Saving the EU

[Bloomberg]( Follow Us //link.mail.bloombergbusiness.com/click/20358605.76440/aHR0cHM6Ly90d2l0dGVyLmNvbS9icG9saXRpY3M/582c8673566a94262a8b49bdBab75fa34 [Get the newsletter]( Legacy moments aren’t always easy to recognize, but Angela Merkel’s deal with Emmanuel Macron on a [virus rescue package]( for Europe certainly feels like one. In backing a 500 billion-euro ($547 billion) European Union fund, the chancellor ditched German opposition to allowing grants to the bloc’s worst-hit members such as Italy and Spain. That amounts to compromising in the name of solidarity and could steer the bloc away from the worst-case threat of breakup. Speculation has been swirling in German media as to whether Merkel might seek a fifth term on the back of her handling of the Covid-19 crisis. Her party has gained about 10 percentage points in the past two months, and she remains the country’s most popular politician. But rather than using [the political capital]( as a springboard to run in next year’s elections, Merkel looks to be converting it into German support for Europe. In doing so, she’s helping her longtime ally, European Commission chief Ursula von der Leyen, who’s struggled for EU unity on a rescue deal. Merkel’s also giving Macron a rare win and dealing a blow to anti-EU populists who claim Europe is failing its electorates. Opposition remains from countries including Austria and the Netherlands that wanted aid to be disbursed as loans and not grants. But history suggests when Germany and France agree, they get their way. Merkel’s mantra has long been that Germany can only thrive if Europe thrives. It may become her political epitaph. — [Alan Crawford]( The EU response had been delayed by a dispute over eurobonds, with France and Italy leading calls for jointly issued debt to shield public finances in the worst-hit countries from the biggest decline in output since World War II. Photographer: Pool/Getty Images Europe  Global Headlines [Airing grievances]( | President Donald Trump escalated his threats against the World Health Organization over its handling of the coronavirus pandemic, saying he would permanently cut U.S. funding if the group doesn’t make sweeping changes. In a four-page [letter](, Trump called on the WHO to “demonstrate independence from China,” renewing a complaint that led him in April to temporarily suspend U.S. payments. - Trump made the letter public hours after Chinese President Xi Jinping addressed the group’s governing body and [promised to devote]( $2 billion to fighting the pandemic over the next two years. - The U.S. president [said he’s protectively taking]( hydroxychloroquine, the anti-malaria drug he’s promoted as a virus treatment, despite government warnings that it can cause serious side effects. [Trade spat]( | Australian exports of wine, seafood, oatmeal, fruit and dairy are in danger if Beijing decides to escalate a row over Canberra’s calls for an investigation into the origin of Covid-19. Chinese officials have compiled a list of potential goods they could target via stricter quality checks, anti-dumping probes or tariffs, as well as using state media to encourage consumer boycotts. [Warren worries]( | Some Democrats fear that Joe Biden selecting Elizabeth Warren as his running mate could lead to a nightmare scenario that results in the party winning the White House and Senate seats in November but still ceding control of the chamber to Republicans. But, as [Joshua Green]( explains, the chances of that materializing are slim. [Tycoon troubles]( | A year after his ally and business partner became Ukraine’s president, things are unraveling for billionaire Ihor Kolomoisky. The government of Volodymyr Zelenskiy is safeguarding the state takeover of the country’s biggest bank, which Kolomoisky once owned, and he’s fighting off accusations of fraud and money laundering, including an investigation by the FBI and federal prosecutors in the U.S. [Storm front]( | Authorities are preparing to evacuate more than 5 million people as the biggest cyclonic storm over the Bay of Bengal in about two decades moves toward the coasts of India and Bangladesh, where it’s expected to hit late tomorrow. Cyclone Amphan, the equivalent of a category 5 hurricane, is set to cause further misery to the South Asian neighbors as their economies slump due to the pandemic. Cyclone Amphan on May 15. It is forecast to be the worst storm over the Bay of Bengal since the 1999 super cyclone that hit the eastern Indian state of Odisha, killing about 10,000 people. Source: India Meteorological Department What to Watch: - Federal Reserve Chairman Jerome Powell and Treasury Secretary Steven Mnuchin testify today before the Senate’s banking committee [about the status]( of stimulus programs aimed at combating the virus fallout. - Malaysia’s opposition leader Anwar Ibrahim told Bloomberg TV’s [Haslinda Amin]( the current government — which was [“fearful” of the outcome]( of a proposed vote of no confidence — was unlikely to last until the next election. - The U.K. has set out its [post-Brexit tariffs plan](, cutting import duties on many products while protecting industries such as automobiles and agriculture in global trade beyond Europe. Tell us how we’re doing or what we’re missing at balancepower@bloomberg.net. [And finally]( ... That luau is going to have to wait. Hawaii has closed its famous beaches and state parks, and venturing out of a hotel there may land you in jail. As nations try to reopen [corridors for air flight](, the island state is arresting people or issuing citations for violating one of the strictest U.S. lockdown regimes, while the visitors bureau has asked media to “refrain from publishing any stories about Hawaii that might encourage people to travel to the islands.” The Hilton Hawaiian Village Wakiki Beach resort temporarily suspended operations in Honolulu. Photographer: Marie Eriel Hobro/Bloomberg   A special offer for Balance of Power readers | [For just $1.99 a month](, get unlimited access to Bloomberg.com, where you'll find trusted, data-based journalism in 120 countries around the world and expert analysis from exclusive daily newsletters.  You received this message because you are subscribed to Bloomberg's Balance of Power newsletter. [Unsubscribe]( | [Bloomberg.com]( | [Contact Us]( Bloomberg L.P. 731 Lexington, New York, NY, 10022