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This is an audio transcript of the FT News Briefing podcast episode: EU prepares new sanctions after reports of Russian atrocities

Joanna S Kao
Good morning from the Financial Times. Today is Monday, April 4th, and this is your FT News Briefing.

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The European Union is preparing new sanctions in response to alleged Russian atrocities in Ukraine. China’s property sector has a new struggle, keeping its accountants. Plus, French presidential elections start next week and Emmanuel Macron has a problem.

Victor Mallet
Which is that he’s the incumbent, so he’s no longer this amazing new fresh blood, you know, somebody who’s gonna sweep away the old party, somebody who’s gonna be a revolutionary.

Joanna S Kao
I’m Joanna Kao, in for Marc Filippino, and here’s the news you need to start your day.

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Reports of Russian atrocities in Ukraine could soon lead to new EU sanctions. The reports are coming from towns on the outskirts of Kyiv, towns that were taken and then abandoned by Russian forces when they retreated. Here’s more from Valentina Pop in Brussels. She’s editor of our Europe Express newsletter.

Valentina Pop
Even our reporters have reported horrendous sights of bodies of people who seem to have been executed basically by the Russian troops. This is the allegation, but it’s confirmed by witness accounts. There is even drone footage where you could see people trying to flee Kyiv in the first days of the occupation and they were just shot at by Russian tanks. Human Rights Watch, a human rights group that monitors abuses in war zones, has just put out a report on Sunday which details all sorts of atrocities, including rape and pillaging.

Joanna S Kao
What kind of sanctions isn’t clear yet. Options include a ban on Russian ships from EU ports, blocking road transport and squeezing more oligarchs. Valentina says the big elephant in the room is whether to ban Russian oil and gas.

Valentina Pop
So at this point we have some signalling from some capitals, including Berlin and Rome, that at least they are not opposed to the idea of discussing such an embargo. And calls have been growing from Poland, from the Baltic states over the past few days and are now at that critical juncture where, especially Berlin and Rome, so Italy and Germany have to take the decision whether they can stomach this economic hurt that will come with severing ties, energy ties with Russia.

Joanna S Kao
Valentina Pop is editor of the FT’s Europe Express newsletter.

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Next week is the first round of voting in the French presidential election. Emmanuel Macron is seeking a second term. But over the weekend, he warned supporters not to assume he would win. To talk more about this, I’m joined by the FT’s Paris bureau chief Victor Mallet. Hi, Victor.

Victor Mallet
Hello.

Joanna S Kao
So Macron had this big advantage at the start of the race. But now his key rival, the far-right candidate Marine Le Pen, is only a few points behind in the polls. So how has she managed to catch up?

Victor Mallet
Originally, her appeal was very much on the issue of immigration. You know, the fear among white working class voters that there were too many Muslim immigrants taking their jobs, causing crime and that kind of thing, a very sort of traditional, far-right appeal. But she has actually done quite a lot to sort of moderate her party’s views. In French, it’s called the dualisation. That’s a sort of detoxifying the policy, if you like. So she’s kind of cast aside the anti-Semitism of her father who founded the party, Jean-Marie Le Pen, and she’s become in a way less toxic from the point of view of a sort of ordinary rightwing people. So she’s beginning to attract votes even from people who had previously have voted centre-right. And also very importantly, because most of her voter base is working class, she’s really focused on the issue of the economy and the cost of living. And I think that’s really helped her, especially since with the Ukraine crisis, we’ve got energy prices going through the roof, petrol prices, diesel prices and so on. And that’s really helped her that she’s focused very much on those issues that are of great importance to the working class.

Joanna S Kao
And is Macron addressing these concerns as well, these economic issues that have become higher priorities to French voters?

Victor Mallet
You know, Macron’s appeal the first time around and again this time around is, you know, he says, look, I’m neither left nor right. I just want to do what’s best for the country. He’s very much in the liberal centre. He’s accused by his opponents of perhaps being slightly more leaning to the right, whereas previously he had quite a lot of support from the left. But he’s got a problem, which is that he’s the incumbent, so he’s no longer this amazing new fresh blood, you know, somebody who’s gonna sweep away the old party, somebody who’s gonna be a revolutionary and do things that have never been done before. He realises, I think, that he needs to sort of reconnect with the people. So he’s taken time out from his diplomacy during the Ukraine war to try and, you know, meet voters in places like Dijon and central France because he realises he needs to reconnect with ordinary people.

Joanna S Kao
So Victor, Macron is still ahead in the latest polls, but his lead over Le Pen has been getting narrower, which raises the possibility that Le Pen could be the next French president. It would be a big change not just for France, but also for the EU, right?

Victor Mallet
I mean, I think the answer is yes. She would be, if you like, the next domino to fall in the sort of wave of populism and nationalism that has swept across the world, including the west. The continental western Europe is one of the last kind of bastions of conventional liberal democracy, if you like. And so if the government was to change from the Macron administration to one run by Marine Le Pen, it would be very, very substantially different, especially well, certainly including in foreign policy. As regards, she’s quite sort of hostile to the EU. She no longer talks about leaving the euro currency, nor about leaving the EU because those turned out to be not very popular policies in France, but still very nationalistic. And she doesn’t wanna do things, she doesn’t wanna make any sacrifices in order to remain a member of the EU. And she was previously very sympathetic to Putin. And like a lot of the extreme candidates on right and left, she recommends leaving the military command structure of Nato and so on. So you have a, quite a, would be a very, very substantial change from a liberal, internationalist outlook pro-European to one that is Euro-sceptic and nationalistic and not so inclined to go along with the multilateral western consensus, whether it’s on Russia or China or anything else.

Joanna S Kao
That’s the FT’s Paris bureau chief, Victor Mallet.

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China’s property industry is in the middle of a massive debt crisis. Now, property developers have been delaying the release of their financial results, and as a result, many of their accountants have resigned. Here’s more from the FT’s Shanghai correspondent Tom Hale.

Thomas Hale
A lot of Chinese property developers have cited coronavirus outbreaks and restrictions as the main reason for this delay that we’re seeing. But the delay is certainly a big problem for anyone who wants to understand what’s going on with the crisis, because people have been hoping that the 2021 audited results would cast some light on the true picture of the losses within the Chinese property sector.

Joanna S Kao
The accountants include the world’s leading firms, known as the Big Four. They spent decades building up their business in China, but the risks for them have been rising. One Big Four accounting firm, PwC, resigned as auditor of a big developer called Shimao after it couldn’t get information on a particular form of financing that Shimao had been using.

Thomas Hale
The simple fact of the matter is it’s resigned because it hasn’t received the information it asked for and doesn’t want to continue with the audit at that point. If you speak to investors in Chinese property developers, many of whom have lost significant amounts as part of this crisis, those investors are very critical of a lot of companies involved in this sector, including the auditors. I think the core of the matter is that there’s a lot of legal risk building for anyone involved in this sector given defaults. International investors so far haven’t taken legal action, but we’ve seen in the last two weeks that they have moved much closer to legal action than they ever have before.

Joanna S Kao
That’s the FT’s Shanghai correspondent, Tom Hale.

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Before we go, here’s a reminder on how to get a 50 per cent discount on FT.com. This is a special offer just for FT News Briefing listeners. Just go to FT.com/briefingsale. Again, that’s FT.com/briefingsale. We’ve got the link in our show notes. 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.

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