TheChek News Flow

Iran and its allies operate a smuggling network that crosses hundreds of miles and at least four borders as part of an effort to broaden Palestinian military capabilities beyond Hamas

AMMAN—Long before Hamas militants burst out of their Gaza stronghold to massacre scores of civilians with handguns and assault rifles, Iran and its allies had accelerated efforts to smuggle weapons into a different part of the Palestinian territories, the West Bank.

Using drones, secret airline flights and a land bridge that traverses hundreds of miles and at least four national borders, the smuggling operation is raising the specter of a new conflagration in the war between Israel and Palestinians. It also poses a growing threat to Jordan, a staunch U.S. ally which borders Israel and the West Bank and has been struggling to contain a growing flow of drugs and arms.

“Iran wants to turn Jordan into a transit area for weapons going into Israel,” said Amer Al-Sabaileh, founder of Security Languages, a counterterrorism think tank in Amman. “But my fear is that the weapons might be used in Jordan as well. Where is the easiest place in the Middle East to punish the U.S. and the West? Jordan,” he said.

Iran is a patron of Hamas, which it over the years has supplied with money, weapons and training. But as Egypt has cracked down on smuggling routes through the Sinai Peninsula, which borders on the Gaza Strip, Hamas has become increasingly self-reliant on indigenously built weapons, especially rockets.

The bulk of Iranian weapons to Palestinians go into the West Bank, particularly to the Palestinian Islamic Jihad, a militant group allied with Hamas, according to a senior Jordanian security official. The official said networks of smugglers, assisted by the Syrian government and Iranian-backed militias like Hezbollah, were growing.

“The weapons flow has really increased, specifically over the past year. This is because Iran has been much more focused on the West Bank recently, and trying to arm some of the groups there, especially the Palestinian Islamic Jihad, which is Iran’s more direct partner,” said Michael Horowitz, Israel-based head of intelligence at Le Beck International, a risk consulting firm.

“This probably explains part of the intelligence failure [during the Hamas attack], because Israel was more focused on the West Bank than Gaza,” Horowitz said.

For more than a decade, Iran has taken advantage of upheaval and corrosion of government authority in the Middle East to cement its footprint in the region. Through a network of loyal militias, Tehran has established a land corridor across Iraq and Syria into Lebanon and, via Jordan, into the West Bank, allowing it to transport troops, equipment and weapons to its allies in the Levant.

Jordan, which has porous borders to war-torn Syria, controlled by Iran’s ally Bashar al-Assad, as well as to the West Bank, has long been vexed by the trafficking of weapons and drugs through its territory.

Jordanian officials have complained to Syria, and expressed their concerns to European allies, worried that weapons flows into the West Bank would strain its relations with Israel, according to European and Middle Eastern officials.

Weapons smuggled into Jordan include Iranian replicas of U.S.-made Claymore antipersonnel mines, M4-style assault rifles, TNT and other explosives and handguns, according to the senior Jordanian official. Terrorgence, an information network that includes advisers to Israeli police, said in October that Israeli border forces had confiscated antipersonnel mines manufactured in Iran and Russia.

Going across the Syrian border into Jordan, the arms are hidden in trucks going through official border crossings or carried across the vast desert expanses, which in the winter are shrouded in fog and dust.

Drones, a new tool of warfare for nonstate actors, are also handy for smuggling. In February, Jordanian agents caught the first unmanned aerial vehicle from Syria carrying hand grenades—four of them. A commercial drone, bought cheap online and fairly easy to maneuver, can also carry two assault rifles, and is very difficult to detect, another Jordanian security official responsible for monitoring the Syrian border said.

“We only see drones by chance,” he said.

Iran has used other means to transport weapons. In February, after a devastating earthquake in Turkey and Syria, Esmail Qaani, commander of Iran’s elite Quds Force, which is responsible for the Revolutionary Guard’s foreign operations, visited the Syrian city of Aleppo, ostensibly to supervise aid deliveries. Qaani flew to Syria in an aircraft owned by Mahan, an airline that has been sanctioned by the U.S. for flying militants and weapons from Iran to Syria.

Soon after Qaani’s visit, the airline, under the guise of delivering aid, began hauling large quantities of weapons to Syria, according to a Central Intelligence Agency operative in the region, a Syrian government adviser and a European security official.

