Poland’s complicated relationship with Ukraine

This is an audio transcript of the FT News Briefing podcast episode: ‘Poland’s complicated relationship with Ukraine’

Marc Filippino
Good morning from the Financial Times. Today is Monday, September 25th, and this is your FT News Briefing.

[MUSIC PLAYING]

Russia is dodging sanctions on some of its oil exports. Private equity is helping a famous restaurant group expand globally. And tensions are high between Poland and its war-torn neighbour Ukraine.

Volodymyr Zelenskyy voice clip
It is alarming to see how some in Europe, some our friends in Europe, play our solidarity in political theatre.

Marc Filippino
I’m Marc Filippino and here’s the news you need to start your day.

[MUSIC PLAYING]

Russia has been avoiding sanctions from the G7 that put a price cap on oil exports. The FT found Russia created a so-called dark fleet of oil tankers that operate outside of western surveillance. In August, almost three-quarters of Russian oil shipped by sea bypassed these sanctions. The G7 instituted a price cap last December to limit Russia’s oil sale revenues. The money is an important part of how the country funds its war in Ukraine.

[MUSIC PLAYING]

Last week, Poland’s president Andrzej Duda compared Ukraine to a drowning person that could end up bringing down the rescuer. Then the country’s prime minister upped the stakes.

News clip
Prime minister Mateusz Morawiecki told a Polish television station: we are no longer transferring weapons to Ukraine because we are now arming Poland with more modern weapons.

Marc Filippino
Poland’s government has since walked back those statements and all stems from a decision to ban grain imports from Ukraine. Here to talk about this is Tony Barber. He’s our European comment editor. Hi, Tony.

Tony Barber
Hi there.

Marc Filippino
All right, Tony. So why the sudden U-turn in Poland? I mean, what’s going on here?

Tony Barber
Well, I think to call it a U-turn would be a little exaggerated. I would expect the longer-term trend of Polish support for Ukraine to come back. But I mean, the short answer why has this friction arisen is because Poland is in an election campaign and it is a pretty tightly fought contest between the ruling rightwing party Law and Justice and the opposition. It doesn’t look as if the government party Law and Justice will achieve an outright majority, so they need to win every vote they can. And they think there are some votes to be gained from taking a tougher line on Ukraine. Public sympathy for Ukraine is broadly still quite strong, but there are certain areas where it has softened. And one area is frustration at Ukrainian agricultural exports to Poland, which, in the eyes of voters in rural and small town areas, threatens their livelihood. So in short, it’s election time and there are votes to be gained from looking a bit harder on the Ukraine issue.

Marc Filippino
And Poland’s election is coming next month. But, Tony, is this recent rhetoric against Ukraine, is that only coming from Poland or is that elsewhere, too?

Tony Barber
In my view, the support for Ukraine across the whole of central and eastern Europe has been a little bit softer than a lot of people understand, particularly Slovakia, Hungary and then to a lesser extent, Romania, Bulgaria. In all of those countries you’ve had, politicians have spoken out against full-throated support for Ukraine. In Slovakia, which traditionally has been actually quite a Russophile society, there is also an election campaign, an election on September 30th, and there the party which is leading in the polls is pretty critical of military and financial support for Ukraine. So you see it across central and eastern Europe. But the surprise definitely has been in Poland, which was one of the most stalwart of Ukraine supporters.

Marc Filippino
So Poland has these elections. Slovakia has their election this week. And politicians from both countries are questioning support for Ukraine. What might that mean for the war?

Tony Barber
Gradually, as the war is now more than a year and a half on, from the full-scale Russian invasion, February 2022, gradually, the levels of European financial military aid have been ramped up, and I think that has been a matter of tremendous support for Ukraine, the Ukrainian people. The risk, of course, is that the war is gonna go on into a third year. The risk for the Ukrainians is that they might see public support in certain European countries tail off a bit. But I mean, a much bigger problem potentially, without any question, is what happens in the US presidential election next year. There’s a pretty hardline minority group and the Republicans in the House in particular who just think this thing has dragged on too long, it’s time to scale back the support. And I don’t think you can expect that not to have a very, very significant impact on European support to Ukraine, particularly in central and eastern Europe.

