Transcript: Sweden set to join the Nato club

This is an audio transcript of the FT News Briefing podcast episode: ‘Sweden set to join the Nato club’

Marc Filippino
Good morning from the Financial Times. Today is Tuesday, February 27th, and this is your FT News Briefing.

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Nato’s on track to control the Baltic Sea. And the UK’s Financial Conduct Authority is announcing a big change today. Plus, Microsoft has invested a ton into OpenAI. Now it’s pouring money into a French artificial intelligence start-up.

Madhumita Murgia
And I think this is definitely an effort from them also to show that there shouldn’t be any antitrust concerns, nothing to see here kind of thing.

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

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Sweden has been neutral for centuries, but now it’s becoming a member of Nato. The country overcame the final hurdle to join the military alliance yesterday. Hungary’s parliament voted to approve the application after a lot of pressure from other Nato countries. Sweden’s neighbour, Finland, also joined less than a year ago. Here to talk to me about it now is the FT’s Nordic and Baltic bureau chief, Richard Milne. Hi, Richard.

Richard Milne
Hi there Marc.

Marc Filippino
All right, so just do me a favour. Remind us why Sweden wanted to join Nato in the first place.

Richard Milne
Well, it all dates back to Vladimir Putin’s full-scale invasion of Ukraine almost two years ago to the day. Swedes, as the same happened in neighbouring Finland, got rather scared when they saw Russia invading a neighbour that didn’t belong to Nato, and sought the embrace of the collective defence pledge, which means any attack on a member is treated as an attack on everybody in Nato.

Marc Filippino
Richard, it seemed like it took a while for Sweden to get the green light to join Nato. What were some of the hurdles that it faced?

Richard Milne
It’s been a real saga. It’s still been one of the fastest ever accessions to Nato, but it has been problematic. I mean, the really main hurdle that Sweden faced was Turkey. They accused Sweden of harbouring Kurdish separatists and giving support to groups that they regard as terrorists. And they really wanted more action from Sweden. And it took a whole lot of tightening its terrorist rules. That was unlocked with heavy pressure from Nato and the US. And then Hungary turned up. Hungary assured Sweden it wasn’t gonna be the last to ratify but it has been. And I think that was just Hungarian Prime Minister Viktor Orbán, something of a populist, just trying to see whether he could use this for some leverage. And he’s picked up some concessions, but he’s also picked up a lot of bad blood in the whole process.

Marc Filippino
I guess the big question for me, then, Richard, is what does Sweden’s membership mean for Nato?

Richard Milne
So on a very practical level, if you look at the Baltic Sea, Sweden and Finland before that were a big hole. What it means for Sweden and Finland to be in is that the Baltic Sea becomes what officials in the region say is a Nato lake. Sweden has an island in the Baltic Sea called Gotland. It’s dubbed the aircraft carrier of the Baltic Sea. Basically, if you control that island, you almost control the Baltic Sea.

Marc Filippino
Richard, I’m curious, what does this mean for future Nato members? Does this kind of open the door for players like Ukraine to come in?

Richard Milne
In and of itself, I don’t think it does. I think there’s a lot of interest in getting Ukraine into Nato. I mean, there’s one enormous barrier, which is that Ukraine is at war. So if Ukraine was to join while it’s at war with Russia, Nato could then become at war with Russia. So, you know, that conflict has to end. I think what you do see is that Finland’s accession was the fastest on record. And that means that if the countries see the need for it, they can act quickly. I think Ukraine, though, would be a more controversial accession than Sweden and Finland, which for most countries it was just a very easy decision.

Marc Filippino
Richard Milne is the FT’s Nordic and Baltic bureau chief. Thanks, Richard.

Richard Milne
Thanks very much.

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Marc Filippino
The UK’s Financial Conduct Authority plans to name firms that are under investigation much earlier than they normally do. The FCA is also going to name firms more frequently. Both changes are to encourage witnesses and whistleblowers to come forward. Now this is a big change for the watchdog. The director of enforcement told the FT that the FCA doesn’t usually publish much of its investigations until they’re resolved. Plans are detailed in a report due out today.

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Microsoft has announced a new agreement with the French artificial intelligence start-up called Mistral. The Paris-based company has been described as possibly the last developer with a credible chance to challenge OpenAI. Now Microsoft is also a big backer of OpenAI, which is considered the leader in the field of artificial intelligence. I’m joined now by Madhumita Murgia, the FT’s artificial intelligence editor. Hi, Madhu.

Madhumita Murgia
Hi there.

Marc Filippino
So Madhu, tell us a little bit about Mistral.

Madhumita Murgia
Sure. So the first thing to know is it’s only 10 months old, founded in Paris by three young French entrepreneurs. They come from a tradition of AI research and development from some of the best companies in the world, which includes Meta and also from Google DeepMind. And they’ve broken off, founded this company. And really, only 10 months into their life as a young company, have built multiple models, known as the Mistral models, that are taking on OpenAI’s models, Meta’s models and even Google’s Gemini models. So, you know, they’re really punching above their weight.

Marc Filippino
So you mentioned OpenAI and I’m glad you did. How does Mistral compare to OpenAI in terms of its valuation?

Madhumita Murgia
So in terms of comparing the two, OpenAI, the last we’ve reported has been valued at roughly $86bn, even though it’s only really started making money since November 2022 when it launched ChatGPT, so pretty young itself. But Mistral, in the 10 months it’s been founded, has been valued currently at about €2bn and raised about €400mn in its last round. So it’s much smaller than its competitors, much newer, but has really managed to create a product that’s already being monetised and commercialised. And now this small investment and partnership with Microsoft will sort of assist them with their go-to-market strategy and connect them with customers, which means it just helps them to develop their commercial business that much more quickly.

Marc Filippino
Yeah. Tell me a little bit more about this partnership with Microsoft. Why is Microsoft even interested considering that it’s partnering with OpenAI?

Madhumita Murgia
Yeah, it’s really interesting because so far we’ve seen Microsoft and OpenAI has been this mighty alliance in the AI ecosystem. You know, it’s been an exclusive partnership, largely, particularly in terms of commercialising OpenAI’s models through Microsoft. And also Microsoft has put in about $13bn into OpenAI. But over the last few months, antitrust authorities, competition regulators across the western world really — the EU, the UK and the US — they’re all starting to examine the relationship between the two companies. So I think partly this is a step by Microsoft to say to the world and to regulators who are watching them that they want to diversify their relationships in this space. And I think this is definitely an effort from them also to show that there shouldn’t be any antitrust concerns, nothing to see here kind of thing, when it comes to their relationship with OpenAI.

Marc Filippino
Do you think that regulators are gonna buy that though?

Madhumita Murgia
So the announcements that were made on Monday by Microsoft, I think, are an attempt to show regulators that they’re trying to make this technology more accessible via a wider variety of channels. You know, that will be their hope that this will take some of the heat off. But I think it really remains to be seen if any investigation really develops into this specific partnership with OpenAI.

Marc Filippino
Madhumita Murgia is the FT’s artificial intelligence editor. Thank you, Madhu.

Madhumita Murgia
Thank you.

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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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