It is unclear how many weapons are smuggled into the Palestinian territories, and whether some of the weapons end up in Gaza, via Israeli proper, though the vast majority going through Jordan appears destined for the West Bank, regional security officials say.

The Israeli army last year said there had been a “significant rise” in detected attempts to smuggle weapons and drugs into Israel from Jordan and Egypt. From March 2021 to April this year, Israeli police thwarted at least 35 smuggling attempts from Jordan, seizing more than 800 weapons, according to a tally by the Washington Institute think tank.

“The Iranians are investing lots of efforts in inflaming all arenas, in the north and the West Bank alike,” a spokesperson for the Israel Defense Forces said. “The IDF is reinforcing the troops and ready for every possibility.”

Traffickers in Jordan profit from the country’s large black market in arms, where guns trade for about one-fourth of the price in the Palestinian territories, according to licensed arms dealers in the capital, Amman. An AK-47 sells for as much as $20,000 in the West Bank, and an M16 rifle for $30,000, according to an arms dealer in the West Bank.

“The country is awash with weapons,” said a gun shop owner in downtown Amman. Prices on the black market are roughly the same as his: from $700 for a Czech 7mm to $4,200 for an Austrian Glock.

In May, a Jordanian lawmaker, Imad al-Adwan, was detained trying to smuggle more than 200 firearms, including 12 assault rifles, across the Allenby Bridge into the West Bank. Israel extradited Adwan to Jordan where he faces trial and up to 15 years in prison. He and 13 other defendants are expected to respond to the charges in court this week.

Palestinian groups have built sizable caches of weapons. In July, Israeli forces carried out their largest assault on the West Bank in decades, targeting militant facilities and weapons depots in Jenin that belonged to the Iran-allied Palestinian Islamic Jihad and Hamas, seizing about 1,000 weapons and hundreds of explosive devices. They also dismantled six bomb-making facilities. Twelve Palestinians were killed, most of them militants, 30 suspects were arrested and hundreds of people were displaced.

Portions of the West Bank are policed by the Palestinian Authority, which is dominated by Fatah, a faction opposed to Hamas and the Palestinian Islamic Jihad. In the past two years, Palestinian police have seized about 600 to 1,000 weapons annually in the West Bank, more than twice the number before 2021, police spokesman Louay Zreikat said, adding that about 60% of those weapons were used for self-protection or criminal activities.

Following Hamas’ attack earlier this month, Israeli security forces have intensified a two-year crackdown on Palestinians in the West Bank, and settlers have attacked protesters and civilians. On Friday, 13 Palestinians were killed in a 30-hour long Israeli military operation against militants in refugee camps in Tulkarem. That came after 55 people were killed in the first week after Oct. 7, the deadliest week for West Bank Palestinians since at least 2005, according to the United Nations.

Anger over the crackdown and the Gaza bombings, which have killed more than 5,000 Palestinians, according to the Hamas-controlled Palestinian health ministry, paired with an increasingly heavily armed West Bank, poses a problem for the governing Palestinian Authority, whose grip on security has slipped as new militant groups have jockeyed for power, and residents resort to violence rather than turn to law enforcement to resolve internal disputes.

An arms dealer in Al-Ram in the West Bank said he sells hundreds of weapons every month, mostly to people who are organizing to defend their villages in the absence of coordinated Palestinian security.

“There’s a big demand nowadays,” he said, “but I tell you all of them are very young.”

The absence of a viable candidate to replace 87-year-old Mahmoud Abbas, whose popularity has long been waning, adds to volatility in the territory as loyalists of competing prospective candidates acquire arms and jostle for power.

The Palestinian Authority didn’t reply to a request for comment.

Horowitz said an ignition of the West Bank could lead to a “cycle of violence,” with the Israeli army deploying more forces, and settlers carrying out more revenge attacks against Palestinians.

For Jordan, stemming the flow of weapons is a Herculean task. The Kingdom is to some extent a victim of its geography. Its long northern border is largely unguarded on the Syrian side, due to lack of cooperation from the Assad government, and its frontier with Israel isn’t protected by significant fencing, making it a viable route for large-scale smuggling.

Jordan this year has made nine weapons seizures on the border, compared to seven in 2022 and 21 in 2021, according to the senior security official.

