Saudi Arabia under MBS

Saudi Arabia's leader faces some tough choices [View in browser]( [Bloomberg]( Welcome to Balance of Power, bringing you the latest in global politics. If you haven’t yet, sign up [here](. Crown Prince Mohammed bin Salman faces a complicated balancing act as he consolidates power in Saudi Arabia. Interest in his stewardship of the world’s biggest oil exporter has intensified since the royal court announced this week that 88-year-old King Salman [was being treated for lung inflammation]( at his palace in Jeddah. Yet MBS, as he is known, has effectively been running Saudi Arabia since his father made him his heir in 2017. Now he’s expected to focus on tightening control domestically. The preference at this stage is likely to be to co-opt possible opponents rather than deploy the iron fist his regime used before to crush dissent within the royal family, the once-powerful religious establishment, and even abroad in the case of slain Washington Post columnist Jamal Khashoggi. A key plank of administration is his Vision 2030 agenda to transform the Saudi economy by investing in everything from tourism to electric vehicles and semiconductors. But that won’t be easy. WATCH: Saudi Arabia Minister of Tourism Ahmed Al Khateeb talks about the country’s tourism push. Source: Bloomberg Oil prices aren’t where he needs them to be to bankroll his multi-trillion-dollar plans, and foreign investors remain hesitant to make big commitments. As he opens up the country further to outsiders, MBS needs to watch for possible discontent among those who feel left behind or fear the kingdom’s losing its Islamic identity. International diplomacy is equally tricky. Relations with Gulf neighbors could get more tense as the kingdom tries to become the main financial and economic hub for the region. And while Riyadh wants a strategic [defense and technology partnership]( with the US, it’s also deepening cooperation with China and Russia. Likewise, maintaining rapprochement with Tehran, brokered by Beijing last year, may be at odds with normalizing ties with Israel at some point. Then there’s the unexpected: a regional event like Hamas’ Oct. 7 attack on Israel and the devastating conflict in Gaza that’s already threatening his plans. — [Sam Dagher]( Mohammed bin Salman. Photographer: Fayez Nureldine/AFP/Getty Images Global Must Reads Israel is expanding its military operations in Rafah against Hamas and says [1 million civilians have]( moved out of the city in southern Gaza. Rafah, which borders Egypt, had about 1.4 million civilians before Israel’s military started urging them to move out in early May. Most of those people fled there after the war erupted in October, something Israel encouraged as its forces initially concentrated on northern parts of the Gaza Strip. A damaged street in Rafah on May 18. Source: AFP/Getty Images Keir Starmer is pitching for votes in Scotland at a campaign event today, part of a push by the UK Labour leader to exploit turmoil in the Scottish National Party [to smooth his path to power](. Ahead of the July 4 general election, Starmer’s message to Scottish voters is that both the SNP and the governing Conservatives have failed, portraying his party as a third way between Prime Minister Rishi Sunak’s Tories and Scottish independence. Prime Minister Narendra Modi was promising to return to power with an even bigger majority than he won five years ago before India’s marathon election kicked off in April. With less than two weeks to go before results are announced, the [picture is looking less certain]( for the popular leader. Insiders of the governing Bharatiya Janata Party and analysts say there’s little sign of “Modi wave.” Most investors expect South Africa’s ruling African National Congress to form a stable coalition that includes the Inkatha Freedom Party after the May 29 election, boosting financial markets and ensuring policy stability, [according to a survey]( by research group Krutham. The business-friendly IFP is seen as unlikely to demand major changes to economic policy instituted by the ANC under President Cyril Ramaphosa. Prominent technology and finance executives attended a state dinner at the White House for Kenyan President William Ruto, part of President Joe Biden’s [effort to strengthen US economic ties]( with Africa and counter Chinese and Russian influence. The first such event for an African leader in 16 years had a guest list including Microsoft’s Brad Smith and Meta’s former executive Sheryl Sandberg. Protesters took to the streets again in Taiwan as opposition lawmakers proceeded with a bill intended to [curtail the powers]( of the new president, Lai Ching-te. Hungary is working to “redefine” its NATO membership status to [allow for opt-outs]( should the alliance undertake military actions outside of its territory, Prime Minister Viktor Orban said. Mexico’s economy eked out weak growth at the start of the year in a fresh sign [of the challenges]( its next president will face after the June 2 election. Washington Dispatch While Americans begin the long Memorial Day holiday weekend today, marking the beginning of summer, both Biden and his Republican challenger, Donald Trump, will be on the road with the election season already well underway. Trump will appear tomorrow at the Libertarian National Convention in Washington. His presence might have something to do with another speaker at the convention, Robert F. Kennedy Jr., who could take [votes away]( from both him and Biden in the November election. Earlier this month, Kennedy challenged Trump to a debate at the event. The same day, Biden will address graduates of the US Military Academy at West Point, with wars in Gaza and Ukraine and the threat of conflict in the South China Sea on the minds of both the president and the young officers. One person to watch today: Treasury Secretary Janet Yellen will take part in meetings on the global economy, financial-industry issues and artificial intelligence at a Group of Seven gathering of finance ministers and central bank chiefs in Stresa, Italy. [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 world’s three dominant economies are entering a combative phase that threatens to deepen fractures and challenges decades of free-market orthodoxy as the US uses trade weapons borrowed from China’s playbook, such as duties on imports and subsidies for domestic industries. That is leaving [Europe with big decisions]( to make. And Finally Each morning in the Indian city of Bhubaneswar, wholesaler Gadadhara Mohanty waits anxiously for trucks [carrying bananas]( to a food market from a few hundred kilometers away. With no refrigeration in his storeroom, a single-day delay in selling the bananas can reduce his stockpile’s value by at least 10%. Poor infrastructure is no small problem in India which wastes nearly 80 million tons of food a year, second only to China. As climate change exacerbates extreme heat, the numbers are likely to worsen in South Asia. Bananas sold at a market in Vizianagaram, Andhra Pradesh, on May 10. Photographer: Anindito Mukherjee/Bloomberg Pop quiz (no cheating!) Which country recalled its ambassador from Buenos Aires over comments by Argentina President Javier Milei at a far-right rally? Send your answers to balancepower@bloomberg.net. More from Bloomberg - Listen to the [Big Take Asia podcast]( on how China’s economic contract with its people is fraying - Check out our [Bloomberg Investigates]( film series about untold stories and unraveled mysteries - [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? 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