Transcript: The challenges to a ceasefire in Gaza

This is an audio transcript of the FT News Briefing podcast episode: ‘The challenges to a ceasefire in Gaza’

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Joanna Kao
Good morning from the Financial Times. Today is Monday, January 29th and this is your FT News Briefing.

The White House says that Iran-backed militants killed three US service members yesterday. And diplomats from all over the world are working on plans to halt the fighting in Gaza. Plus, carmakers in Germany are under a lot of pressure to adapt to electric vehicles. 

Patricia Nilsson
For decades, the German car was the pinnacle of engineering. I mean, that’s what the Germans were famous for. And the heart of the car was the engine. 

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

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The White House announced on Sunday that three US service members were killed by a drone attack on a military base near the border of Syria and Jordan. American officials say the attack was carried out by Iran-backed militant groups. The deaths are the first US casualties in the Middle East since the Israel-Hamas war began in Gaza, and President Biden has promised to hold those responsible to account. Fears are growing that the US and its allies could be drawn into a wider regional war.

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Staying on the conflict in the Middle East, the United Nations’ highest court on Friday ordered Israel to limit harm to Palestinians in Gaza. This was an initial ruling in a case brought by South Africa that accuses Israel of committing genocide. Israel has forcefully denied those accusations. The final ruling could take years, but it comes as leaders and diplomats are racing to put forward plans for a ceasefire. I’m joined now by the FT’s Jerusalem correspondent, James Shotter. Hi, James. 

James Shotter
Hi. 

Joanna Kao
OK, so let’s start with the ruling from the International Court of Justice. In what ways, if any, does this initial decision change the situation on the ground inside Gaza? 

James Shotter
I think the answer, to be honest, is not very much. The court issued six emergency orders that Israel has to comply with. These included: you prevent and punish incitement to genocide, but allow the provision of more humanitarian aid in Gaza, then take steps to preserve evidence relating to the case. So from a military point of view, I don’t think any of those orders is really gonna change the situation on the ground very much. I mean, South Africa in its application had asked for Israel to be ordered to immediately suspend its operation in Gaza. And the court didn’t do that. So I think if it does have an impact, it’s likely to be quite small. 

Joanna Kao
Does the ruling potentially create a sort of breakpoint, or a means from which the international community can push for a more lasting ceasefire? 

James Shotter
I mean, maybe it, you know, adds a little bit to the mounting international pressure on Israel to agree to a ceasefire. I think there’s also a recognition that some of the other orders are at least politically uncomfortable for Israel. The order to punish and prevent incitements genocide, and the order that Israel has to provide a report to the ICJ on how it’s complying with the measures the court has imposed — both of those could affect the political debate a little bit in Israel and internationally, and also put Israel in a position of having to sort of explain itself on an ongoing basis, which I think, you know, is, I mean, it’s obviously not a hugely significant impact, but it’s less comfortable than it could have been. 

Joanna Kao
So let’s talk a little bit about where we stand in an effort to work towards a ceasefire. We’ve talked on the show before about a plan that Arab countries are working on. It would include the creation of a Palestinian state and the normalisation of diplomatic ties between Israel and its Arab neighbours, most importantly Saudi Arabia. Is it the only plan or are there others also under consideration? 

James Shotter
Yeah, I mean, there’s lots of initiatives being discussed by diplomats at the moment. I mean, as you say, there’s the Arab plan. The EU is pushing for concrete steps towards a two-state solution, which is, as you know, its long-standing position. The UK also has its own, plan, which it’s been discussing with other partners that would include temporary ceasefire and an exchange of hostages, and then work towards a permanent ceasefire and some sort of political horizon for a Palestinian state. And then, obviously, the US has been pushing for a two-state solution with the West Bank and Gaza. So I think, you know, there’s a lot of plans being discussed at the moment, but the the road that they all face is that Benjamin Netanyahu, who’s Israel’s prime minister, he’s spent his whole career trying to prevent the creation of a Palestinian state. And at the moment, certainly there’s not much political appetite in Israel for a two-state solution. I mean, only really on the very left of the political spectrum is there much support for that. So even if Netanyahu were replaced, it doesn’t necessarily mean that the Israeli leadership would be much more amenable to a two-state solution. 

Joanna Kao
OK, so all these plans you bring up, they’re all hinged in some way on a two-state solution. But like you say, that’s kind of a non-starter for Israel at this point. So is there a road map for any sort of lasting ceasefire? 