Years ago, at the peak of Islamic State’s reign, many weapons smuggled into Jordan were destined for Sunni terrorist groups, but now they are mostly traded for commercial gain, said Mohammad Afeef, a former president of Jordan’s State Security Court.

He warned that if security continued to deteriorate, the high concentration of weapons could in time benefit terrorist sleeper cells. That should worry the West, he said.

“Jordan is playing a pivotal role in preventing smuggling of narcotics and weapons,” Afeef said. “It is a huge burden for us.”

On an underlying basis, group sales were down 9 percent to 4.46 billion euros, with Gucci falling 14 percent on a reported basis, and 7 percent underlying in the three-month period.

LONDON — Kering’s third-quarter revenue figures further confirmed the luxury slowdown, with group revenue falling 13 percent at reported exchange rates, and 9 percent on an underlying basis, to 4.46 billion euros.

The revenue figure dovetailed with forecasts from analysts, most of whom had already downgraded their expectations for the quarter and their share price targets for Kering.

Sales at Gucci, Kering’s largest brand, were down 14 percent on a reported basis and 7 percent underlying to 2.22 billion euros. Yves Saint Laurent fell 16 percent, and 12 percent underlying, and Bottega 13 percent, and 7 percent underlying.

Kering said its “other houses” division, which is home to brands including Balenciaga and Alexander McQueen, saw sales fall 19 percent on a reported basis, and 15 percent underlying.

François-Henri Pinault, chairman and chief executive officer of the French luxury group, said that beyond the challenging macroeconomic conditions and softening demand across the luxury industry, “the change in our revenue performance in the third quarter reflects the impact of our decisions to further elevate our brands and their distribution.”

He said the organization that Kering put in place in July “will enable us to strengthen the steering of our houses in the current market environment and to reclaim our positions and influence. With the acquisition of Creed completed last week, one of the world’s most distinguished high fragrance houses has joined our family, propelling our ambitions in beauty onto the next stage.”

Kering has been undergoing a raft of changes, restructuring management, acquiring luxury brands and reducing wholesale distribution in a bid to compete in a challenging and crowded market that has seen a cyclical slowdown in demand.

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With interest rates at their highest in years, entrepreneurs are looking for real estate with a higher risk-reward profile

The 47-year-old Bollywood film star Vivek Oberoi is not a typical property investor — and his latest venture, building a luxury hotel on an island in the Ganges River in India, is not a typical property investment.

Combining his own capital with that of other wealthy Indians, Oberoi has raised $40mn of the $160mn he needs for the spa resort, in the state of Uttarakhand.

This may be a riskier prospect than the city centre office blocks and shopping malls that form the bedrock of commercial real estate, but Oberoi is after bigger-than-average returns.

On his last property investment, a series of large-scale housebuilding projects for low-income workers, he says he achieved a profit margin of around 20 per cent per year, between 2011 and 2017. This time, by tapping into the fashion among the wealthy for wellness, Ayurvedic medicine and sustainable travel, he hopes to make even more.

“There is a huge demand for luxury right now’’, he says. And this investment fits in the sexy part of my portfolio,” — a reference to the roughly 40 per cent of his investment pot comprising high-risk, high-return investments, including private equity and venture-capital deals sourced in India.

Uncertainties over the future of the office, and the continued poor prospects for retail on the high street, have combined with the higher cost of borrowing to push wealthy investors around the world further into niche property sectors. As well as luxury hospitality, commercial housing, industrial warehouses and self-storage buildings are all popular. So is hunting for unusual properties, such as, in one case, an American whiskey distillery.

Globally, total investor allocations to property fell 21 per cent last year to $1.12tn, as rising interest rates began to bite and uncertainty about the post-pandemic future of office blocks mounted, according to data from Knight Frank. But, while institutions such as pension funds scrambled to get out, cutting exposure by 28 per cent to $440bn, and holdings by trusts and other sources dropped 29 per cent to $222bn, private investment by individuals — rich people and their families — dropped only 8 per cent to $455bn.

This shift is remarkable. Knight Frank says it is the first time on record that rich investors have allocated more than institutions to property.

