This is an audio transcript of the FT News Briefing podcast episode: ‘Sunak grapples with ruling on flagship asylum plan’

Josh Gabert-Doyon
Good morning from the Financial Times. Today is Thursday, November 16th, and this is your FT News Briefing.

[MUSIC PLAYING]

Rishi Sunak vows to change the law to save his flagship immigration policy. EY has a new chief executive. And Denmark could begin halting Russian oil shipments. I’m Josh Gabert-Doyon, in for Marc Filippino, and this is the news you need to start your day.

[MUSIC PLAYING]

UK Prime Minister Rishi Sunak has signalled he’ll press ahead with his government’s flagship immigration policy even after the country’s supreme court ruled it was illegal. In a ruling on Wednesday, the court said undocumented asylum seekers sent to Rwanda would be at real risk of being sent back to the places they’d fled from. Sunak now says he’ll introduce emergency legislation to confirm that the African state is a safe country for processing asylum applications. It’s all ahead of a UK election set to take place next year. Here to speak with me now is the FT’s Whitehall editor, Lucy Fisher. Hey, Lucy.

Lucy Fisher
Hi, Josh.

Josh Gabert-Doyon
So we had a ruling from the Supreme Court on this Rwanda policy. What are the implications for the government?

Lucy Fisher
So it’s a big blow for the government because this is their flagship plan to solve the small boats crisis. It’s one of Rishi Sunak’s key priorities. And it’s also the issue that beats the economy, beats the cost of living even, among Tory voters at the last election. So it’s really crucial for the government to try and solve this issue in order to stay in power at the next election.

Josh Gabert-Doyon
Sunak came out afterwards to have this press conference. What are his plans after the ruling by the Supreme Court?

Lucy Fisher
What he has announced in a press conference is that he will bring forward emergency legislation to legislate that Rwanda is a safe third country to remove people to, and thereby make it lawful. However, that has run into all sorts of questions already. And frankly, MPs on the Tory right don’t buy it. They say you can’t just legislate to say Rwanda is safe. It’s still gonna meet challenges in the court and we’re gonna end up back at square one. So they . . . It isn’t sufficient to buy them off. And things are looking pretty febrile, but we haven’t heard the last of this by any means. I don’t think that the move that Rishi Sunak has announced has necessarily solved the problem in a legal sense, and it certainly hasn’t solved the political problem he faces in terms of pressure from his backbenchers.

Josh Gabert-Doyon
What do you think this tells us about the current state of the Conservative government?

Lucy Fisher
I think it says something really worrying because today you’ve seen someone as senior as Lee Anderson, who is a vice chair of the Tory party, you know, a very senior position of responsibility, openly instruct Rishi Sunak to press ahead with this plan and get planes in the air and get people moving to Rwanda, essentially urging him to break the law. Then you’ve had, in response to that, Alex Chalk, the justice secretary, come out and say, no, look, we are a country that respects the rule of law. We need to respect our independent judiciary and the results today. So it’s all feeling very febrile and fevered tonight. But as I say, this issue of migration and how much it matters to conservative voters mean that it’s a really emotive issue in the party and one that is likely to stoke further ill discipline and outbursts further down the line.

Josh Gabert-Doyon
Lucy Fisher is the FT’s Whitehall editor. Thank you so much, Lucy.

Lucy Fisher
Thanks for having me.

Josh Gabert-Doyon
You can hear more about that story on the FT’s Political Fix podcast, which airs this Friday.

[MUSIC PLAYING]

Janet Truncale is set to become the first woman CEO of a Big Four accounting firm. Her appointment follows what was a lengthy — sometimes dramatic — selection process at EY. As the new global head, she’ll have to deal with the recent demise of a plan to spin off the firm’s consulting arm, which many had hoped would spur growth at the company. Truncale joined EY as an intern and rose through the ranks of its auditing business.

[MUSIC PLAYING]

A new European Union plan would make Denmark responsible for inspecting Russian oil tankers sailing through its waters. The bloc is looking for ways to enforce a price cap on Russian oil. Western officials recently admitted that the price cap wasn’t working for the vast majority of Russian crude exports. I’m joined now by the FT’s Brussels bureau chief, Henry Foy. Hey, Henry.

Henry Foy
Hey.

Josh Gabert-Doyon
So, real quick, what is the price cap? What’s it supposed to do?