James Shotter
I think it’s very difficult at the moment to see how we get to that just because the two sides are so entrenched. It’s still hard to see how a deal can be reached, you know, at least in the short term. Maybe in the long term with enough external pressure, something is possible, but the politics is incredibly fraught. 

Joanna Kao
James Shotter is the FT’s Jerusalem correspondent. Thanks, James. 

James Shotter
Thank you. 

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Joanna Kao
Hungary’s economy might take a serious hit if its leader blocks funding for Ukraine at a European Union summit later this week. The €50bn aid package for Ukraine has support from all other EU member states. But Hungary’s Prime Minister Viktor Orbán has promised to veto the proposal. In response, Brussels has drafted a strategy to shut down all EU funding to Budapest. The goal is to reduce investor confidence in Hungary’s markets and hurt their currency. And the plan seems to have support from other EU members. This stand-off marks a significant escalation in tensions between the EU and Hungary.

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Germany’s car industry is one of the biggest in Europe, but it’s had a few brutal years recently and now the industry is shrinking. Here to talk about some of the headwinds German car companies are facing is the FT’s Frankfurt correspondent, Patricia Nilsson. Hey, Patricia. 

Patricia Nilsson
Hello. 

Joanna Kao
OK, so paint the picture for me. What sort of pressure is Germany’s car industry bumping up against these days? 

Patricia Nilsson
Well, one of the issues is that fewer cars are being sold in Europe overall. Look at a company like Volkswagen, which is the, you know, second-largest carmaker in the world. In 2019, so before the pandemic, they sold about 11mn cars globally. Last year they sold just over 9mn cars. That’s a pretty big drop. And that’s an issue to suppliers who rely on volume. But there’s another thing happening at the same time, which is this transition towards electric vehicles. And for suppliers, that means they basically have to start making and selling new parts. It’s very expensive to invest in this kind of research and development. And there’s an additional issue, which is that it appears we just don’t need as many people to make an electric car as the car with the combustion engine. And you’re seeing that among suppliers now. Quite a lot of them are shedding jobs. 

Joanna Kao
So you have a few headwinds there. But a big one seems to be the transition to EVs. What’s making it particularly difficult for German companies? 

Patricia Nilsson
For decades, the German car was the pinnacle of engineering. I mean, that’s what the Germans were famous for. And the heart of the car was the engine. What’s happening now is not just the transition to a new type of electric motor. Cars these days are more sold on their software capabilities, and building software is something that Germany has not really caught up with. I mean, it’s not their strength. And so you’re seeing that there is this race to sort of become better at building software and systems and so on. In the meantime, what’s happening is you’re seeing this rise of the Chinese carmaker. 

Joanna Kao
Yeah. So tell me about the competition here. How is China nipping at Germany’s heels in the car industry? 

Patricia Nilsson
The world’s biggest market for cars is China. And the German carmakers, especially Volkswagen, have a long history of being very strong in this market. What’s happening now is that you’re seeing all these Chinese start-ups that are starting to sell a lot of cars, but also they’re selling only electric vehicles. That’s their speciality. So, for example, a lot of these suppliers are in semiconductors or batteries or software. These are also businesses that have higher margins than the sort of traditional suppliers. And the German suppliers are still in many ways playing catch-up. 

Joanna Kao
Do you think the German car industry can turn this around? And you know, what happens if they can’t? 

Patricia Nilsson
The German car industry is hugely important for Germany in terms of jobs, in terms of tax and its sort of reliance on exports. Needless to say, it could have nearly catastrophic consequences if the country would lose its car industry. I’m not saying it will. You’ve seen BMW and Mercedes-Benz, for example. They’re trying to become more and more premium carmakers. So there it’s less about volume and it’s more about boosting margins on the cars they’re actually selling. But for a company like Volkswagen, these are definitely scary times, as we are expecting Chinese carmakers to come in and start selling cheaper EV cars in Europe. And we’ll have to see how that develops in the next couple of years. And of course, if these companies can develop models that really appeal to people. 

Joanna Kao
Patricia Nilsson covers German industry for the FT. Thanks, Patricia. 

Patricia Nilsson
Thank you. 

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Joanna Kao
Before we go, more employers are putting their foot down over work-from-home policies. In an effort to get people back at their desks, EY has started keeping track of every time someone swipes a key at their UK office door. Other companies are trying different tactics. Bank of America has sent what it calls letters of education to employees who haven’t been showing up in person. And Citigroup has told its staff that it will be keeping an eye on attendance more closely. In the battle between work from home and return to office, it looks like return to office wins this round.

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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. 

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