The $195bn allocation that rich investors made to the residential sector last year (which is separate from spending on their own luxury homes) was double the 10-year average. Popular projects include building new apartments to rent out and — in particular today — converting offices to housing.

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“The lion’s share is going into living,” says Nancy Curtin, chief investment officer of AlTi Tiedemann Global. She is talking about the property allocations she makes for the company’s wealth clients, comprising typically between 5 per cent and 15 per cent of their total portfolio, which can be anything from $25mn and $1bn in size. The majority of the company’s wealth clients, who represent a total of $49bn in assets, are based in the US or Europe.

“Build-to-rent, build-to-own, residential apartments for sale, student accommodation: the overriding secular tail wind is that there isn’t enough supply to meet demand,” she says.

To get these deals off the ground, rich individuals are relying less on loans in today’s high-interest-rate markets and instead digging deeper into their own pockets.

“A couple of years ago, with rates on loans at 2 or 3 per cent, any real estate deal was profitable,” says Randy Nichols, a developer in Denver, in the US. He has just completed a $55mn project — the conversion of a downtown vacant office building into 190 micro apartments for rent — with money raised from a group of local high-net-worth investors (and the rest borrowed from the bank). “But, today, you can’t sell the conventional deals. Investors have changed their strategy: you have to reach for the returns,” he says.

Michael Sonnenfeldt, founder and chairman of Tiger 21, a network of 1,300 super-rich people, based mainly in the US, with a combined net worth of $150bn, says that residential deals like Nichols’s are particularly attractive to the group’s members right now.

America accounted for $302bn of the total $455bn spent by wealthy individuals and families in property last year, according to Knight Frank.

Private investors in the US especially like converting office buildings bought at a discount from developers unable to service loans, due to rising interest rates, or properties from hotel and motel companies that have failed to recover from travel restrictions following the start of the pandemic.

“Rising interest rates mean you have a wave of forced sellers,” Sonnenfeldt says. As institutions have left the market, Tiger 21 members are well placed to find bargains that can generate big returns. “Today, we stock pickers are at an advantage over institutions,” Sonnenfeldt says. “If you can find an unfinished project and buy it out of distress, this is a great time.”

But it’s not only about housing, as Oberoi’s example shows. Since the start of the pandemic, Tiger 21 members have also shown a growing interest in logistics and self-storage, high-tech and biotech parks, and sites for renewable energy plants, Sonnenfeldt says.

Last year, property developer Darek Bell bought a whiskey distillery and storage site in Kentucky, with $25mn raised from three wealthy local entrepreneurs, alongside some of his own money.

The three made their money in fintech, food and beverage and banking (Bell made his fortune in property). Once the site’s first building has been renovated, revenue from storing and producing whiskey there will finance the renovation of another four. Investors will exit in 2027, when the site and the business is sold for, Bell hopes, $100mn.

The four warehouses provide a handy insurance policy, he notes: if something goes wrong with the whiskey business, they can be used as standard industrial warehouses, a thriving sector. The returns exceed those available from downtown offices or the retail sector, according to Bell.

“At a time when you can get Treasuries at 5 per cent, everyone wants a better rate of return on property. You have to have something compelling for investors today,” he says.

Investment approaches, and amounts, vary. While Bell raised his $25mn from three investors for his whiskey project, Nichols needed 14 high-net-worth investors — each of whom contributed between $100,000 and $2mn — to find the $15mn for his office conversion. All Denver locals, their fortunes have been made in sectors as diverse as technology, truck-trailer manufacturing and supplying sand and grit to de-ice roads.

The US trend applies across the globe, as rich investors look for a niche. Without the lengthy approvals required from lenders or the exhaustive due diligence process common at institutions, they can move fast on opportunities that institutional investors are now avoiding.

One in three rich Europeans who invest in property have an allocation to the build-to-rent sector (36 per cent), and just under half invest into the hotel and leisure sector (48 per cent), according to Knight Frank.

Rich investors from mainland China increased their allocations to property by a quarter last year, to $6.3bn, helping the total allocation to Asia by rich investors to 30 per cent, despite wider flows into Asia’s property market falling by 21 per cent, according to the agency.

“With borders reopened, mainland China and Hong Kong clients have now started to travel again, triggering more interest in real estate debt,” says Jyrki Rauhio, regional head of credit advisory, Asia Pacific, for HSBC Global Private Banking. He adds that allocations by rich Asians have grown most rapidly in Singapore, Australia and Hong Kong.

