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Good morning from the Financial Times.
Today is Monday, June 23rd, and this is your FT News Briefing.
The U .S. has entered the war between Israel and Iran, and the Trump administration is implementing a new set of tariffs.
Plus, we take a look at what knockoff brands in Russia tell us about the country's economy.
What we're seeing is kind of a return in some ways to the old Soviet economy where there's been a huge pivot towards China.
And as a result, Russia's economy has become more isolationist. I'm Kasia Broussalian, and here's the news you need to start your day.
The U .S. bombed three nuclear sites in Iran over the weekend.
The attack marks a major escalation in the conflict, which had so far only involved Iran and Israel.
It also marks a huge political gamble for U .S. President Donald Trump.
My colleague Steph Chavez has been covering the story from Washington.
Hey, Steph. Hey, Kasia.
So we know that Trump had spent the last week or so weighing military action.
He said on Thursday that he'd take up to 14 days or so to decide what to do.
Do we know why he moved up the timeline?
line? I mean, we can probably say that it was never an actual two -week timeline, but was kind of a mechanism for him to buy himself a few days and maybe even catch the Iranians by surprise.
And then his decision also came after some of the U .S.'s European allies negotiated directly with Iranian officials in Switzerland.
I talked to one former Pentagon official who speculated that those unsuccessful EU talks were the final straw for Trump.
And what do we know about the mission itself and whether or not it was effective?
So right now, the Pentagon is saying that the strikes inflicted severe damage on Iran's nuclear facilities, but there's still a full damage assessment pending.
Well, thank you for joining us this morning.
U .S. Secretary of Defense Pete Hegseth briefed on Sunday.
U .S. Central Command conducted a precision strike in the middle of the night against three nuclear facilities in Iran, Fordow, Natanz, and Esfahan, in order to...
And he said that this was the largest B -2 operational strike in U .S. history.
The order we received from our commander in chief was focused, it was powerful, and it was clear.
We devastated the Iranian nuclear program.
Trump has said this, as have other top U .S. officials, that what they want is for Iran not to have a nuclear bomb and they want Iran to come back to the negotiating table so that the U .S. and Israel can get what they want, which is for Iran to give up its nuclear program.
Now, speaking of Israel, Iran has traded a barrage of missile attacks with the country recently.
But what sort of options does Tehran now have to respond to this U .S. bombing?
So on one hand, Israel has been really effective in weakening Iran militarily.
They've taken out a lot of the country's top military leadership, its air defenses.
But despite that weakening, you know, there still are missiles that Iran can launch at U .S. troops deployed in the Middle East. They could try to close the Strait of Hormuz, through which a third of the world's seaborne oil passes each day.
There could be new strikes by Iranian proxies.
And then, of course, they could continue to attack Israel.
Yesterday morning after the U .S. strikes were complete, Iran struck Israel and came out and said that it was in retaliation for Washington's attacks.
So the military operation brings very real risks for a number of different assets.
But what about for Trump himself?
How big of a political gamble is it for the U .S. president?
It's a huge political gamble.
He campaigned for his second term on a promise of being a peacemaker to end America's forever wars.
But these strikes risk drawing the U .S. into a longer conflict.
Right now, the U .S. is maintaining that they have no plans for further attacks on Iran.
But of course, if Iran retaliates, U .S. officials have said that they will then continue to strike Iran.
So this does risk becoming a protracted conflict.
And there are also some constitutional questions being raised in Congress.
There were some lawmakers who questioned whether the president actually had the authority to do this.
All right, Seb, so we're talking about like the potential here for a much longer drawn out conflict.
And I really can't help but think about how the U .S. has now been embroiled in the Middle East for decades.
So I guess I'm wondering, are we seeing echoes here of the past in this latest U .S. attack?
I think we're absolutely seeing echoes of the past. I was talking to former former Air Force Secretary Frank Kendall, last night.
And he told me every time we've tried to shift to strategically more important regions since 2001, violence originating in the Middle East has sucked the U .S. back in.
He said, here we go again.
Steph Chavez is the FT's Washington reporter.
Thanks, Steph. Thanks, Kasia.
New U .S. steel tariffs are kicking in today, day.
And they're set to hit some common household appliances.
Think of things like washing machines, fridges, and ovens.
A lot of people are concerned that the levies might push up prices for these goods.
A similar tax from 2018 drove up the cost of a washing machine by about 12%.
And we could be in for more trade bumps ahead.
