Trump lands in Europe for NATO summit
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This BBC podcast is supported by ads outside the UK. This is Andrew Peach with World Business Report. On the way, NATO leaders are in the Netherlands as a summit centred on increasing defence spending begins. A former US ambassador to NATO is with us live. Later, we're off to rural northern Uganda, where one social enterprise is using agricultural waste to power homes and plug the energy gap. I got my battery for electricity.

Also, I'm using it for cooking. It has improved my life. And protesters in Venice are claiming a win after a last-minute change of venue for the opulent wedding of the Amazon founder Jeff Bezos and his fiancée Lauren Sanchez. We are not opposing the wedding. What we are opposing is a multibillionaire can buy Venice for a few days.

Going to start in The Hague, though, where President Trump has arrived for the NATO summit. Coverage so far somewhat overshadowed by an extraordinary 24 hours in the conflict between Israel and Iran. But after sending the US president a flattering pre-summit message, which Donald Trump then released on social media, lavishing praise on his handling of the Western alliance, the NATO Secretary General Mark Rutter told his European colleagues to stop worrying about the US's commitment and

and focus on investing in defence. Both men want each member country to spend 5% of GDP on defence, or to break that down more specifically, 3.5% on defence and a further 1.5% on related infrastructure.

Not everyone has signed up to this, at least not yet. Speaking to reporters on his flight to the summit, Donald Trump singled out Spain. They're having a problem with Spain. They're always a problem with Spain. Spain's not agreeing, which is very unfair to the rest of the press. The US won't be increasing our GDP to 5%. We should pay what everyone else, you know, they're in Europe, we're not. You know, a lot of that money goes to rebuilding their bridges, their roads, so it can take heavy equipment.

And, you know, we don't have any roads in Europe. We don't have any bridges in Europe. Javi López is the member of the European Parliament for Spain's governing socialist party and a member of the EU Committee on Security and Defence. The Secretary General of NATO, Mark Rutte, sent a letter to Madrid this Sunday saying that Spain is able to find their path forward.

to be ready to have the capabilities that NATO is asking for. What we are talking is not about figures that we are talking, it's about capabilities in a obviously more hostile atmosphere. What we made during this year is to have a huge increase, like coming from 1.5 to 2%.

This was a decision made by our government and we are ready to work on this direction and to spend more. But the reality is like it's not the same every country. We are not facing the same reality, the same geography, the same history and the same budget. So how did we arrive at this situation where Europeans have suddenly got to spend much more of their money on defence? A question I put to Gontram Wolff, who is a professor of economics at the Université Libre de Bruxelles.

I do think European countries really need to do a catch-up. They need to invest more and they need to invest now urgently more because, frankly speaking, the situation is quite dangerous and Russia has gotten stronger. So I would frame this much more in terms of the Russian threat. The Russian threat 10 years ago was actually relatively limited. But in the last couple of years,

Russia's military, um, increased, uh, both in, in, in, in terms of its size, the number of troops, but also in terms of the equipment and in, in, in, in experience. And it has become a formidable, uh, military threat to Europe now. And we are basically pretty, pretty unprepared at this, at this point, uh,

And so it's important that we continue to spend more as Europeans. But it's in particular important that we spend smartly, meaning we need to buy the right kind of stuff. We need to buy it cost effectively. We need to modernize our armed forces. We need to become much more agile and we need to be prepared, really.

Obviously, just from a geographical point of view, some European countries are at much greater risk from Russia and any threat it poses than others because of where they're situated. Do we see that playing out in the diplomacy where those countries are keener on the idea of spending money on defence against any Russian threat

than those who are further away? We see it in the diplomacy, but we also see it in the real actual spending. So if you correlate your spending, defense spending, with the distance to Moscow, I mean, that's basically the best predictor of how much you're going to spend. Poland spends close to 5%.

On defense, already now, Germany is now moving up to three and a half. The Baltics are really doing a lot, while Spain hasn't moved and is still very low. So geographical distance is really what will determine how much countries are spending. It's much more geography than, I would say, declarations at the NATO summit.

People might want to get to 5% and want to agree to that and see the necessity for it. How do they pay for it? The German strategy at the moment is to go in the markets and borrow. Germany has had very prudent fiscal policy over the last, I would say, two decades and is now...

in a position to really go on the market and borrow and literally borrow hundreds of billions per year in addition to spend on its military. And given the size of the German economy, this is going to be by far the biggest European spending outside of Russia on the military measured in billions of euros.

