France’s Marine Le Pen readies for fight with EU

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0:32Good morning from the Financial Times. Today is Wednesday, October 14th, and this is your FT News Briefing. France's far-right presidential candidate Marine Le Pen sits down with the FT. And will Accenture survive the age of AI? Plus, we'll look at why Saudi Arabia's defense systems haven't stopped the Hufis. I'm Mark Filippino, and here's the news you need to start your day.

1:07Marine Le Pen might finally have her moment in the sun. After multiple runs for president, she's the frontrunner in France's upcoming election. Judges cleared her to run earlier this year, even though she was convicted of embezzling from the European Parliament. Le Pen sat down with the FT's editor, Rula Haloff. They discussed her plans for France's debt-laden economy and relations with the EU. And obviously, given that she may very well be the next French president, it's important for our readers to get to know her and to be able to evaluate her policies. Rula explains why this time around, Le Pen is closer than ever to winning.

1:49I think because of the state that France is in, France is going through a whole range of economic problems. I think the markets are very jittery about France and about France's debt. Oui, je suis absolument convaincue. Non seulement qu 'il y a un véritable souhait de fermer une parenthèse. She now feels that France is ready for a rupture. The centre has hollowed. The left, the traditional left, hasn't done well. The traditional right hasn't done well. So I think if you look at the political landscape, there are a lot of French people today who will say, well, we can try something new. And what is that something new?

2:33It's either the far right or the far left. The topic of Ukraine came up in the interview. The far right leader has very contentious views about Russia and European support for Kyiv. On Ukraine, she's very clear. She says France cannot afford to keep supporting Ukraine financially. Moi, je dis très clairement que dans les six mois de mon arrivée au pouvoir, j 'arrêterai les financements à l 'Ukraine parce qu 'on ne peut plus.

3:21mentions she'd like to have a peace conference. So I would say her attitude is perhaps a bit closer to the U.S., to the Trump administration on Ukraine, than it is to her European partners. Le Pen also told Rula about her plans for France in the European Union. This includes cutting Paris's contributions to the bloc's budget. This is something that is very controversial. She recognizes that there would have to be a negotiation.

3:57Her argument is that, well, you know, I will have a lot of allies and we'll have to, we will all go together to renegotiate. with the help of a whole series of other governments.

4:35economic plan has been from a lot of economists. What they have said is that it's incoherent. Rula Halaf is the editor of the FT. You can find more of her interview with Le Pen in the show notes.

4:54You don't need me to tell you that artificial intelligence is shaking up a lot of industries. But when it comes to the world's largest IT consulting firm, Accenture, investors can't decide if AI will be an existential threat or an incredible boost. Accenture is hoping to clear things up at an Investor Day event happening today. Stephen Foley is the FT's U.S. accounting editor, and he joins me now to discuss. Hey, Stephen. Hi, great to be here. Good to have you. So why is today such a big day for Accenture? So right now, it's trying to navigate one of the biggest, well, perhaps the biggest technological change in its history.

5:29Now, in previous technological revolutions, whether it be digital computers and desktops, the shift to the cloud, those have been huge bonuses for IT consultants. You know, companies come in and need help to transition to the new technology. So it's been a real banker. This time around, we're not sure how AI is going to affect Accenture. And today comes after a period of really quite volatile swings in its share price because investors don't know what to make of AI. Is it going to be a force that completely decimates demand for IT consultants? Are clients going to be able to implement their own software, write their own software, do their own research projects?

6:10So that's what investors are worried about. Okay, so what are some of the things that investors will be watching at today's event to, you know, see whether AI will be a good thing or a bad thing for Accenture? So one of the things that investors and analysts have been sort of talking through in recent months is just what is going to happen to demand for IT consultants if it turns out that AI helps corporations do more of the things that they've traditionally outsourced to these giant call centers and back office centers that Accenture has built in India. Or if they can do research projects or implement new software themselves because the AI is helping to write code much more quickly.

6:52So those sorts of questions are feeding into the question about whether there will be strong organic growth for Accenture in the long run or not. On the other hand, one of the questions actually will be its acquisition strategy going forward. I spoke to a veteran investor in professional services who thinks of Accenture as like always buying these hot new startups that are implementing the very hottest new technology. And Accenture has been buying a lot of companies, but the prices of these acquisitions, particularly for these AI specialists right now, the prices of these have gone way up as well.

7:27So we'll be looking for acquisition strategy amongst other things today. What has Accenture said about investor concerns? Anything? Oh, yes. Julie Sweet, the chief executive of Accenture, has been a very big proponent that AI will transform Accenture for the better. She's been talking about training a lot of Accenture's staff. It's got over 100 ,000 people now who are in the category of data or AI trained out of the 800 ,000 workforce. So she says it's going to be in the forefront of helping clients get ready to introduce AI because heaven knows you've got to prepare your data and get all your change management programs and all of your risk management programs in place.

8:07So they say there's a huge new opportunity there. And that's what they hope investors take away from today. Let's just say, Stephen, that long-term Accenture can't calm jitters, either at today's event or beyond. What could that mean for the world's largest IT consulting firm and the rest of the industry, really? Well, I mean, this past 18 months has been some of the most volatile in Accenture's history when it comes to share price moves. One earnings day, the share price can be down 20%, but the worst performance in its history, the opposite on a different day. So So I think whilst we're still working through this transition, I think we're going to see quite wild swings until we work out whether AI is a positive or negative for this company.

