Transcript: What a local ceasefire means for the Russia-Ukraine war

Marc Filippino talks to Amy Mackinnon, Michael Pooler and Arjun Neil Alim

This is an audio transcript of the FT News Briefing podcast episode: 'What a local ceasefire means for the Russia-Ukraine war'

Marc Filippino

Good morning from the Financial Times. Today is Wednesday, October 28th, and this is your FT News Briefing. Can a localised ceasefire reshape the Russia-Ukraine war?

Amy Mackinnon

All of this sort of revolves around one person, Russian President Vladimir Putin, and whether or not he can be persuaded.

Marc Filippino

And we take a look at the fallout from Brazil's election. Plus, it looks like the AI bubble has already popped in China.

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

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Today marks day two of a temporary localised ceasefire between Russia and Ukraine. It protects a frontline Ukrainian town called Oleshky, just north of Crimea. The ceasefire only lasts until November 1st, which is Sunday. But if it holds, it would be one of the most significant de-escalations in the war since Russia's full-scale invasion in 2022. But does this get the two countries any closer to a broader peace deal? Here to discuss is the FT's Amy Mackinnon. Hi, Amy.

Amy Mackinnon

Hey, happy to be here.

Marc Filippino

Good to have you. So we're talking in the American afternoon on Tuesday. Tell me about the ceasefire and why it's significant.

Amy Mackinnon

So this is a localised ceasefire around the Ukrainian town of Oleshky. Before the war, there was around 24,000 people that lived in Oleshky. Now the population is thought to be around 2,000. The town has been pretty much completely cut off from the outside world.

Marc Filippino

This pause is meant to get aid in, people out and also bury their dead.

Amy Mackinnon

Exactly, yes. I was at a very grim briefing last week about the situation in Oleshky, and we heard from Ukrainian human rights activists and Ukrainian journalists who are working in the region. And they told us that people in Oleshky have been struggling to bury their dead. The people are getting killed in Russian drone strikes, and people are themselves at risk if they try and go and retrieve these people and give them anything like a proper burial.

Marc Filippino

Now in addition to this temporary ceasefire in Oleshky, Russian President Vladimir Putin spoke with two of Ukraine's European allies yesterday. Tell me more about what the conversation looked like.

Amy Mackinnon

Putin had a call with Finnish President Alexander Stubb and Norwegian Prime Minister Støre, and this was kind of a follow-on from the talks in Oslo last week, which were presided over by the Finns and Norwegians. This was the first phone call between Putin and a European leader since last summer when Putin spoke with French President Emmanuel Macron. And it comes as the Europeans are really keen to have their voice heard in these talks to end the war in Ukraine because a lot of European security is tied up in Ukraine's future as well.

Marc Filippino

So that's the European perspective. Now we can't ignore the Trump administration's involvement here in brokering peace. It's been particularly keen on using economic incentivisation when it comes to Russia with business deals to get Putin to come to the table and agree to some sort of ceasefire. You've been reporting on some of the things that have been discussed. What do they look like?

Amy Mackinnon

Yeah, so among the kind of package of things that US officials are looking at to try and bring the parties to the table is economic incentive. Prior to the full-scale invasion of Ukraine and prior to the Russian annexation of Crimea in 2014, US business was very active in Russia, particularly in the energy industry. And so they have raised the prospect with the Russians that this is something that could be revisited after the war has ended as sort of a carrot to Putin to try and lure him to the negotiating table. We know that the US and Russian negotiators have talked about US energy majors returning to Russia, resumption of flights for US airline companies and also bringing in US investors to the Druzhba pipeline, which flows through Ukraine and supplies energy into Europe.

Marc Filippino

What has the White House said about this?

Amy Mackinnon

So the White House sees these deals as part of a broader postwar economic framework. They have also been very clear that these potential business deals that are being discussed are very much for after a peace deal, what they will often describe as a comprehensive peace deal.

Marc Filippino

So between Putin speaking with the Europeans, the ceasefire in Oleshky and some of the economic deals that we're talking about . . . feels like actual real momentum. Is it fair to call it that?

Amy Mackinnon

I think momentum would definitely be too strong of a word. There's sort of engagement phases, and then there's tensions. And we're now in an engagement phase where the Russians are talking. The US and Ukraine are on much better terms than they were a few weeks ago. We are looking ahead to potential trilateral talks between the US, Russia and Ukraine early next month. All of this sort of revolves around one person, and that's the Russian president, Vladimir Putin, and whether or not he can be persuaded or pushed to change his ultimate goal in the war, which is the long-term and permanent subjugation of Ukraine. And there is very little to suggest that his long-term goals in this war have really changed in any meaningful way.

Marc Filippino

Amy Mackinnon is our US-Europe foreign affairs correspondent. Thanks so much, Amy.

Amy Mackinnon

Thank you.

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Marc Filippino

There is not a clear winner in the Israeli parliamentary elections. That's according to exit polls late on Tuesday night. The bloc of main opposition candidate Gadi Eisenkot is slightly ahead of Prime Minister Benjamin Netanyahu's coalition, but neither is forecast to get a majority in parliament. It's worth pointing out that exit polls in previous Israeli elections have not always been accurate; the official results will depend in part on how smaller parties do. We'll have more updates on this election as news comes in.