Other countries will find that more difficult. The UK and France both are in a more difficult fiscal situation. And I think there, if the increase was to happen in that order of magnitude, which I frankly doubt for France and probably also for the UK,

But if it were to happen, then it involves hard budgetary trade-offs, meaning the UK and France will have to decide either to raise taxes or cut spending elsewhere. And meantime, at the meeting, there's an awful lot of keeping Donald Trump on side going on for all sorts of reasons, some of them economic. The short-term interest for Europe is to keep

the U.S. in Europe. We need to have the U.S. in Europe for security reasons. And indeed, we don't want this relation to end up in a complete disaster also for our trade relationships. So I would say, yes, part of the announcements of higher spending targets

are also about signaling to the United States that Europe is understood, Europe is ready to play the game of Donald Trump, at least for the time being.

Let's go live now to Kurt Volker, former US ambassador to NATO. Thank you for being with us on World Business Report. I quite like Gunter and Wolf's metric there, that the enthusiasm for defence spending is directly proportionate to distance from Moscow. And of course, Washington is a blooming long way from Moscow. Yeah, that is true. But, you know, the US is currently spending three and a half percent of GDP on defence spending.

The president has proposed a trillion-dollar defense budget, which would take it up a little bit. Plus, we're also spending another one and a half or more on critical infrastructure, on bridges, on cyber defense, on satellites. So we're meeting those targets ourselves. And really, it's the global responsibilities of the United States to have a military force that is capable both in Asia, in Europe, in the Middle East as needed.

The US could have, and to an extent has been saying that for a long time. What's changed now? I think what's changed really is, first off, as your previous guest said, the ongoing war in Europe. Vladimir Putin has unleashed the largest war in Europe since World War II. He's taken a million casualties. The Ukrainians have taken a lot as well. So this has woken everybody up in Europe that there is a serious security threat to them.

Second, Donald Trump has made threats about whether the U.S. would really support NATO if NATO allies are not doing enough for their own security. So he's really made a big push to rebalance the alliance so Europe takes on a bigger share. And European allies have responded to that.

Now, at the moment, these leaders are having dinner with the king before getting down to the talks. Help us read the room, because we've already got the feeling that Spain is pretty reluctant to sign up to this amount of defence spending. One or two other members as well. How does that all play out? How does Donald Trump get his way? Right. So first off, I think you're going to have the secretary general and almost every other NATO ally staring down the Spanish saying, don't screw this up.

We want to keep the Americans engaged and happy. And just saying no is a recipe for disaster. So I think that's one thing. They'll get a lot of pressure.

Ruta's message to Trump earlier today seemed to indicate that everyone has already agreed. So the Spanish president was playing that probably for a domestic audience. But even there, people need to be careful because if it starts to look like this is just an empty shell and no one really means that they're going to increase defense expenditure, Trump could blow up this summit like he did in 2018.

I mean, of course, all these politicians are facing pressure from the other side, aren't they? Because if they it's in a way, the easy part is to say, yes, let's sign up, keep everybody happy. You know, say we're going to spend more on defense. They're going to find the money, haven't they? And not spend that money on something else in their own country. That's right. It's a lot of money, but it is a lot less money than it's going to take to defend yourself against Russia if Russia really does attack.

And these countries have an obligation as NATO members, all for one and one for all. So if there's an attack against Poland or the Baltic states, that's going to be a very expensive proposition. So it's better to deter that. Hard to sell to the electorate, though, in exactly the way that Donald Trump has discovered in the US. Much more popular to say to the electorate, get someone else to pay for it.

That's exactly right. That is very true. But this has always been an issue at NATO, maintaining public support for defense spending. But it has to be done.

Just give me your take on what we've seen in the last 24 hours in terms of Donald Trump and Iran-Israel. It's been a dizzying 24 hours, which seems to have ended spectacularly well for the president and his idea of how to bring this to some kind of conclusion, at least for now. Right.

Well, so far, that's the way it looks. There's a few things we still don't know about the battle damage assessment, what happened to all that enriched uranium, are there any usable facilities left in Iran. But the big picture is indeed a big success. I don't think Trump wanted Israel to attack Iran, but they did.

And once that happened, that put Iran in a mood to actually accelerate its nuclear program to the point of creating a weapon. That prompted President Trump to go in and take out the nuclear facilities and to do so swiftly, which he did. And then having done that, he's now urged both sides, OK, now stop.

Iran has a clear interest in getting a ceasefire. The facilities are destroyed. A lot of their conventional capability and air defenses have been destroyed. They need to regroup. So they've been interested in a ceasefire. Israel would like to press its advantage right now, but with pressure from Donald Trump saying, OK, enough is enough, they've agreed to a ceasefire as well. This is looking like Trump got away with one strike,

serious damage to the nuclear program and then peace to follow. That is quite something. And I think he'll be looking for a lot of credit heaped on him as Secretary Ruta did already. He'll be looking for that at the NATO summit. Is he a lucky general, Donald Trump? Contrary to what a lot of people say, does he actually really know what he's doing?

You know, what I have been telling a lot of people who I advise is that Donald Trump is doing everything by instinct, but his instincts are often very, very good.