“[Rich investors] do not need to go through a lengthy investment committee process,” says Henry Chin, global head of investor thought leadership, Asia Pacific for estate agency CBRE. “We have seen some [rich investors] do 100 per cent equity deals,” he says, adding that many plan to refinance when interest rates fall.

Bell’s previous property deals used some bank finance to boost returns; this time he relied entirely on the cash from his investors. The shift to less or no borrowing is also typical among the developers that Nichols knows, all of whom have had to switch to more exotic, higher returning deals, to attract investors.

“A couple of years ago, cheap money boosted profits, meaning that offerings sold out in a day or two,” he says. “Today, the conventional deals just don’t sell any more, there aren’t the returns.”

The case of Cal Simmons, a super-rich serial entrepreneur based in Virginia, US, indicates why high-net-worth investors are cooling to conventional property sectors.

Five years ago, he invested $150,000 with a local developer to renovate a tired five-storey office building in downtown Alexandria. The idea was that the building would increase in value — thanks to the improvements and rising prices in the wider market. This would allow the investors to refinance, pay themselves back their initial investments, and then draw a secure long-term income from renting the building out to commercial tenants.

But, today, Simmons says, the bank thinks the building is worth less than the investors paid for it — he disagrees — and there is no prospect of refinancing with a larger loan.

He is much more focused on early-stage equity investing than on property: recently he has funded two local entrepreneurs to build a pickleball centre, and put up early-stage finance for a dating app.

So, when the same developer approached him this year for a similar project, he passed. “It’s a terrific building, he is a great operator and five years ago I would have happily gone in. But, today, the risk reward doesn’t work: now that my cash can earn me 5 per cent risk-free, it just doesn’t make sense,” he says. 

More than 800,000 people fled Russia after last year’s invasion of Ukraine. Now, some have changed their minds

One week after Russia invaded Ukraine last year, Egor Gazarov packed his bags.

A fluent English speaker who received an MBA from Insead in Paris and spent the first decade of his career climbing the ranks of Boston Consulting Group and Procter & Gamble, Gazarov left for Armenia to wait out the situation and seek out career opportunities in either the west or Middle East.

Less than six months had passed, however, before he decided to return to Russia, disheartened by the jobs available to someone with his experience.

“I came to understand that actually the job opportunities outside the country are not as good as they could be,” he said in a telephone interview from Moscow.

While hundreds of thousands of Russians left the country last year, some, such as Gazarov, have chosen to return to Moscow — a sign of the degree to which the Kremlin has managed to maintain a vestige of normality in the capital and contain some of the biggest economic shockwaves from the war. 

More than 820,000 people have left Russia since February 2022, according to a study by Re:Russia, a website run by exiled academics. That exodus represents one of the biggest waves of emigration from Russia since at least the early 1990s, after the fall of the Soviet Union.

The émigrés include dissidents opposed to the war and upwardly mobile young professionals, such as Gazarov, who left for economic reasons or to escape the draft. Some departed in the initial days and weeks of the full-scale invasion, while others left six months later, when the Kremlin ordered a mass mobilisation of men to fight in Ukraine.

While many dissidents have stayed in the countries to which they fled, some young professionals are choosing to return to Russia, either temporarily or indefinitely, after Vladimir Putin said the Kremlin had no plans for another mass mobilisation. The academics at Re:Russia said it was “highly likely” that some of those who had left Russia to avoid mobilisation had already returned.

Recent turmoil in Israel and Armenia has further complicated matters for the thousands of Russians who had moved to those countries.

More than 35,000 Russians left for Israel last year, according to the Jewish Agency for Israel, the largest Jewish non-profit. Many are staying, and for those planning to return, lawmakers in Moscow have vowed a frosty reception in Siberian prisons.

Armenia, a small republic in the Caucasus traditionally aligned with Moscow, has received more Russians than any other country besides Kazakhstan and Serbia. But after Azerbaijan took back the Armenian enclave of Nagorno-Karabakh last month despite Russian peacekeepers stationed there, anti-Russian sentiment has grown.