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Markets in Brazil had a hard start to the week after Luiz Inácio Lula da Silva's re-election. His unsuccessful challenger, Flávio Bolsonaro, reportedly fled the country as he faces federal investigations. And even President Donald Trump is weighing in. Here to break down what's going on is the FT's Michael Pooler in São Paulo. Hey, Michael.

Michael Pooler

Hi.

Marc Filippino

So Sunday we saw leftwing politician Lula surprisingly win re-election when a lot of the polling predicted otherwise. What has been going on since then?

Michael Pooler

So after all the celebrations on Sunday evening, there was a bit of a hangover on Monday morning for President Lula. Financial markets opened with a very negative response. The Brazilian real fell 8 per cent against the US dollar -- and that was its worst day performance since 1999 -- and the local share index as well lost 14 per cent. On Tuesday financial assets are fairly flat, so there hasn't been a continuation of that turmoil that we saw on Monday. But the currency and stocks are still down from where they closed before the election run-off.

Marc Filippino

And why did markets tumble so dramatically?

Michael Pooler

There are a couple of reasons. A lot of investors were betting that Flávio Bolsonaro was going to win the election. Bolsonaro had promised more business-friendly policies. He said he was going to cut government spending with a view to lowering debt and interest rates, and that's one of the main preoccupations of investors.

And the market slump also reflected these deep concerns that investors have about the state of the public finances. During the election campaign, Lula promised more spending -- things like increased welfare benefits and free public transport on weekends -- and it leaves a big question about where he's going to find the money.

Marc Filippino

Yeah. And has he said anything about where he might find the money, or does he have a plan of any kind that could soothe investor worries?

Michael Pooler

So far, we haven't heard a new fiscal plan from Lula. His finance minister came out on Tuesday and insisted that the government was committed to fiscal responsibility, and they said that they were working on new measures. Until now, we've had nothing concrete, but the government will be expected to present something soon. And one of the complaints that you hear all the time from businesses, but also individuals, is Brazil's very high interest rates. So if the government can't win back investor confidence, then the risk is that interest rates will remain higher for longer, and that will have a knock-on effect on growth, on families and companies.

Marc Filippino

Aside from the market concerns, Michael, you report that Lula has his hands full with foreign policy, especially in the US with the Trump administration targeting Brazil with trade tariffs. And now Bolsonaro has fled Brazil. The US has said it's issuing visas to him and his family as he faces alleged corruption and money laundering investigations. How might that complicate Lula's foreign policy with Washington?

Michael Pooler

While most Latin American countries and other democracies and big nations around the world have congratulated Lula on his victory, one notable exception is the United States. President Trump on Monday said that he thought the election was rigged. So Flávio Bolsonaro apparently fleeing the country adds another volatile factor into that situation. It could have a further impact on the already difficult bilateral relationship between Brazil and the US. Everyone will be waiting to see what Flávio Bolsonaro says, and crucially, the US government's response to that, and whether they will eventually congratulate President Lula or if they will take a different position.

Marc Filippino

That's the FT's Michael Pooler covering the elections for us from São Paulo. Thanks, Michael.

Michael Pooler

Thank you.

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Marc Filippino

Asia tech stocks were pretty happy about Anthropic's gargantuan IPO filing. They rebounded yesterday after the AI giant took the next step to go public. But one Asian country didn't get to join that party.

Arjun Neil Alim

I think it's fair to say that China is in a bit of a bear market right now.

Marc Filippino

That's the FT's Asia financial correspondent, Arjun Neil Alim. China's benchmark exchange, the CSI 300, is down 20 per cent since its June peak, and the index of top Chinese tech companies is down even more: 33 per cent this year.

Arjun Neil Alim

The sentiment in China around tech is pretty negative. It's really gone into reverse from last year, where you saw a lot more excitement around the local China market, China's ability to build out the AI hardware and its own kind of parallel AI universe.

Marc Filippino

Of course, you can't forget about all the hype around DeepSeek's debut last year. But Arjun says now the country's markets are stuck in their own kind of mini AI boom-bust cycle.

Arjun Neil Alim

There's a few things going on at the same time. In the short term, you have these big tax changes in China that are changing how offshore wealth is taxed. And so you have a lot of wealthy people offshore and trusts that are, according to analysts, selling stocks in order to pay tax bills that could date back decades.

Marc Filippino

But there is something broader at play too.

Arjun Neil Alim

And then medium-term, the story is that China's economy, although not necessarily deflationary anymore, is still not buoyant, is still kind of held back by the impact of the bursting of its property bubble. And so China's problems ultimately will become the world's problems, and its weak economy will impact the rest of the world.

Marc Filippino

That's the FT's Arjun Neil Alim in Hong Kong.

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Before we go, the big day is finally here. Labour chancellor John Healey will unveil the UK's autumn Budget. Healey has promised a Budget that offers, quote, "breathing space for today and fresh hope for the future". People doubt there will be anything crazy coming out of it, but there's probably going to be something to help with energy costs to get Britain through a tough winter.

Healey has already hinted at higher taxes on banks and gambling companies, and some decisions will likely get kicked down the road, like defence spending and welfare. But Healey has his sceptics. Former Conservative chancellor Jeremy Hunt told the FT that a, quote, "steady as she goes" Budget is only putting off a "future fiscal reckoning".

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You can read more on all these stories for free when you click the links in our show notes. This has been your daily FT News Briefing. Check back tomorrow for the latest news from the Financial Times.