So he doesn't know the details. He's not relying on experts or expertise, but he's reading the room. He's reading people. And he is often right about the way he does this. In this case, it seems to have gone well. In the case of Putin, just by contrast, I think he has misread Putin. I think he thought Putin would be rational and take a good deal where Russia could get out of sanctions and make a lot of money.

And Putin doesn't want that. He wants all of Ukraine. And that, I think, is very frustrating to Trump, that he's not taking what Trump would take himself. Kurt, thank you. Kurt Volker, former U.S. ambassador.

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This is World Business Report with Andrew Peach on the BBC World Service. Let's bring George Conboy in now, Chairman of Brighton Securities in Rochester, New York. George, we were just talking to Kurt Volker about the ceasefire in place, it seems, between Israel and Iran. How are markets reacting? Markets just love a ceasefire. Markets love a resolute response to...

to Iranian waffling over there. So we've got that. Instead of sending negotiators, you send a hammer and you say, I'm going to send another hammer. And markets say, yeah, we think that message will get through with a hammer. And so they're all buyers. And therefore, this is the market saying this will hold. It's been shaky. It's stuck for a few hours. They think it's going to be a much longer term thing. Right. Well, markets will always react in the short term and they can always react again tomorrow morning.

But you've got this kind of a trifecta. You've got ceasefire holding after resolute action. You've got lower energy prices, sharply lower inside of a week. And that's good for any kind of global economic growth, except for the Exxons and Chevrons of the world. No one's going to shed too many tears for them. And then finally, you've got Paul Volcker coming around to say, well, we might be willing to cut rates. And so markets just love that. It's sort of a turbo charge for U.S. stocks.

Elsewhere, the boss of the US central bank, the Fed, Jerome Powell, was in Congress telling the House Financial Services Committee that the Fed would take a wait-and-see approach on key economic data before cutting rates, which could be on the cards for later in the year. A significant majority of the committee, but also there's a pretty significant minority that doesn't agree, but a significant majority feels it will be appropriate to reduce rates later this year. And what that means is that

each of those persons who wrote down a cut in rates later this year, they think that there's some state of the world where inflation doesn't prove to be as high or the labour market weakens or some combination of those two things that it will turn out to be more likely than not appropriate to reduce policy rates, subject to great uncertainty. Now, Jerome Powell and Donald Trump are always at least publicly on some kind of collision course over rates. It sounds like that's going to continue.

It certainly does. I think Donald Trump's always on a collision course with somebody, maybe several people at a given time. But the fact that Powell talks about a rate cut as more likely than a rate increase is what the markets want to hear. And it makes it more likely that's what we'll actually see. Part of Powell's job is to prepare markets so that there aren't surprises.

And so the Fed tends to signal and it sounds like they're signaling a late year cut in rates. The Trump-Powell relationship is pantomime, as we might say in the UK, really, isn't it? Trump knows what Powell's going to do. And all this sort of like, oh, he's a terrible man stuff is to appeal to his supporters rather than to influence economic policy, isn't it?

Right. I do think so. And it also gives him the opportunity to take credit, not like he needs. He doesn't need any cue to take credit for something. But if and when rates do go down, it would be Trump who would step up and say, well, I caused that. I leaned on him and look what we got here. So that's that's what you'll hear later this year, I suspect. Let's talk about energy prices in the US. What's happening with them?

Super down, oh, more than 10% week over week as the fears of the Straits of Hormuz being blocked and oil not being shipped have kind of faded with the idea that there is not now a big conflagration and that the ceasefire is holding. It looks like it will be steady as she goes. And the tensions that have boosted oil prices in recent months have softened along with the price. Good for economic growth in almost every economy.

Great chatting, George. Thank you so much. George Convoy from Brighton Securities in Rochester, New York.

Now to Uganda, which has one of the lowest electrification rates in Africa. According to a report in 2020, only about 10% of rural Ugandans have access to power as connection costs and infrastructure gaps make grid extension outside of urban areas economically tricky. In northern Uganda, the social enterprise Mandunis Energy is connecting rural homes...

and transforming lives by turning agricultural waste into clean, renewable energy. Njoroge Mwegai reports. Catherine Lamuaka is removing cow peas from their pods using a stick so that she can prepare a meal for her family. She's a farmer from Gotungur village in northern Uganda, where renewable energy is impacting lives for the better. I got my battery for electricity.

Catherine is one of the 112 residents whose lives have changed thanks to electricity generated by this plant.

"Mandulis operates in multiple hybrid renewables to deliver clean energy." That's Peter Nyeko, an aerospace engineer and co-founder of Mandulis Energy. He explains how they use farm waste to generate electricity. "We begin with agricultural waste: rice husks, maize cobs, groundless shells and coffee husks, because you have a lot of that in rural Uganda."