Emil Kamalov and Ivetta Sergeeva, two researchers at the European University Institute in Florence, have been studying the outflow of Russian émigrés in surveys since the start of the invasion.

Respondents, they noted, were largely highly educated, politically engaged and young, compared with the overall Russian population. Yet more than 15 per cent of those surveyed had returned to Russia — some to settle their affairs, others more permanently.

“It’s definitely not an economic migration in the classical sense,” Sergeeva said. “These are people who have been very competent specialists in Russia and are now losing the money, the status . . . For many people, the quality of life is declining [abroad].”

The Kremlin has seized upon the trend. In June, Putin claimed that half of the Russians who had left since the war broke out had already come back. “I don’t see anything wrong here,” he said.

Other officials have asserted that many chose to return because of hostility and suspicion towards Russian immigrants, citing Czech president Petr Pavel, who called for all Russians living in western countries to be “monitored” by security services, alluding to the much-criticised treatment of the Japanese in the US during the second world war.

Vyacheslav Volodin, chair of the Russian state Duma, or legislative assembly, subsequently claimed that Pavel wanted to put Russian émigrés into “concentration camps”. 

“Official propaganda is trying its best to make us believe that [émigrés], especially IT specialists, have returned to Russia en masse,” said Alexandra Arkhipova, a Russian anthropologist.

The reality was more nuanced, she said. “Work is very bad, visas are bad too, so some people come back and some don’t.”

Grigory, a 31-year-old industrial designer living in Moscow, said he had crossed the border into Kazakhstan on foot last September to avoid being sent to the front in Ukraine, after being deployed to Syria during his mandatory military service. Grigory, who refused to give his last name for fear of retaliation, said his stay in Kazakhstan ended after a few weeks as he and his wife could not keep up with the cost of living.

After a few more months in India, the couple returned to Moscow to come up with a better plan on where to move and build up enough savings to live there. “We decided we wouldn’t just jump from place to place,” Grigory said.

Being back home in some ways felt comfortable, he admitted, but not in the most important way. “When you can’t express your point of view honestly because there’s a likelihood . . . I know I’m being listened to, in this sense it’s not safe.”

Others who decided to return, however, said they were surprised by the degree of apparent normality in Moscow, where restaurants and bars remain lively; western outfits — such as McDonald’s, Starbucks and Domino’s pizza — have reopened under Russian ownership with barely altered names and logos after their western owners quit the country. Barbie is being shown on the Russian big screen in bootleg versions, despite a lack of official showings since its producer pulled out of Russia.

Nikita Kiktenko, a 29-year-old who works in financial technology in Russia, left Moscow for Kyrgyzstan in 2022. This spring he decided to return to Moscow to visit friends and family. He thought he would stay for a month. In the end, he never left.

“When you’re outside the country, you have very limited communications . . . you think that the situation is very difficult, that all the people you know left the country,” said Kiktenko. “But when you come back you understand that it’s not true. Life goes on, business continues to develop.”

Some young professionals said they had come back to find a more lucrative job market with senior vacancies and high salaries at some of the country’s biggest tech firms, as they seek to replace talent lost to emigration.

One former consultant at global group BCG, who relocated to the firm’s office in Azerbaijan after it closed down its Moscow operations, said he ultimately decided to return for a job at Yandex — Russia’s biggest search engine — in a management role that offered more than double his former salary.

Another former BCG partner who moved with the firm to Latin America decided to come back to Moscow and set up his own business, lured by the relatively low cost of living. He said he was now paying just $2,000 a month in rent for a prime flat in the city centre, with fine dining and drinks costing much less than in western Europe.

Maria Snegovaya, a senior fellow at the Center for Strategic and International Studies, said she had acquaintances who, despite claiming to oppose the regime, had decided to stay in Russia.

Their alleged reasons for staying ranged from the need to care for a sick family member to influencing Russia’s geopolitical trajectory from within, and a sense of moral duty to stay and resist, she said.

“Unfortunately, it looks like there was a first moment of shock and then essentially now we see the adjustment. People are making long-term choices about . . . where they want to be and [whether] they really hate Putin so much they’re willing to undergo some personal sacrifices for it — or not.”

