Iran, and the art of war

[Balance of Power]( From [Bloomberg Politics]( [FOLLOW US [Facebook Share]]( [Twitter Share]( [SUBSCRIBE [Subscribe]](  In the The Art of War, Sun Tzu [advised conquering leaders](, “Do not press a desperate foe too hard.” Based on the developments of the past few days, U.S. President Donald Trump might have done well to heed that 2,500 year-old advice. Trump’s “maximum pressure” campaign has weakened the Islamic Republic and hobbled its economy. But it’s also made the country more dangerous, pushing it to strike back in hard-to-counter ways. The Sept. 14 attack on the world’s biggest oil refinery — which top Trump administration officials have blamed on Iran — disrupted markets from Tokyo to New York. Iran has denied it was behind the incident. But that’s just the most recent dustup. Since Trump withdrew from the 2015 agreement meant to contain Iran’s [military ambitions]( and curb its nuclear program, Tehran and its proxies have seized oil tankers, interfered with shipping lanes and hit arch-nemesis Saudi Arabia with repeated drone and missile strikes. Trump said yesterday he’d [ramp up]( sanctions and was preparing a “dastardly response” to the refinery attacks. And Secretary of State Michael Pompeo arrived in Saudi Arabia yesterday on a [hastily arranged visit]( to build a coalition to deter Iran. At least for now, Iran’s strategy is paying off. While bruised, it’s in a better negotiating position than ever, holding the world economy hostage as it faces down the efforts to force it into submission. - [Benjamin Harvey]( Iranian President Hassan Rouhani. Read [here]( about how a much-anticipated potential meeting next week between him and Trump is going up in smoke. Photographer: VYACHESLAV OSELEDKO/AFP Global Headlines [Golden State bogeyman]( | Trump is casting California as a cautionary tale for Democratic rule ahead of the 2020 election. During a two-day visit, [he singled out]( the state over its burgeoning homeless problems, [moved to eviscerate]( its authority to regulate auto emissions, and stopped at the border wall, highlighting his disdain of its policy of offering sanctuary to undocumented immigrants. - Whether or not Trump wins re-election, his hold on the Republican Party [will endure]( for years to come, [Ryan Teague Beckwith]( writes. [New direction?]( | Trump’s selection of top hostage-affairs official Robert O’Brien as his new national security adviser sends a clear signal the president is seeking to turn the page from the confrontation and controversy that defined John Bolton’s tenure. Bolton regularly picked ideological fights with the president and cabinet secretaries, while people who know both men say O’Brien will help mediate disputes, not create them. [Losing hope]( | Officials on both sides of the Brexit talks are increasingly pessimistic about the chances of a breakthrough, as the European Union accuses Boris Johnson of engaging in dangerous brinkmanship and the British government blames the bloc’s intransigence for pushing the U.K. toward a no-deal exit. In London, a landmark case in the Supreme Court could [severely restrict]( the prime minister’s options to end the impasse. [Spain’s paradox]( | With a fourth election in as many years, Spain on paper seems more unstable than Italy or Brexit-battered Britain: its acting prime minister just hasn’t been able to form a government. And yet, investors appear unbothered. That’s because Spain’s economy is still going strong and its political class, though fragmented, remains firmly pro-Europe. [Tainted ground]( | Eight years after an earthquake and tsunami caused the meltdown of the Fukushima Dai-Ichi nuclear reactor, residents and businesses are still struggling to persuade the world their towns and produce are safe. In an attempt to rebuild its brand, the region is hosting a Rugby World Cup training ground and next year will launch Japan’s torch relay for the 2020 Summer Olympics. But as [Jon Herskovitz]( reports, there are fears it may not be enough to undo the damage. What to Watch - Saudi Arabia [will be required]( to forgo enriching or reprocessing spent uranium if it wants to secure a nuclear-technology-sharing deal with the U.S., Energy Secretary Rick Perry said. - Congress [has reached a deal]( on a stopgap spending bill to avert a U.S. government shutdown on Oct. 1, even as the threat of a closure later in the year continues to build. - Trump said [he was unhappy]( with the cost of operating the U.S. military prison at Guantanamo Bay in Cuba and was exploring options, though he declined to say whether closing it down was on the table. [And finally]( ... A mysterious foreign investor has upended the economy of tiny Lesotho, which is dependent on wool and Mohair trade. Last year Chinese businessman Guohui Shi managed to wrangle a monopoly over the industry. Angry farmers, many of whom were not paid or were even forced to eat their flock, forced the government to end the monopoly. But as [Antony Sguazzin]( and [Mathabiso Ralengau]( report, the damage lingers, as does the question – “who is Guohui?” Angora goats in the countryside outside Maseru. Photographer: Waldo Swiegers for Bloomberg Businessweek   You received this message because you are subscribed to the Bloomberg Politics newsletter Balance of Power. You can tell your friends to [sign up here](.  [Unsubscribe]( | [Bloomberg.com]( | [Contact Us]( Bloomberg L.P. 731 Lexington, New York, NY, 10022