Commenting on Israel-Hamas is tricky for businesses

This is an audio transcript of the FT News Briefing podcast episode: ‘Commenting on Israel-Hamas is tricky for businesses’

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Marc Filippino
Good morning from the Financial Times. Today is Tuesday, October 24th, and this is your FT News Briefing.

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Humanitarian aid is making its way into Gaza, but slowly. And Argentina’s new presidential frontrunner has investors worried.

Michael Stott
I think there is a real risk if Massa continues these policies of boosting spending, that inflation could spiral out of control.

Marc Filippino
Plus, it’s a tough balancing act when it comes to commenting on the war between Israel and Hamas. And companies are finding that they can’t please everyone. I’m Marc Filippino and here’s the news you need to start your day.

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The European Union’s top diplomat is calling for a pause in the violence between Israel and Hamas. The EU’s high representative for foreign policy, Josep Borrell, said on Monday that humanitarian aid needs to get through to people living in Gaza. And he said a break in the violence would allow that to happen and give Hamas an opportunity to release more of the hostages that it’s taken. Israel has been bombing Gaza since Hamas’s brutal attack earlier this month. It also cut off electricity and has restricted water and food supplies. The UN representative said that a third aid convoy entered Gaza yesterday: 20 trucks with food, water and medicine. But that’s just a drop in the bucket compared to what was coming into the territory before the siege. And aid officials say that conditions there remain catastrophic.

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There was a lot of movement in Argentina’s bond market yesterday. The price of the country’s benchmark 2035 dollar bonds fell 12.5 per cent before recovering some of their losses. Investors got jittery after Sunday’s close presidential election. Peronist Sergio Massa and libertarian challenger Javier Milei will head to a run-off election next month. The results were a bit of a surprise given that as economy minister, Massa has overseen triple digit inflation and growing poverty. The FT’s Latin America editor Michael Stott is back with us to talk about what’s next for Argentina. Hi, Michael.

Michael Stott
Hello, Marc.

Marc Filippino
So Michael as we said last week, we went into Sunday’s election kind of expecting that there wouldn’t be a clear winner, that the election would go to a run-off. So why are markets acting surprised here?

Michael Stott
I think what markets are really concerned about here is that the Peronist incumbent, Sergio Massa, did much better than expected, and they believe that’s giving him a mandate for more of the same, more of his tax-and-spend policies and will not encourage him to move towards austerity and balance the budget if he wins in the second round.

Marc Filippino
So does that mean that investors prefer Milei?

Michael Stott
They loved Milei’s small state plan, and I think they thought also that it was more likely that Patricia Bullrich, the centre-right candidate, might face him in a run-off. And there was this rather optimistic and rosy consensus in the market that Argentina’s voters were moving towards the idea that they needed a more market friendly government and that they needed a smaller state. I always thought that was a little optimistic, given Argentina’s political history and the strength of the Peronist movement. But that was the sort of consensus that you heard in markets and among business people. And of course, that’s now been shattered.

Marc Filippino
So investors liked Milei because of his free market plans, but clearly that didn’t jive with voters. Why did they choose Massa over Milei?

Michael Stott
I think what he managed to do, Marc, was successfully convince the population that it could be even worse for them under a Milei government. Milei had threatened to take a chainsaw to the state and slash spending, and with 40 per cent of Argentines in poverty, there are clearly a lot of people who felt that the social safety net was at risk in a Milei government and that sort of fear strategy by Massa proved very effective.

Marc Filippino
So what is all this movement in Argentina’s bond market that I mentioned earlier, say about how people are looking at the upcoming run-off on November 19th?

Michael Stott
So the expectations have now shifted, Marc. I mean, Milei was the favourite to win in a second round before Sunday’s result. Massa is now the favourite to win in a second round. He’s acquired a momentum now which will be harder to stop. Massa can turn to a couple of smaller candidates who are on the centre and the left to pick up additional votes. He can split off some of the centrist votes from the centre-right coalition that’s now out of the race. For Milei, it’s much more difficult to grow beyond the 30 per cent of voters who’ve stuck with him in the first round.

