shape or form is this story over with. Goldman might have already sort of paid the price in a sense for it, but it’s still an immense topic of discussion.

Marc Filippino
Stefania Palmer is the FT’s US legal and enforcement correspondent.

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Before we go, Germany yesterday said it’s buying American made F-35 fighter jets capable of carrying nuclear weapons. This is the first big purchase since Berlin announced a 100 billion euro boost to its military forces just a few weeks ago after Russia invaded Ukraine. F-35s are made by the US defense company (Lockheed Martin), and they’ll replace the aging tornado models that Germany’s air force has been flying since the 1980s.

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You can read more on all of these stories at FT.com. This has been your daily FT. News Briefing. Make sure you check back tomorrow for the latest business news.

This transcript has been automatically generated. If by any chance there is an error please send the details for a correction to: typo@ft.com. We will do our best to make the amendment as soon as possible.



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