Henry Foy
So the price cap was brought in by the G7, the group of developed nations, to effectively allow Russian oil to continue to be sold in international markets, but at a price that was lower than the market value, therefore reducing the amount of money Russia could earn on those exports and therefore the amount of money they had available to prosecute its war against Ukraine. Effectively, how it works is it says, we will only provide shipping services, insurance and allow docking of ships that have bought oil at a price below the $60 that we’ve set as the G7. However, what we’ve seen — as the FT reported this week — there’s basically no implementation for lots and lots of reasons: the Russians now using non-western insurance companies, for example, using so-called shadow fleets of tankers that aren’t registered to western companies and finally adding on other costs to the oil. So it looks like the oil was bought at $60, but actually the full price of the barrel is much, much higher. And therefore Russia’s earning just as much as it was before.

Josh Gabert-Doyon
OK. So the Kremlin is basically circumventing this economic measure that’s supposed to hit their revenues. How significant is that?

Henry Foy
It’s really important. I mean, crude oil is the most valuable export that Russia has. It’s how it earns the bulk of its foreign exchange. It’s a really critical part of the Russian economy, not just in funding the war, but keeping the Kremlin machine turning.

Josh Gabert-Doyon
Walk me through this latest move by the EU. Why is Denmark at the centre of this?

Henry Foy
So basically 60 per cent of Russia’s seaborne oil exports, so about 2mn barrels of oil a day, flow out of the Baltic Sea ports close to St Petersburg. To get anywhere else in the world, they have to transit the Danish straits. So effectively, if you can get the Danish government to say, while your ships are sailing through our waters, we need to check to make sure that every single barrel of oil that’s being shipped out of Russia is conforming to the cap, that’s a way of making sure that Russia and the trading companies that are shipping your oil are sticking to the rules. The problem, of course, is how do we enforce this? And Denmark’s argument and the EU’s argument at the moment that they’re trying to enforce is, well, ships sailing with dodgy insurance, ships that are off the grid, if you like, these shadow fleets, they’re an environmental hazard. If there were an oil slick, for example, would an insurance company that we’ve never heard of that’s not a mainstream western insurance company pay out? And so that’s their line that they’re going to take and say, well, on these grounds, the Danes should be able to stop and potentially detain boats that they think have breached the cap by running dodgy insurance or by faking their documents.

Josh Gabert-Doyon
What happens if a ship were to refuse to stop? Would the Danish military have to physically stop it? This seems like it would, you know, potentially inflame tensions with Russia.

Henry Foy
This is the real crux of the problem here. The Law of the Sea under the UN allows essentially free movement of ships that are safe and seagoing anywhere. However, there are clauses that allow coastal states, in this case, Denmark, to stop and potentially detain ships that they believe pose a danger. Now, how to do that? It’s fine with a sort of pleasure boat and a small Coast Guard ship. But if you’ve got an enormous Russian tanker that’s refusing to stop, would the Danes put their boats on the line to stop them? It’s probably not gonna come to that, honestly. The whole point of these moves are effectively to make it more and more cumbersome, more and more expensive for traders to try to circumvent this cap. And therefore you’re gonna just push the price up and the risk premium that trading companies, that oil companies, that refineries are gonna take by shipping Russian oil will just go up and up and up. And that’s the sort of knock-on effect the G7 want to achieve here.

Josh Gabert-Doyon
Right. OK. So it’s giving a signal out to people that are maybe facilitating this oil trade below the cap. What do you think this action tells us more broadly about the west’s attempt to hit Russia economically?

Henry Foy
We’re gonna see the EU’s new package of sanctions probably this week with these measures on the oil price cap included. What the western governments are focusing on now much more is tightening up existing measures rather than bringing in new ones. It’s really the only offence that the west has right now — how to make this war more and more expensive for President Vladimir Putin. Economics are always gonna have to trump politics at some point in Russia. What we’re being told now is that this is not the idea of a tyre blowing up on the road and completely shredding. It’s about slowly letting the air out. And so this is gonna be a long-term sustained economic campaign against Moscow.

Josh Gabert-Doyon
Henry Foy is the FT’s Brussels bureau chief. Thanks so much, Henry.

Henry Foy
Thanks a lot.

[MUSIC PLAYING]

Josh Gabert-Doyon
You can read more on all of these stories at FT.com for free when you click on the links in the show notes. This has been your daily FT News Briefing. Make sure you check back tomorrow for the latest business news.

[MUSIC PLAYING]