Middle East’s risk to Biden

The danger of further conflict in the Middle East [View in browser]( [Bloomberg]( Welcome to Balance of Power, bringing you the latest in global politics. If you haven’t yet, sign up [here](. When President Joe Biden presented [a comprehensive peace plan]( for Gaza a week ago, he must have been hoping to score a big foreign-policy win just five months before the US election. Yet both Israel and Hamas pushed back against the proposal, saying key conditions to ensure a lasting cease-fire hadn’t been met. Talks remain deadlocked and the war is entering its eighth month. Now, two more long-running Middle East conflicts are in danger of erupting. Israeli Prime Minister Benjamin Netanyahu traveled to the north of the country this week, where he warned Hezbollah militants against [making a “big mistake”]( by persisting with increasingly deadly attacks across the Lebanese border. The Iran-backed group has been trading fire with Israel almost daily since the Oct. 7 attacks by Hamas, also supported by Tehran, and the skirmishes appear close to boiling point. In Yemen, the US is exploring new ways [to pile pressure on the Houthis](, who have continued attacks on Red Sea shipping despite five months of airstrikes. The plan is to starve the militant group of revenue needed to keep up the campaign and control its territory, but risks upending a hard-fought peace proposal with rival Yemeni factions. A resurgence of land fighting could once again draw in Saudi Arabia and other Gulf states like the United Arab Emirates that have previously been involved in the near decade-long conflict. The potential for war along the Israel-Lebanon border and in Yemen threatens to combine with the ongoing violence in Gaza to push the Middle East into a full-scale regional conflict. And all that comes about as Hamas and Hezbollah’s backers [in Iran are growing in influence]( at home and abroad ahead of elections likely to strengthen the grip of hardliners. Netanyahu has been invited [to address the US Congress]( next month. He’ll have a lot of ground to cover. —[John Bowker]( The aftermath of an Israeli strike at the Nuseirat refugee camp yesterday. Photographer: Ahmad Salem/Bloomberg Global Must Reads South Africa’s ruling party will seek to form a [government of national unity]( after last week’s election failed to produce an outright winner. After ceding its parliamentary majority for the first time since apartheid ended three decades ago, the African National Congress must secure the support of at least one of its three main rivals to retain power: the business-friendly Democratic Alliance, the leftist Economic Freedom Fighters and former President Jacob Zuma’s uMkhonto weSizwe Party. WATCH: President Cyril Ramaphosa explains the need for a unity government. Source: Bloomberg Bank of Russia Governor Elvira Nabiullina is helping keep Russia’s war economy on the rails but increasingly finds herself out-of-step with the government over key policies. She remains an anomaly President Vladimir Putin is [keen to protect](. “Elvira has the exclusive right to tell the president what he doesn’t like,” says Oleg Vyugin, a former top Bank of Russia official. The UK opposition Labour Party is holding a meeting today at a secret location to hammer out the final [details of its election manifesto](, with key policies likely to include commitments on childcare, voter-registration reforms and recognizing Palestinian statehood. A potential dispute is brewing with unions over its promises on worker’s rights. A coalition of left-wing parties led by former European Union climate commissioner Frans Timmermans won the most Dutch seats in the European Parliament elections, in a setback to Geert Wilders’ nascent governing coalition. While the conservative populist did chalk up gains for his far-right party, winning seven seats, the [worse-than-expected performance]( suggests a reduced likelihood of a significant rightward tilt in the region. German politician Sahra Wagenknecht is causing a stir with her new party that blends pacifist, pro-Russian rhetoric with calls for a more restrictive immigration policy. EU election polls suggest Wagenknecht, who cut her political teeth in the post-communist Left Party, is mainly taking votes from the nationalist AfD, in [a shake-up that potentially holds lessons]( for the ruling coalition in Berlin. President Emmanuel Macron said France will send [fighter jets to Ukraine]( and train thousands of soldiers to help the country repel Russia’s invasion. Rishi Sunak apologized for leaving D-Day commemorations in France [early to return](to the UK, where the prime minister filmed a TV interview as part of campaigning for the July 4 election. Germany may purchase 10 additional F-35 fighter jets from US defense manufacturer Lockheed Martin on top of the 35 units it ordered [shortly after Russia’s invasion]( of Ukraine, sources say. Biden said he had ruled out a pardon for his son, Hunter, if he is [convicted on federal criminal charges]( and would respect the verdict. Washington Dispatch Senator Tim Scott, a contender to be Donald Trump’s running mate, has [embarked on a public tour]( to show the former president what he can bring to this November’s Republican ticket: Black voters and billionaire donors. A political action committee with close ties to Scott, South Carolina’s junior senator and the lone Black Republican in the chamber, plans to spend $14 million to help turn out Black and Hispanic voters in battleground states who participate infrequently in elections, the group announced this week. Scott is also organizing a Washington event on June 19 featuring some of the wealthiest Americans including Citadel’s Ken Griffin, Pershing Square Capital Management’s Bill Ackman and Apollo’s Marc Rowan. The moves, coming weeks before Trump has said he will name his choice as vice presidential nominee, are intended to show Scott’s bona fides: authenticity in reaching out to voters of color and his close ties with Wall Street from serving in a leadership role on the Senate Banking Committee. One thing to watch today: The Labor Department will release the US unemployment report for May, which forecasters believe will show that the labor market is gradually cooling even as hiring rebounded compared to April. [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 prospect of a fresh round of tax cuts next year is helping Trump woo Wall Street donors but [threatens to add trillions of dollars]( to the national debt. The estimated $4.6 trillion cost of extending expiring portions of Trump’s 2017 tax cuts isn’t dampening Republican enthusiasm for renewal next year. Many simply reject cost projections and say the cuts pay for themselves through economic gains. And Finally Around the world, surprise election results in some of the biggest developing countries are illustrating how much markets have riding on the politics of 2024 — and the [pitfalls of trusting opinion polls]( to predict the outcome. From India to Mexico, this election year is providing an early warning to investors before voters go to the polls in the EU, UK, and US.  Indian Prime Minister Narendra Modi celebrates his party’s election win in New Delhi on Tuesday. Photographer: Money Sharma/AFP/Getty Images Pop quiz (no cheating!) 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