Risks of war in Europe

Fears are rising in Europe over the risks of war [View in browser]( [Bloomberg]( Welcome to Balance of Power, bringing you the latest in global politics. If you haven’t yet, sign up [here](. Europe’s leaders aren’t just discussing the risk of a new war on the continent. They’re preparing for it. Hardly a day goes by without a fresh warning about the need to reinforce defenses in response to Russian President Vladimir Putin’s military ambitions. While Putin insists he has no intention of attacking states in Europe, he said the same thing before invading Ukraine. That war has transformed the security landscape facing the European Union and NATO, making what seemed unimaginable a few years ago appear quite plausible today. It’s got Europe ramping up defense spending and tackling the thorny issue of how to pay for it. Prime Minister Rishi Sunak spoke of putting the UK’s defense industry on [“a war footing”]( during a visit yesterday to Poland, whose invasion by Nazi Germany sparked British entry into World War II. Polish Prime Minister Donald Tusk is warning that Europe is again living in a “pre-war” situation. French President Emmanuel Macron says Europe faces an “existential” risk and refuses to rule out putting [boots on the ground]( in Ukraine, an idea Germany quickly dismissed. The jitters are provoking governments to look at the vulnerability of their energy infrastructure, a point driven home by Russian attacks on Ukraine’s power system. Take Sweden, NATO’s newest member. As [Lars Paulsson]( and [Niclas Rolander]( write, it’s upgrading its civil defenses and [focusing on how to protect]( its energy supply — a mix of nuclear, hydro and wind. European Commission President Ursula von der Leyen holds up Finland as a model. Bordering Russia, it maintains a robust civil-defense infrastructure to respond to a national emergency. War still seems an abstract prospect for many Europeans, who’ve grown comfortable on decades of peace after their continent was laid to waste in the 1940s. It’s no longer a hypothetical question for their leaders. — [Karl Maier]( NATO Secretary General Jens Stoltenberg, Tusk and Sunak at the Armourd Brigade barracks yesterday in Warsaw. Photographer: Damian Lemanski/Bloomberg Global Must Reads Beijing’s claims to the energy riches under the South China Sea — based on a vague 1947 map — were rejected by a United Nations-backed tribunal in 2016. But as [Philip Heijmans]( reports, President Xi Jinping dismissed the ruling, and [escalating tensions in the disputed waters]( point to an uncomfortable truth for nations like Vietnam and the Philippines, as well as the US: In this standoff, China is winning. WATCH: Tensions are escalating in the South China Sea. Source: Bloomberg President Joe Biden’s recent polling bump in key battleground states has mostly evaporated as a deep current of pessimism about the trajectory of the US economy hurts his standing with voters. The April Bloomberg News/Morning Consult [poll]( found Biden is ahead in [just one of the seven states]( most likely to determine the outcome of his matchup with Donald Trump, leading Michigan by 2 percentage points.  North Korea sent its highest-level delegation to Iran in about five years as the US raised concerns that arms sales from Pyongyang and Tehran have helped fuel conflicts in the Middle East and Russia’s war in Ukraine. The trip by External Economic Relations Minister Yun Jong Ho [highlights the military cooperation]( between the two countries. Gulf nations are building up portfolios that have made them major forces on the global investment scene, with holdings that include American tech companies, English football clubs, Egyptian real estate, African mines and Turkish bank deposits. As [Ziad Daoud]( explains, [they’re using their petrodollar wealth]( to wield influence on the world stage. The US Senate passed a long-delayed $95 billion aid package for Ukraine, Israel and Taiwan, clearing the way for resumed arms shipments to Kyiv within days. Biden is expected to quickly sign the package, and the US can tap supplies already in Europe to expedite the assistance to Ukraine, where shortages of weapons have raised the [risk of a Russian breakthrough]( more than two years after the invasion began. China criticized the $8 billion in US aid to Taiwan, saying “it sends a wrong signal to the Taiwan separatist forces” and urged Washington [to stand by its commitment]( not to support the island’s independence. Presidential frontrunner Claudia Sheinbaum is strengthening her advantage in the race to be Mexico’s next leader. Three new surveys added to the Bloomberg Poll Tracker [show her 28.6 points ahead]( of the main opposition rival, Xóchitl Gálvez. President Nicolás Maduro said the UN’s human rights workers [he expelled more than two months ago]( can return to Venezuela during a fourth visit from the International Criminal Court’s prosecutor Karim Khan. Washington Dispatch Although best known for providing fresh military assistance [to Ukraine](, the foreign aid legislation that Biden plans to sign today also contains [a new weapon]( against a longtime US adversary — Iran. The measure singles out the Iranian oil industry, broadening sanctions to include foreign ports, vessels and refineries that knowingly process or ship Iranian oil in violation of existing US penalties. It also would expand so-called secondary sanctions to cover all transactions between Chinese financial institutions and sanctioned Iranian banks used to purchase petroleum and products derived from it. Biden, according to analysts, is likely to take advantage of waiver authority built into the measures and may opt to avoid stringent enforcement of the sanctions, which could contribute to a rise in oil and gasoline prices. Yet the passage occurs soon after a missile and drone assault on Israel that US forces helped to deflect, and an Israeli retaliatory strike on an Iranian airbase. Although the threat of a wider conflict has receded for now, the clash demonstrated that Iran and Israel do not consider each other’s territories off limits, if they ever did. And that the US will be a party to any further hostilities. One thing to watch today: US House Speaker Mike Johnson plans to meet with Jewish [students at Columbia University]( in New York and hold a press conference regarding antisemitism on the campus. [Sign up for the Washington Edition newsletter]( for more from the US capital and watch Balance of Power at 1 and 5 p.m. ET weekdays on Bloomberg Television. Chart of the Day The EU launched an investigation into China’s procurement of medical devices, the latest in a spate of actions that are raising tensions ahead of Xi’s first visit to the bloc in five years. The probe was formally announced today and will seek to address concerns that Beijing unfairly favors domestic suppliers. EU relations with China [have been deteriorating](, as Europe becomes more assertive in responding to the Asian nation’s trade policies. And Finally The new US presidential helicopter has been demoted to backup duty because Lockheed Martin still can’t figure out how to keep its spinning rotors and engine exhaust from [scorching the White House’s South Lawn](. As a result, the VH-92 Patriot is landing only on paved runways for now, flying missions with White House officials or Secret Service staff instead of carrying Biden. Biden arrives on the South Lawn of the White House March 21. Photographer: Samuel Corum/Sipa More from Bloomberg - Listen to our [X space discussion]( at 9am ET on how South Africa is ripe for change ahead of elections next month - [Bloomberg Opinion]( for a roundup of our most vital opinions on business, politics, economics, tech and more - [Next Africa](, a twice-weekly newsletter on where the continent stands now — and where it’s headed - [Economics Daily]( for what the changing landscape means for policy makers, investors and you - [Green Daily]( for the latest in climate news, zero-emission tech and green finance - Explore more newsletters at [Bloomberg.com](. Follow Us Like getting this newsletter? [Subscribe to Bloomberg.com]( for unlimited access to trusted, data-driven journalism and subscriber-only insights. Want to sponsor this newsletter? [Get in touch here](. You received this message because you are subscribed to Bloomberg's Balance of Power newsletter. 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