FirstFT: Middle East at its most ‘dangerous’ in 50 years, Blinken warns

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US secretary of state Antony Blinken has warned that the Middle East faces its most “dangerous” conditions since at least 1973, as Washington considers its response to an attack that killed three serving members of the military and injured dozens of personnel.

Blinken’s comments underscored the concern in the Biden administration about the potential for an expansion of the conflict, even as it vows to retaliate against the Iran-backed militias it has blamed for the deadly strike.

The US military had failed to stop the enemy drone on Sunday after mistaking it for an American drone that approached a base near Jordan’s border with Syria at the same time, a US official said yesterday.

The attack was the first to kill US troops since the Israel-Hamas war began on October 7 and triggered a wave of assaults by Iranian-aligned groups against American forces in the region.

This has raised pressure on President Joe Biden to find a way to halt the attacks on US personnel and interests. Here’s more on what Blinken has called an “incredibly volatile” situation.

• Go deeper: The Middle Eastern borderlands where Sunday’s drone attack took place have long been a “tinderbox”, reports Raya Jalabi.

• ‘Axis of Resistance’: Attacks by a network of Iran-backed militant groups risk dragging the US deeper into regional hostilities.

• Red Sea attacks: Companies trading commodities such as iron ore and grain are threatening legal action to pressure shipowners to use the more dangerous but faster Suez Canal route.

On a busy day for company earnings, here’s what else I’m keeping tabs on:

• Results: Microsoft and Google-parent Alphabet release their latest results after trading finishes in New York with the focus likely to be on artificial intelligence updates. General Motors, Pfizer and UPS report before the market opens while Starbucks, Mondelez, AMD and Match Group report after the close of trading.

• US interest rates: The Federal Reserve’s interest rate-setting committee will begin a two-day meeting. Here are the questions on policymakers’ minds.

• Economic data: Job opening data for December and the Conference Board’s January consumer confidence index will be published. The IMF also releases its latest World Economic Outlook.

• US-China: Officials hold talks in Beijing aimed at stemming the flow of chemicals from China used to make the deadly opioid fentanyl.

• Nikki Haley: The US Republican presidential candidate will be in New York City for a major fundraiser hosted by financiers Stanley Druckenmiller, Ken Langone, Cliff Asness and Henry Kravis.

Five more top stories

1. Boeing has withdrawn a request for a safety exemption for a new version of its 737 Max 7 jet. Investors had expected the Max 7 to be certified in the first half of this year before being delivered to its first customer, Southwest Airlines. But the withdrawal throws into doubt that timeline as Boeing works on a permanent design change.

2. Hong Kong has unveiled details of a proposed new national security law which analysts warned would further curb civil freedoms in the city and damage its status as an international financial hub. The law, which targets broadly defined crimes of secession, subversion, terrorism and collusion with foreign powers, comes on top of a security law imposed on Hong Kong by Beijing in 2020 following widespread anti-government protests.

3. Saudi Aramco, which accounts for about 10 per cent of the world’s oil supply, has dropped a plan to boost its daily production capacity. The state-run oil producer said the energy ministry had ordered the move which would have increased its daily output from 12mn barrels a day to 13mn b/d by 2027. Here’s more on the big policy reversal by the world’s largest oil company.

4. Sagging growth in Germany and France held back the eurozone economy in the fourth quarter of 2022. Gross domestic product in the countries that use the euro contracted 0.1 per cent in the final three months of last year, a similar decline to the previous three months. Spain and Italy, however, performed better than expected during the period. Here are the full details from Martin Arnold in Frankfurt.

4. Flutter, which owns the Paddy Power betting group in the UK and FanDuel in the US, plans to quit London’s FTSE 100 index and move its primary listing to New York. The Ireland-based group said, if approved by shareholders, the move would offer “access to much deeper capital markets” and new investors. Here’s more on the latest blow to London’s ailing stock market.

• More listings: French carmaker Renault has cancelled plans to list shares in its new electric vehicle and software business, Ampere. Here’s why.

Today’s big read

The rapid growth of China’s new breed of green exports — electric vehicles, solar energy products and lithium batteries — has boosted the world’s second-largest economy as it struggles with a deep property slump, deflationary pressure and low investor confidence. But for China’s developed country trading partners in Europe and North America the prospect of low price Chinese imports flooding their markets has prompted growing alarm.

We’re also reading . . . 

Chart of the day

Climate campaigners rejoiced last week when US President Joe Biden froze approvals for new liquefied natural gas terminals that export the fuel.
But the White House hopes that the “pause” in LNG permitting will win it political kudos with a much bigger group: American consumers worried about the price of heating and electricity. 

Take a break from the news

FT Globetrotter has launched a 2024 guide to the best arts, sports, festivals and events happening in destination cities around the world.

Additional contributions from Tee Zhuo and Benjamin Wilhelm