These new tariffs are coming into force about three weeks before Trump's wider scale so -called reciprocal ones are set to come back.
He put a pause on those for 90 days back in April.
Lines snaked around the block when Moscow's first McDonald's opened in 1990.
Now, decades later, the golden arches are gone.
The company left after Russia's full -scale invasion of Ukraine in 2022.
But it's since been replaced by a local knockoff.
Here to explain what this new burger chain signals about the Russian economy is the FT special correspondent for Eastern Europe, Courtney Weaver.
Hey, Courtney. Hi, thanks for having me.
Yeah, thanks for joining me.
So tell me about this knockoff McDonald's.
What's the story there?
So the knockoff McDonald's has a name.
It's called Vkusna Itochka, which roughly translates as tasty and that's it.
And essentially what happened, McDonald's was one of the first big multinational brands to leave Russia in 2022.
and they sold the business to one of their franchisees, a man in Siberia named Alexander Gavor.
And he basically tried to replicate McDonald's as it had been.
And since then, it's been kind of a bonanza for the business.
They're actually doing better in Russia than they were when they were under McDonald's ownership.
Well, explain the process of leaving Russia a bit more.
What exactly happened when McDonald's and other Western brands pulled out?
So over the past three years, we've seen a lot of Western companies leave Russia Russia, and they've had to find a buyer to take this over.
But obviously, especially McDonald's, this was a huge market.
I think everyone had this kind of idea in their back of the mind that maybe one day the war would end, maybe one day sanctions would lift it and geopolitical circumstances would change.
And a lot of companies that left at the very beginning, they left with something in their pocket.
They left with a 10 -year option to buy back the business.
And what we're seeing now is a lot of these businessmen that bought the businesses, is, they're not so eager to sell the business back to the original owners.
And they want to make sure that these buyback clauses are nullified.
And McDonald's is a prime example of that.
And why are these knockoff companies, you know, this new burger chain that we're talking about, why are they so keen to keep the Western brands out?
Well, a lot of these brands, especially in the consumer sector, have been doing really well these past few years.
Basically, what has happened is, you know, the Russian government is plowing all this money into the war, which has created all these new industries, obviously, that has lifted up salaries across the board. So, you know, the military is obviously offering high wages for people to go and fight, and other industries have had to raise their own salaries to compete.
Basically, what you're seeing is a lot of Russians have a lot more money in their pocket than they did before the war started.
They're spending it in retail, they're spending it in food, they're spending it in restaurants, and companies like Kuznet and Tochka have been the one to benefit.
benefit. And so you can see why these new owners would be a little bit reluctant to see that go away.
All right. So these firms are looking to the Russian government to help them out here.
Do you think Moscow is going to?
Yeah. So in May, Putin held a meeting with a lot of executives from companies that have done really well the past three years.
And Putin indicated he had already asked the Duma, which is Russia's lower house of parliament, to start working on a bill that that would address this issue.
He had this great line to the CEO of Kuznetsov's.
Remember the famous joke, only the cowards pay their debts.
Wow. All right. So Putin has signaled that he's looking to help these knockoff brands nullify their buyback clauses.
What does that tell us about how the Russian economy is changing?
The economy has really changed over the past three years.
Before the war, Russia was really an export -driven economy and obviously sanctions sanctions have crippled that.
What we're seeing is kind of a return in some ways to the old Soviet economy where domestic manufacturing is playing a much bigger role than it did after the collapse of the Soviet Union.
I mean, obviously, it's not a completely direct parallel because the Soviet Union was communist and this is a capitalist country, but there's been a huge pivot towards China and that seems unlikely to reverse even with Western sanctions being lifted.
And as a result, Russia's economy has become more isolationist. That's the FT's Courtney Weaver in Berlin.
Thanks, Courtney. Thanks.
And finally, pay packages for chief executives have been under the microscope lately.
And it's not hard to understand why.
The figures can be mind -boggling.
Take Revolut CEO Nick Sturonsky.
He could be in line for a multi -billion dollar payout.
if he's able to get the fintech's valuation to around $150 billion.
That'll mean more than tripling where the company is at currently.
Investors are increasingly using these sky -high pay packages as motivation for CEOs in order to reach really aggressive growth targets.
Steronsky's potential payday is being compared to the contract that Elon Musk negotiated with Tesla back in 2018.
That deal has led to a years -long legal battle.
You can read more on all of 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 business news.
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