Marc Filippino
Tony Barber is the FT’s European comment editor. Thank you, Tony.

Tony Barber
Thank you.

[MUSIC PLAYING]

Marc Filippino
China’s version of the World Bank is prioritising the environment. The Asian Infrastructure Investment Bank says it will release a climate action plan this week. The AIIB told the Financial Times that it will triple its climate financing by the end of the decade. This would make climate the bank’s top lending priority, making up more than half of the funds it gives out. Still, China is the world’s biggest carbon emitter annually and is really reliant on coal for power. China says that its CO₂ emissions will peak before the end of the decade and that it’ll achieve carbon neutrality before 2060.

[MUSIC PLAYING]

Big Mamma is a popular Italian restaurant chain with restaurants in five European countries. Now its co-founders want to expand into the US and the Middle East. And Big Mamma is gonna do it through private equity. The FT’s leisure industries correspondent Oliver Barnes joins me now. Hey, Oliver.

Oliver Barnes
Hey, Marc.

Marc Filippino
So for those who don’t know Big Mamma — I admit I don’t know, I have not been there — tell us a little bit about the restaurants, who owns them and why they are so popular in Europe.

Oliver Barnes
So they launched in Paris almost a decade ago now. Italian restaurants, but French-owned. And they’re just kind of unmistakable for their very over-the-top, extravagant interiors, a little camp almost. And then the food is just very decadent and fun. And these two entrepreneurs behind it, Victor Lugger and Tigrane Seydoux, they’ve been running the business since it began. They’re used to having investors, but now to kind of grow the estate, to grow the business, they brought on a private equity firm, McWin, that says it specialises in food tech and the restaurant sector in a deal that’s set to probably close by the end of the year.

Marc Filippino
And Oliver, why did Big Mamma decide to go with a private equity firm?

Oliver Barnes
The justification for it is basically they want capital to expand. So they’ve got 23 sites. Most of them are in London and Paris, and they want to take those and bring them to the US, bring them to the Middle East — big markets for hospitality where there’s lots of money and lots of interest from consumers at the minute. And the avenues to do that at the moment in terms of getting the capital for are quite limited, right? If you look at most other kind of comparative restaurant chains or members’ clubs or other stuff in hospitality, either they’re taking on private equity investment or they’re probably taking on Middle Eastern investment. And clearly, Lugger and Seydoux, the two entrepreneurs behind Big Mamma, have decided, you know, having a private equity investor makes sense.

Marc Filippino
But are there risks for restaurants going into business with private equity?

Oliver Barnes
The risks generally centre around cost cutting and driving earnings to the detriment, one could say, of the brand. Now that maybe sits a bit easier in the kind of casual dining mid-market sector where Big Mamma pitches itself. It’s, you know, it’s in the upper end. And if you had a PE firm that was trying to drive costs very hard, that probably wouldn’t sit very well with that model. McWin insists that that’s not their endgame. And basically they see a business that they can enter in investment now. And, you know, at some point they’ll have to exit — five, six, seven years down the line — and there will still be a kind of convincing growth play to say, look, we’ve got a brand that’s really well respected, we’ve managed to maintain it and we can still grow it.

Marc Filippino
So is it just me or is it a really weird time to expand right now? Right. Like, commercial real estate is unstable. Interest rates are really, really high. Why would Big Mamma want to expand at this moment?

Oliver Barnes
I think basically the way I’d interpret it and I get your kind of scepticism sometimes about growth in the industry right now because it is a tough time for the restaurant industry. But there’s so many different segments in the restaurant industry and this very much is planted within a kind of more luxury upmarket segment. And when you look at hotels, when you look at restaurants, when you look at other hospitality businesses, generally the upmarket is a more stable bet because wealthier consumers, if there is a downturn, are gonna be a bit less affected by it and are gonna continue to go out more.

Marc Filippino
Oliver Barnes is the FT’s leisure industries correspondent. Thanks, Oliver.

Oliver Barnes
Thank you.

[MUSIC PLAYING]

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

[MUSIC PLAYING]