A careful response

[Balance of Power]( From [Bloomberg Politics]( [FOLLOW US [Facebook Share]]( [Twitter Share]( [SUBSCRIBE [Subscribe]](  The retaliation, when it came, was [a direct attack on U.S. soldiers](. On the surface, that should be enough to warrant a swift reprisal from the White House. But the impact of Iran’s missile strikes on U.S.-Iraqi air bases is not so straightforward. The bases were already on high alert — Iraq says Tehran notified it beforehand — and it’s possible there were few if any U.S. casualties. The initial reaction from the U.S. was cautious — President Donald Trump met with senior advisers, but there was no formal statement aside from his Tweet that “All is well!” As Washington processes the news of the strikes, the question is whether Iran [has calibrated its action]( — a retaliation for the U.S. drone attack that killed top general Qassem Soleimani — to allow it to claim a show of strength without tipping things into a full-scale war. There was a [strong initial market reaction]( to the missile strikes, with gold and oil prices spiking. But that settled down as it became clear the U.S. would not immediately react. The worst outcome is this sets off a tit-for-tat that ends in an all-out ground war. Much depends on two things: Trump’s reaction (and that of his close advisers), and whether Iran sees itself largely done with this strike. Either way, Tehran is likely to continue its long-running campaign of [proxy attacks]( in the Middle East. Anything beyond that, though, is likely to be self-defeating. — [Rosalind Mathieson]( An image taken from video purportedly shows the moment missiles were fired from Iran. Read [more here]( about who has the most say over the U.S. going to war. Source: Iranian State TV Global Headlines [Waning leverage]( | House Speaker Nancy Pelosi’s gambit of delaying sending articles of impeachment to the Senate hasn’t won any concessions from Majority Leader Mitch McConnell, who says he has enough Republican votes to set rules for Trump’s trial without committing to any of the new witnesses Pelosi is seeking. Still, she’s insisting on details about how a trial will work before transmitting the impeachment articles. [Nuclear power]( | North Korean leader Kim Jong Un will probably cling to his atomic arsenal even more tightly after Trump’s decision to kill one of Iran’s top commanders. Unlike Iran, North Korea has shown its ability to set off nuclear bombs, and the U.S. move reinforces Pyongyang’s view that Washington only takes such action against states that lack a credible nuclear deterrent. Personal security guards surround Kim as he prepares for his departure to North Korea at the railway station in Vladivostok, Russia last year. Photographer: Andrey Rudakov/Bloomberg [Political polarization]( | Protests against a citizenship law that discriminates on religious grounds have swept India, but the worst violence has been concentrated in its most populous state, Uttar Pradesh. Security forces have cracked down hard — of the 26 people killed nationally, 19 died in the state — and Muslim citizens, who make up almost a fifth of the population, say they’re living in fear of further police retaliation, [Shruti Srivastava]( and [Upmanyu Trivedi]( report. [Europe’s frenemies]( | Hungarian Prime Minister Viktor Orban has consistently thumbed his nose at the European Union, which in turn criticizes him for cronyism and undermining the rule of law. But through an unlikely alliance with French President Emmanuel Macron, Orban might be helping to force the EU to change its ways. [Guaido’s return]( | Venezuelan opposition leader Juan Guaido yesterday pushed past armed guards to reclaim his position as head of the National Assembly two days after President Nicolas Maduro’s loyalists blocked him from attending his own re-election. The confrontation over Venezuela’s last democratic institution has deepened the standoff between Maduro and Guaido, who’s recognized as the nation’s legitimate leader by more than 50 countries. What to Watch - A Boeing passenger jet bound for Ukraine [crashed shortly after takeoff]( in Tehran, killing all 167 passengers and nine crew, with Iran saying early assessments pointed to a technical fault. It came just after U.S. aviation regulators issued new restrictions barring civilian flights over Iraq and Iran. - Turkey and Russia will inaugurate [a third natural-gas pipeline]( between their countries today, diversifying export routes to Europe amid a backlash from the U.S., even as Moscow and Ankara [dig in]( on opposite sides of Libya’s escalating proxy war. - U.K Prime Minister Boris Johnson will tell EU Commission President Ursula von der Leyen during their first meeting since she took office and his election victory that he’s [determined to strike]( a free trade agreement with the bloc by the end-2020. - Carlos Ghosn, the former chief executive officer of Nissan Motor and Renault, is due [to address the media]( today in Beirut following his shock escape by private plane from Japan just over a week ago. Tell us how we’re doing or what we’re missing at [balancepower@bloomberg.net](bbg://screens/MSG%20balancepower%40bloomberg.net). [And finally]( ... The scale of the deadly wildfires burning across Australia is difficult to imagine. More than 10 million hectares have been destroyed — that’s about five times the size of Wales, or larger than the U.S. state of Indiana — while 25 people and an estimated billion animals have been killed. The unprecedented scale of the crisis has shocked the world. Now smoke from the fires has spread halfway [across the globe](, darkening skies in Argentina and into the Atlantic.    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