Iran’s perfect storm

[Bloomberg]( Follow Us [Get the newsletter]( Ebrahim Raisi might have wished for a quieter start to his presidency of Iran. An ultraconservative cleric and protégé of Supreme Leader Ayatollah Ali Khamenei, Raisi takes over [today]( against a backdrop of renewed tensions in the shipping lanes of the Persian Gulf and growing doubts over Tehran’s nuclear deal with world powers. His ascent marks a shift from the more moderate Hassan Rouhani, who sought engagement with the West that unraveled under Donald Trump. While the transition has stalled the nuclear talks, Raisi himself is not expected to derail them. Iran has said it still seeks to re-enter a deal that would lift U.S. sanctions and allow it to return to global oil markets in return for curbing its atomic program. The more immediate complication is a deadly drone attack on an Israeli-owned vessel transiting the Persian Gulf last week. The U.S. and others have blamed Iran and [vowed]( a response. Iran rejects the accusations. In addition, Tehran has been [expanding]( its nuclear program, which the West believes is aimed at creating an atomic bomb, and curtailing the access of UN monitors. All this raises the stakes for the diplomats involved. Western countries have warned that if Iran does not re-enter talks soon, the revival of the deal itself is at risk. Some in the oil market are growing more pessimistic. The response now falls to Raisi, who also faces [unrest]( over chronic water shortages and the worst coronavirus [outbreak]( in the region. Raisi has previously indicated he doesn’t want to make the nuclear issue Tehran’s central foreign policy concern. He may not have a choice. — [Sylvia Westall]( Supporters hold photographs of Ebrahim Raisi. Photographer: Ali Mohammadi/Bloomberg 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 Hawkish turn | Japan has long avoided overtures toward Taiwan that would risk tensions with China, keen to preserve ties with its biggest trading partner. But, as [Isabel Reynolds]( and [Emi Nobuhiro]( write, that is starting to change as Tokyo watches with concern President Xi Jinping’s [crackdown]( on Hong Kong and increased military activities in the Taiwan Strait. - A high-profile [Taiwanese]( TV host became the latest to draw fire from Chinese internet users after referring to Taiwan’s Olympians as “national competitors.” Virus hurdle | U.S. Senate Majority Leader Chuck Schumer’s plan to pass a $550 billion infrastructure bill this week hit a potential [roadblock]( when a key Republican supporter announced he tested positive for Covid-19 and would quarantine for 10 days. Because the Senate doesn’t allow proxy balloting, Lindsey Graham would miss votes on the legislation. - The infrastructure plan backed by President Joe Biden stands to [benefit]( industries heavily dependent on transportation, with companies including Amazon.com and FedEx among the biggest winners. Turf war | Russia is seeking to [exploit]( Israel’s change of government to assert some control over military operations on the territory of its ally Syria, [Henry Meyer]( and [Gwen Ackerman]( report. While the shift is mostly rhetorical so far, a more abrasive Kremlin relationship could force Israel to change its strategy of targeting Iranian-backed militias in Syria. On its path to a greener future, South Africa plans to [invest]( in natural gas. The country wants to wean itself off the coal that generates more than 80% of its electricity and makes it the world’s ­12th‑biggest source of greenhouse gases. Best of Bloomberg Opinion - [Infrastructure Bill Shows Politics Are Not Broken: Tyler Cowen]( - [China Forgets Some Women Who Hold Up Half the Sky: Shuli Ren]( - [From Belarus Drama to X, the Olympics Get Political: Tim Culpan]( Chronic shortage | Truck drivers, retail staff, food processors and construction workers. These are just a few of the posts that U.K. employers are [struggling]( to fill as the pandemic begins to lift and the economy opens. While countries across Europe are experiencing Covid-related holes in their workforce, the U.K. shortfall is more acute due to Brexit, with implications for the government’s mantra to “build back better.” Next target? | Gaming stocks slumped in Hong Kong after an offshoot of China’s official news agency decried the “spiritual [opium](” of games, leading the country’s largest corporation to declare the possibility of banning kids under 12 from playing at all. That stoked fears Beijing will set its sights on online entertainment after reining in the e-commerce, ride-hailing and online education industries. - [Read how]( the ‘China Model’ aims for prosperity without democracy. What to Watch This Week - Biden sought to stave off a wave of [evictions]( after a federal moratorium on tenants losing their homes expired. - China and India said their military commanders had [constructive]( talks about their Himalayan border dispute. - The governor of Nigeria’s commercial hub of Lagos said [steps]( must be taken to curb coronavirus infections after an alarming increase in deaths in Africa’s biggest city. - German Finance Minister Olaf Scholz may announce more disaster aid today during a visit to the flood-hit areas of North Rhine-Westphalia with fellow chancellor candidate Armin Laschet, the state premier. - A referendum [spearheaded]( by Mexican President Andres Manuel Lopez Obrador to investigate his five predecessors came up far short of the turnout needed to make it legally binding. And finally ... North Korean leader Kim Jong Un has appeared in public in recent days with a [bandage]( on the back of his head that has added fuel to simmering speculation on his health. When the patch was gone, a greenish spot was visible, but South Korea’s spy agency told lawmakers it didn't believe there was reason for alarm.  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