Turning crises into opportunity

[Bloomberg]( Follow Us [Get the newsletter]( Like the double-headed eagle of the national crest, President Vladimir Putin faces challenges and opportunities to Russia’s east and west. In neighboring Belarus, President Alexander Lukashenko grows increasingly dependent on Russia as his campaign of repression against protesters deepens his isolation from the West after almost a year of political [turmoil]( since contested presidential elections. After President Joe Biden [signaled]( U.S. support for exiled opposition leader Sviatlana Tsikhanouskaya at a White House meeting last week, Lukashenko said Friday he wouldn’t hesitate to call Russian troops into Belarus to keep order, the state-run Belta news service reported. That’s music to Putin’s ears, as Moscow underlines its determination not to lose dominance over Belarus as it has in Ukraine. Europe, too, offers potential and risks for Putin. With Angela Merkel stepping down soon, the Kremlin is [targeting]( Annalena Baerbock, the Greens’s candidate to be chancellor in September’s German elections, as a threat to its interests because of her hawkish attitude to Russia. Just as in the U.S., perceived Russian election meddling risks a political backlash. Yet as [Patrick Donahue]( reports, officials in Germany may not [shut]( down the Nord Stream 2 gas pipeline if Russia attempts to use it as a geopolitical weapon. That suggests an agreement Merkel reached with Biden to penalize Russia in that event may be toothless. Meantime panic in central Asian republics triggered by the Taliban’s rapid advance in Afghanistan has seen them turning to Moscow with pleas for help to secure their borders. Amid the worst repression of domestic critics for years ahead of parliamentary elections next month, the Kremlin often justifies its actions by casting Russia as surrounded by external threats. In reality, a combination of circumstances is presenting Putin with unusually favorable conditions for advancing his foreign interests. — [Anthony Halpin]( Belarusian sprinter Krystsina Tsimanouskaya runs in the women’s 100-meter race at the Tokyo Olympics. Tsimanouskaya said she was pressured to leave Tokyo halfway through the games for criticizing sporting officials from her country and is reportedly now seeking asylum from Poland. Photographer: Martin Meissner/AP Click [here]( to follow Bloomberg Politics on Twitter and tell us how we’re doing or what we’re missing at balancepower@bloomberg.net. Global Headlines Potential default | The U.S. could [default]( on its debt by October after its credit ceiling officially became operative yesterday following a two-year suspension. [Katia Dmitrieva]( writes that Democrats could negotiate a new cap with Republicans or use the budget reconciliation process to push one through that would leave Biden’s party with sole ownership of a potentially unpopular move. - The Senate is heading toward [passage]( this week of a $550 billion infrastructure bill that would mark a milestone for Biden’s economic agenda. Share talks | China’s securities regulator called for talks with the U.S. Securities and Exchange Commission, which has increased disclosure requirements for IPOs of Chinese companies amid a near-$1 trillion share selloff last week. It adds to signs Beijing has become uneasy with the market [slide]( that sent its key stock indexes to the brink of a bear market. - China is [confronting]( its broadest coronavirus outbreak since Wuhan as the delta variant breaks through the country’s defenses, with cases now in 14 of 32 provinces. [Click here]( for our big takeout on Xi Jinping’s capitalist smackdown. After 40 years of allowing the market to play an expanding role in driving prosperity, China’s leaders have remembered something important — they’re Communists. Troubled ties | Pyongyang is [upset]( again. This time it’s the upcoming U.S.-South Korea military exercises that “seriously undermine” talks with Seoul, North Korean leader Kim Jong Un’s sister said yesterday. The comments from Kim Yo Jong reinforce worries North Korea could use South Korean President Moon Jae-in’s desire for talks to try and force him to scale back or halt the joint drills. Iran tensions | The U.S. formally [blamed]( Iran for a deadly attack on an Israel-linked oil tanker off Oman, though it provided no direct evidence, and warned of an “appropriate response.” The latest incident complicates efforts by world powers to restore the 2015 nuclear pact with Tehran, and comes before hardliner Ebrahim Raisi is officially confirmed tomorrow as the Islamic Republic’s new president. Best of Bloomberg Opinion - [A New Age of Anger Looms for India and Brazil: Pankaj Mishra]( - [How Should Investors React to China Crackdown?: Mohamed El-Erian]( - [How Should the Pentagon Spend Its $777 Billion?: Tobin Harshaw]( Under fire | Malaysian Prime Minister Muhyiddin Yassin is in [trouble](. Just days after the king berated a government minister for misleading parliament, opposition lawmakers today marched to demand the premier quit. With parliament suspended last week he is safe for now, but anger against him is building as virus numbers spike. What to Watch This Week - U.K. ministers are due to [discuss]( August travel restrictions on Thursday amid rising concern they are damaging the tourism industry and the economy. - Peru’s finance minister, Pedro Francke, said in an interview he wants to [retain]( the central bank president and that he’s been given room by the new government to implement his economic policies. - Former President Donald Trump’s power as Republican kingmaker will face another [test]( tomorrow as a large cast of candidates vie to be the party’s choice for an open congressional seat in Ohio. - Chinese Foreign Minister Wang Yi will attend a meeting with Asean foreign ministers from tomorrow. - Germany is poised to [widen]( Covid-19 vaccinations to include all 12-17 year-olds as its inoculation drive flags. Thanks to the 30 people who responded to our pop quiz Friday and congratulations to Zihui Chan, who was the first to name Tunisia as the nation whose president said he fired the prime minister and suspended parliament to restore order and retake the country from “thieves.” And finally ... Biden has pledged an era of “extreme competition” with China, which includes being able — if push comes to shove — to fight and win a war. The question is how to steer the behemoth U.S. military away from the Middle East and terrorism to focus on a new region and [different]( threats, 20 years after the Sept. 11 attacks. The spending habits of the Pentagon are deeply entrenched in congressional politics. Even inside the building, officials warn of a “say/do gap” when it comes to taking on China. The Pentagon is the world’s largest office building by floor area. Photo Credit: AFP/Getty Images  Like Balance of Power? [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