And when we take that dry waste, we bake it at a high temperature and it breaks down into hydrogen and methane, which is rock fuel. And in that process, those gases, when taken through a gas engine, generate electricity. The by-product from the gasification of the crop waste to generate electricity is also useful. But what's left behind is a biochar, pure carbon. And that biochar is useful

for making green concrete is also useful for making organic fertilizers into the ground so that's the cycle of how we produce most of our energy but we also utilize solar as a low cost additive during daylight hours thereby reducing our reliance on battery storage and what happens as well is our excess

Agriculture waste is converted into pellets and those pellets are useful not just as a store for the energy, but can also be used for cooking by the communities. So we also make a smaller gasifier stove that we distribute amongst the communities and they use that to cook.

And once they finish cooking, they sell back to us their biochar waste, in effect earning as they cook. The 50-kilowatt hybrid power plant has transformed the local community. The electricity, it has improved my life. Right now I'm getting light. My children now, they read their book in time. The electricity powers several economic activities in Gotunguru.

both on the grid and off-grid, using batteries. Some farmers have some crops to make. Robert, who works at the power plant, explains. On the agricultural processing side, we have rice milling and peanut butter milling. On the clean cooking side, we have machines for making briquettes, non-carbonized briquettes, still also using feedstock from agricultural mills.

We also have water pumping to provide clean water to households. The water pumps are also purified using the power generated from here. We also have electric tricycles that are used for sourcing biomass from the community.

and also for to invert yourself because there are some households that are not directly connected to the grid they are off grid and they have factory

Mandolis Energy wants to replicate this model across Africa and empower more rural communities to take advantage of what they already have to better their living standards. The future is very, very, very bright. As long as we have rural areas where people are farming, as long as there's agricultural waste that is not being valued, there's an opportunity to connect these dots.

Now, let's go to Venice in Italy, where the weddings of all weddings are taking place at the moment. The Amazon founder Jeff Bezos, the journalist Lauren Sanchez are tying the knot in a few days with a multi-million dollar three-day ceremony. There have been protests, though, and now one of the venues for the wedding has been moved. Protesters saying things like, no space for Bezos, and if you can rent Venice for your wedding, you can pay more tax. What's the latest?

one of the organisers of the group, No Space for Bezos' schoolteacher Marta Sotariva. We are not opposing the wedding. What we are opposing is a vision and a logic that see the city as some like a ascetic scenery, like a landscape behind which

a multi-billionaire can buy Venice for a few days. So the idea is basically, of course, there was a lot of anger coming from Venetian people because we are looking at a proper assault to the lagoon. So the whole issue of a city that is very fragile and of people that are struggling to live here, it's a city that is losing its population year after year.

And so our idea is that by opposing this event, it's our way to say we are sick and tired of the exploitation and decommodification of our land. Live to Alina Trabattoni, who's a journalist in Venice. Just explain the case that protesters are making here. Is it just an opposition to someone being wealthy or doesn't quite sit alongside the problem with too much tourism in Venice? What is this about?

Well, I think it's actually an opportunity for people to come out and, you know, air their grievances in terms of globalization, in terms of, you know, the overall inequality that exists in the world. I mean, it's not really about the wedding in itself, because by all means, compared to an Italian wedding, at very least, you know, 200 guests is a very small wedding, as it were. It's not even that lavish.

It's not. Well, well, well, it's in terms of price tag, it's targeted to be costing some 30 million dollars. So in terms of price tag, it's lavish. But in terms of overall figures of presences, absolutely.

Absolutely not. Absolutely not. And in actual fact, you know, so it has to be contextualized. I think people that are protesting, that are demonstrating, we had like a flare up, a sort of blitz carried out by Extinction Rebellion that was unexpected and came out of the blue and, you know,

a giant crane and protests and huge signs hovering over the five-star Daniele Hotel in Venice this evening. I think what it really boils down to is people really making, trying to make their grievances heard and, you know, taking this opportunity because obviously Bezos said

symbolises a lot of these issues. Of course. I mean, I suppose many cities around the world would be thrilled to have the problem of someone wanting to come and spend $30 million there. But in this case, the venue's actually been changed, presumably because if you're going to get married, you don't really want it to be amongst a load of angry folks.

Yeah, yeah, absolutely. And in fact, originally, the sort of the final event of the festivities was scheduled to take place in a beautiful place, a location called Scuola Grande della Misericordia, a very prestigious, a breathtaking Renaissance venue known for hosting some of the city's most exclusive gatherings over the decades. But following what

really hardcore mounting opposition and more importantly, you know, growing security concerns given... Aliyah, sorry to interrupt you. I'm going to let you go and get ready for the wedding now because I know you're on the guest list. Thank you very much indeed for being with us and thank you for listening to World Business Report.