Ferrexpo chair urges Kyiv to spare miner in anti-oligarch campaign

UK-listed group caught in Ukrainian authorities’ efforts to recover assets from billionaire founder Kostyantin Zhevago

The chair of UK-listed Ukrainian miner Ferrexpo has urged Kyiv to spare the company as Ukrainian prosecutors seek damages from its largest shareholder who is wanted in the country for alleged embezzlement involving a now-collapsed bank.

Speaking in London, Ferrexpo chair Lucio Genovese said the legal actions risked undermining investor confidence in Ukraine, just when the war-torn country needs to attract foreign capital.

“Ferrexpo is caught up in a dispute that has nothing to do with us,” Genovese said in an interview. “Ultimately, the Ukrainian authorities risk penalising British and American ordinary citizens whose pensions are invested in Ferrexpo.”

Genovese said the company planned to invest $3bn in Ukraine “over the coming years”.

Ferrexpo, which turns iron ore into pellets for steelmakers across the globe and was listed on the London Stock Exchange in 2007, has been hit by several court cases or investigations by Ukrainian authorities seeking to recover assets from Kostyantin Zhevago, its billionaire founder, who together with his family holds a 49.5 per cent stake.

Shares in Ferrexpo have fallen 52 per cent in London this year, bringing its market capitalisation to £464mn. The company’s output has tumbled 58 per cent in the first nine months of this year compared with the same period in 2021 because of energy, logistical and other constraints related to Russia’s full-scale invasion of Ukraine.

Zhevago was arrested in the French ski resort of Courchevel last year following a request from Ukrainian prosecutors seeking his extradition relating to the collapse of Finance and Credit bank in 2015. They have also taken action in Ukrainian courts to obtain more than $1bn in damages from Zhevago and have frozen shares held by Ferrexpo in its three Ukrainian subsidiaries.

Ferrexpo believes it is the victim of an orchestrated campaign to punish its largest shareholder. It says the legal swoop against its subsidiaries is illegal, that it was never party to the loans agreements Zhevago made with the collapsed bank’s creditors and that any attempt to seize Ferrexpo’s assets would penalise other shareholders.

Other large investors in Ferrexpo include BlackRock, Schroder Investment Management, Acadian Asset Management, HSBC and Vanguard Group.

President Volodymyr Zelenskyy is under pressure from the Ukrainian public, the EU, US and IMF to clamp down on the country’s oligarchs.

Zhevago, now 49, became post-Soviet Ukraine’s youngest billionaire and served as an MP for two decades. He also owns a TV station.

Ukrainian prosecutors say Finance and Credit made fraudulent loans to companies ultimately owned by Zhevago. The bank collapsed in 2015, inflicting losses on its creditors including the National Bank of Ukraine and on the country’s Deposit Guarantee Fund.

“We are confident that President Zelenskyy is committed to the rule of law,” Genovese said. “It is important that he upholds the rights of Ferrexpo’s international investors in Ukraine.”

Zelenskyy’s office declined to comment.

Ukrainian authorities tried to recover assets from Zhevago relating to the bank’s collapse in England’s high court. The court ruled that while there was a “good arguable case” of fraud, it did not have jurisdiction.

Contacted in Paris, Zhevago denied the embezzlement charge against him and said the bank collapsed because of the economic slump after Russia’s invasion of Crimea and eastern Ukraine in 2014.

“It has no kind of merit or any basis in truth,” Zhevago told the FT. He blamed the “complete incompetence” of the banking regulator for the collapse of Finance and Credit, one of 180 lenders to be declared insolvent in the mid-2010s.

Ferrexpo is facing several legal actions at once. The Deposit Guarantee Fund is seeking to recover 46bn hryvnia ($1.26bn) in assets from Zhevago and the central bank 1.5bn hryvnia.

Last month, the country’s State Enforcement service, issued an order to freeze a 50.3 per cent stake in two of Ferrexpo’s Ukrainian subsidiaries on behalf of the central bank. In March, the Deposit Guarantee Fund obtained a similar freezing order against stakes in all three of Ukraine’s subsidiaries. Ferrexpo says the asset freezes have not affected its operations but could ultimately lead to their confiscation.

The central bank said Zhevago was the ultimate beneficial owner of the three Ukrainian mining subsidiaries through his shares in Ferrexpo and so their seizure is “lawful and is relevant to Ferrexpo”.