Marc Filippino
Yeah, but is there a risk for Massa even before we get to the run-off? I mean, inflation is spiralling out of control and you mentioned that 40 per cent of the population is living in poverty.

Michael Stott
I think there is a real risk if Massa continues these policies of boosting spending, giving additional handouts, cutting taxes unbelievably, while running this big budget deficit, that inflation could spiral out of control and you could see a complete collapse in the dollar rate. I think he’ll be obviously trying as hard as he can to stabilise the economy and hold it together. But confidence is very fragile at the moment in Argentina.

Marc Filippino
Yeah, so Massa’s kind of in between a rock and a hard place. He needs to spend in order to win over voters. But increased spending could worsen the country’s economy.

Michael Stott
Yeah, I think we have to hope, for Argentina’s sake, that he finds a way to hold it together.

Marc Filippino
Michael Stott is the FT’s Latin America editor. Thanks, Michael.

Michael Stott
Thank you, Marc.

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Marc Filippino
Oil companies are doubling down on fossil fuels. Chevron has agreed to buy US oil and gas producer Hess for $53bn. This deal comes just two weeks after ExxonMobil acquired Pioneer Natural Resources. Now, if you think it’s weird that oil and gas companies are throwing money at energy sources that the world is trying to wean itself off of — you are not alone. But Chevron and ExxonMobil are betting on the long-term demand for oil and gas. The Hess acquisition would boost Chevron’s oil and gas output by more than 10 per cent. The deal also gives the big oil company a foothold in the country of Guyana, a place where the biggest recent discoveries of oil have occurred.

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Companies are basically tying themselves in knots, trying to comment on the war between Israel and Hamas, without drawing criticism. It’s a tough needle to thread, though, and in a lot of ways it’s kind of a damned if you do, damned if you don’t situation. Anjli Raval is the FT’s management editor. She’s been writing about the corporate response to the conflict. Hey, Anjli.

Anjli Raval
Hi, Marc.

Marc Filippino
So, Anjli, I’m a big baseball fan and I’ve noticed on Instagram that Major League Baseball and even the team that I follow, the New York Mets — they posted support for Israel in the days following the attacks. And I found that pretty surprising given that this is such a charged issue. Why are companies and organisations coming out and talking about this?

Anjli Raval
In the last couple of years, employees of companies and customers, clients, they’ve been asking a lot more of the companies that they are affiliated with. They’re asking a lot more of their corporate leaders. They would like them to be more vocal, particularly as a show of corporations’ culture and values. That’s why we’ve seen so many companies over the last two years take a stance on quite hot political issues. We saw this with Russia, Ukraine as well.

Marc Filippino
So what have companies been doing since Hamas attacked Israel on October 7th and how have their messages been received?

Anjli Raval
So some companies have been very vocal. They have been targeting really their staff and maybe customers, maybe because they’ve got operations in the region. But for some people, it’s not enough. They’re not picking a side. They’re staying too neutral. And in some cases, some companies have decided to not say anything at all. And this has also faced a backlash.

Marc Filippino
You spoke to a bunch of experts who talked about company responses. Did they give a sense of what the right manoeuvre should be?

Anjli Raval
There are a few people that we spoke to who had some really interesting thoughts, particularly after Black Lives Matter and during the pandemic. There was this sense that companies are required to speak on issues even if there is no direct impact to their operations or their company. And now we are seeing a change there, where companies are being a little bit more selective. What’s interesting now is that companies are being encouraged to come up with a plan for when they respond, like what are the criteria that have to be met in order for a company to speak out publicly? Do they have operations in the region? Is there a direct impact to their people? And if that is the case, then they have to choose their response selectively and also probably have the involvement of the board of the company and the leadership of the company from the CEO and the rest of the C-suite.

Marc Filippino
Anjli Raval is the FT’s management editor. Thanks, Anjli.

Anjli Raval
Thanks, Marc.

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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.

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