8:49So not a company for those who have a queasy stomach, huh? Indeed, indeed. Stephen Foley is the FT's U.S. accounting editor. Thanks, Stephen. Thanks so much.

9:04elsewhere in the artificial intelligence world the cloud provider core weave is looking for cheaper ways to fund its spending on chips and other ai infrastructure and co-founder brandon mcbee told the ft it wants to tap a source of quote unlimited capital that is borrowing from insurance companies life insurers manage trillions of dollars and they've become the biggest target for AI companies that need funding. McBee said that in order to borrow from insurers, the company needs to get, quote, investment-grade ratings for more of its debt.

9:41Bank of America is in hot water. The U.S. Treasury has fined the lender$1.2 billion for, quote, egregious and continued money laundering as well as sanctions violations. The Treasury found that Bank of America didn't properly report more than$5 billion in suspicious transactions. The Office of Foreign Assets Control also announced a roughly$11.5 million settlement with the bank. This one's over, quote, apparent violations of numerous sanctions programs, including on Iran, Russia, narcotics, and global terrorism. This came right as Bank of America prepares to report quarterly earnings today. The lender said that the fine from the treasury reduces net income by 17 cents per share.

10:20It also said it was committed to completing the work required to address the issues raised by our regulators.

10:32Saudi Arabia has one of the Middle East's most formidable military arsenals, and it didn't come cheap. The kingdom has spent hundreds of billions of dollars on top-of-the-line missiles, fighter jets, and other weapons. But this month, Yemen's Houthi rebels have exposed a weakness. They've launched multiple strikes deep into the country and hit critical infrastructure like the international airport in Riyadh. Here to explain how is Charles Clover. He covers defense and security for the FT. Hey, Charles. Hi, thanks for having me. Good to have you. So what is going on here? Why are Saudi Arabia's top-of-the-line defense systems not able to fend off Houthi strikes?

11:07Well, Saudi Arabia's air defenses have been working really hard since February when the U.S. and Israel attacked Iran, and Iran very unexpectedly attacked the Gulf states to sort of make them collateral damage and to punish the U.S. So for the last several months, Saudi Arabia's air defenses have been pretty effective against fending off Iranian drones and ballistic missiles. But a couple of things are happening. First of all, they're starting to run out of interceptor missiles. These are very expensive and very hard to produce and slow to make. So now that the Houthis have opened a second front in the war, they've actually come in at a time when Saudi Arabia was already strapped and strained.

11:50And second of all, the Houthis have started to use different tactics to overwhelm. They've figured out what works. And that's put Saudi Arabia in a real bind in terms of air defenses. But you know, Charles, as I mentioned, Saudi Arabia spends a ton of money on these things. They've allocated the equivalent of six and a half percent of GDP to military spending last year. Are they just not spending money on the right stuff? Well, I think part of the problem is the right stuff just doesn't exist. So what you're seeing is that air defense is fundamentally an economic problem. An interceptor missile costs maybe 10 times, 20 times what a ballistic missile costs.

12:31And you have to use three of them or five of them per incoming ballistic missile. So that works if the conflict is very short or if your opponent has only a few ballistic missiles, which has been the case until very recently. But now you've got Russia, Iran, the Houthis, who have learned to very cheaply mass produce drones and missiles. And it's just as the conflict drags on, that model of air defense where you're relying on very expensive, exquisite interceptor missiles just gets exhausted. So what do they do then, Charles, to fix this? If they're spending all this money and it's still not defending the country properly, where do they go from here?

13:13Well, that's a very difficult question at the moment for Saudi Arabia because they've only got what they've got. And it's very hard to kind of reinvent your missile defense system, you know, in the middle of a war. But what they really need to do is actually destroy the missile launchers. And so the next stage of this is Saudi Arabia sends its very impressive fleet of modern fighter planes to try and destroy those launchers on the ground. That's really the only way that Saudi Arabia can win or even draw. Are we seeing a different type of effective warfare here? We see Ukraine with its advanced drone warfare against Russia, now the Houthi rebels against Saudi Arabia, underdogs really infiltrating unexpectedly on the battlefield and elsewhere.

13:57What does this tell you about how modern warfare and militias are changing? Yeah, well, it's a question of just technological development. In military circles, they refer to this as cheap precision. the advent of drones and the advent of cheap ballistic missiles mean that the advantage is with, you know, weaker countries, weaker militaries now can inflict an inordinate amount of damage on a stronger country because they can put warheads anywhere very cheaply. And it's very, very difficult to stop them. Charles Clover is the FT's defense and security correspondent. Thanks, Charles. Thank you.

14:40Before we go, Republicans and Democrats are battling it out for control of Congress this fall. One place the fight is especially fierce is in Bethlehem, Pennsylvania, which is home to a critical swing district. The FT held a round table there to understand what voters were thinking, and even supporters of President Donald Trump are losing faith. I sell construction equipment, any construction equipment, and I would say a majority of my customer base is mostly pretty big supporters again. I would say it has dwindled a little bit. This whole gas situation right now definitely has guys unsettled, unsure.

15:19What's going on? We'll have more from those voters on Saturday in our latest episode of our series, The Bethlehem Project, which looks at big U.S. political issues through the lens of one city. Make sure you tune in.

15:35You could 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 business news.

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