The Deposit Guarantee Fund did not respond to a request for comment.

Ferrexpo says its corporate rights are being violated and that previous attempts to freeze its assets were cancelled by the Ukrainian courts three years ago.

The company is also in a dispute with the Ukrainian government over royalty payments. Lastly, Ukraine’s State Bureau of Investigation launched a probe into suspected illegal extraction and sale of minerals known as “rubble”, which is used for road building.

The company says it is a byproduct of turning iron ore rock into pellets and its production has been officially certified for years. However, one of its employees has been detained in relation to the case — with a court setting bail at 999mn hryvnia ($34mn), an extraordinarily high figure in Ukraine.

Environmental NGOs say special treatment of projects to upgrade existing gas pipelines favours fossil fuel majors

Environmental campaigners have attacked a critical part of the EU’s plans to green its energy supply, describing a register of almost 150 projects proposed for special treatment as a “wish list” for oil and gas majors.

The “Projects of Common Interest” draft document, which features 149 activities earmarked for better access to billions of euros of funding and prioritisation by policymakers, is set to be debated by officials from the European Commission and EU member states later on Wednesday.

However, while almost half of the projects involve seemingly low-emission hydrogen energy, campaigners claim that many of those that made the list risk keeping existing fossil fuel pipelines in place.

Frida Kieninger, director of EU affairs at Food & Water Action Europe, an environmental group, described the selection as a “wish list coming true” for the fossil fuel industry.

“A fossil gas pipeline going from A to B with a certain size and a certain route is designed for transporting gas via a certain route,” Kieninger said. “It’s not necessarily what would work for hydrogen.”

Dominic Eagleton, senior campaigner at Global Witness, echoed her remarks, saying that subsidies could be “handed to rich fossil fuel companies to maintain polluting gas infrastructure”.

The document, which has been seen by the Financial Times, must still be signed off by the European Commission, which will make a final decision in November.

New projects are selected for Projects of Common Interest, or PCI, status every two years. The schemes, which are entitled to apply for a pot of €5.4bn worth of EU funds, must be deemed as crucial to the bloc’s energy security and decarbonisation goals.

Hydrogen energy is created through breaking water particles apart in a process known as electrolysis. The process can be powered by renewable energy — dubbed green hydrogen — or fossil fuels.

The process is seen as a crucial to decarbonising sectors such as chemical and steel production. But its use is contested by some environmentalists who believe that it is an inefficient way to transfer energy.

They also argue that it offers an opportunity for gas companies to continue producing fossil fuels with the promise that the infrastructure can be used for hydrogen in future.

Ghassan Wakim, production and export director for zero-carbon fuels at the NGO Clean Air Task Force, said claims that gas pipelines could be made “hydrogen ready” were unproven.

“The material that you need to line the pipe varies a lot between what you need for natural gas and what you need for hydrogen,” he said, adding that compressors that pressure gas through the pipes would need to be reconfigured or “completely replaced”.

But Minh Khoi Le, head of hydrogen research at Rystad Energy, a consultancy, said building hydrogen pipelines from the ground up would “take time and cost a lot more money compared to refurbishing existing infrastructure”.

The European Network of Transmission System Operators for Gas, which is involved in the selection of the projects, said that schemes had been chosen to help meet EU hydrogen targets and to “enable cross-border flows”.

The commission declined to comment on the PCI list.

This year’s selection comes after a revision of PCI criteria in 2022 to focus on projects that “contribute to the EU’s energy and climate goals” and “facilitate the integration of energy from renewable energy sources”, according to the commission.

Maroš Šefčovič, the EU’s Green Deal climate law chief, said the EU’s first auction of €800mn of subsidies to hydrogen producers would take place in November.

The auction, which is distinct from the PCI list, would “have an impact on how to adjust the infrastructure and where to direct the eventual production [of hydrogen] in the EU or import from third countries”, he said.

Other PCIs selected on the draft focus on grids, electricity connections and offshore interconnectors.

The discussion of PCIs follows the publication of several reports by the European Commission on Tuesday showing that the EU has cut greenhouse gas emissions by a third since 1990.

But the reports warned that current emissions projections from member states showed that the bloc “needs to significantly pick up the pace of change” and particularly cut emissions in the transport, buildings and agriculture sectors.