The EU’s risky expansion

There’s little sign President Vladimir Putin is willing to call his troops home. [View in browser]( [Bloomberg]( Follow Us [Get the newsletter]( European Union leaders are poised to open a new era of eastern expansion today by offering candidate status to Ukraine and Moldova, with Georgia not far behind. It’s a historic moment that’s also fraught with risks. Unlike the bloc’s earlier embrace of eastern Europe’s former Communist states, the new applicants all have territorial conflicts within their borders and Russian troops on their land. Key reading: - [EU Leaders Plan to Grant War-Torn Ukraine Candidate Status]( - [Draghi Vows to Defend Ukraine Despite Splintering Coalition]( - [EU Aims to Finalize $9.5 Billion Ukraine Loan Package This Week]( - [Estonia’s Kallas Warns of Existential Russian Threat to Baltics]( - Follow our latest coverage the war [here]( Ukraine’s determined resistance to Russia’s invasion accelerated acceptance of its EU ambitions in Brussels. Moldova seized the moment to press its case, too, as did Georgia, which fought a brief war with Russia in 2008. While the membership process is long, there’s little sign President Vladimir Putin is willing to call Russian troops home. That presents the EU with a dilemma of whether to make resolving the territorial disputes a condition of entry, thereby handing Putin a veto over its membership decisions. Optimists point to Cyprus as an example of the bloc’s ability to absorb states with unresolved conflicts, or to the gravitational pull of the opportunities it offers as a force for peace in the Balkans. But in contrast to the Balkan states or Turkey in the case of Cyprus, the Kremlin has never shown interest in joining the EU. It’s highly critical of the bloc’s expansion into its former Soviet backyard, regarding it essentially as the civilian wing of the NATO military alliance. Unlike the three Baltic republics that joined in 2004, the accession process for Ukraine, Moldova and Georgia begins at the most dangerous moment in European security since World War II. The EU has always been a project aimed at demonstrating Europe’s “soft power” in resolving conflicts. Now it’s about to test that proposition against Russia’s readiness to pursue its goals with hard force. A man places Ukrainian flags bearing the names of servicemen killed in the war on Wednesday in Kyiv. Photographer: Sergei Supinsky/AFP/Getty Images Click [here]( to subscribe to our weekly newsletter Next Africa running tomorrow and share this newsletter with others. They can sign up [here](. Global Headlines Gas alarm | Economy Minister Robert Habeck said Germany is in a [“gas crisis”]( and that Europe’s biggest economy should brace for a further reduction in Russian gas flows. He said Moscow’s decision to slash supplies risked sparking a collapse in energy markets, drawing a parallel to the role of Lehman Brothers in triggering the financial crisis. - Joe Biden called on the US Congress to [suspend]( the federal gasoline tax, a largely symbolic move in the face of lawmaker opposition as the president runs out of options to ease pump prices weighing on Democrats’ political prospects. - Federal Reserve Chair Jerome Powell gave his most explicit acknowledgment to date that steep interest-rate hikes could tip the US economy into [recession](, saying one is possible and calling a soft landing “very challenging.” Inflation’s impact | To see how inflation is influencing voters, look at Wisconsin, one of the most competitive swing states in US midterm elections in November. Democrats hope to unseat Republican Senator Ron Johnson, a pro-Trump multimillionaire with low ratings, and have a shot at keeping control of at least one house in Congress. Instead, as [Laura Litvan]( and [Michael Sasso]( explain, the economic [pain]( felt by constituents has given him an opening by pinning the blame on Biden. Xi’s pledge | President Xi Jinping’s vow to meet China’s economic targets for the year [faces]( big problems: his zero tolerance approach to combating Covid-19 outbreaks and a weak housing market. In the latest Bloomberg survey, economists downgraded their full-year growth projections to 4.1%, compared to the government’s goal of 5.5%. Best of Bloomberg Opinion - [Can Trump Be Tied to His Allies’ Violent Intimidation? Jonathan Bernstein]( - [X-Rated Recession Risks Can't Be Covered Up: John Authers]( - [Rising Yields Will Test EU’s Economic Cohesion: Marcus Ashworth]( Election test | Boris Johnson faces a test of voter outrage over scandals, a summer of strikes and Britain’s deepening economic woes. The prime minister’s Conservative Party faces an [uphill struggle]( to hold on to two districts in England that hold special elections today. - The government is preparing legislation to allow temporary agency workers to replace [striking]( workers as a result of transport chaos caused by industrial action. - Brexit is [depressing]( the UK’s assets and making it harder to recover from the global market meltdown, with the pound, stocks and bonds all on a losing run. Explainers you can use - [A ‘Price Cap’ on Russian Oil -- What Would That Mean?]( - [Half of New US Entrepreneurs Are Women, Leading a Creation Boom]( - [These Are the Gun Measures Advancing in US Congress]( Costly silence | President Cyril Ramaphosa should have [spoken out]( against rampant corruption during his predecessor’s rule and didn’t do enough to stop the theft of billions of dollars of South African taxpayer funds, according to a judicial inquiry. The finding is another blow to the credibility of the 69-year-old, who came to power in 2018 promising to cleanse his country and the ruling African National Congress of graft after Jacob Zuma’s scandal-ridden tenure. In our weekly global politics Twitter Space we discussed the coming slate of major summits including the Group of Seven meeting in Germany and NATO summit in Spain. You can listen to that conversation with four of our global political reporters via this [link](. News to Note - Spain is undertaking Europe’s most ambitious increase in military spending, and sustaining that effort hinges on [transforming]( an undersized defense firm to compete with much larger European rivals. - Myanmar’s Aung San Suu Kyi has been shifted to solitary [confinement]( inside a military-built prison compound in the capital, a junta spokesman said. - China and India may be buying more [Russian]( oil than the US previously believed, easing a supply crunch in global markets and potentially driving a recent price decline, one of Biden’s economic advisers said. - Saudi Crown Prince Mohammed bin Salman and Turkish President Recep Tayyip Erdogan [agreed]( to turn the page on years of rancor that had brought trade and diplomatic links to a virtual standstill. - Former Brazilian President Luiz Inacio Lula da Silva saw his [lead]( over incumbent Jair Bolsonaro grow to 17 percentage points in a possible runoff, the widest in five months, according to a new poll carried out after a recent fuel price increase. And finally ... As Russia’s invasion of Ukraine squeezes energy supplies, some EU countries are pushing for tighter control over data centers run by companies such as Google and Meta Platforms that can [guzzle]( a small town’s worth of power. Luxembourg, the Netherlands, Belgium, Germany and Denmark have teamed up to propose measures to rein in vast facilities that handle everything from social media posts to apps for businesses. Agricultural and forest land for the proposed Google data center north-east of Bissen, Luxembourg. Source: Google Maps Like getting this newsletter? [Subscribe to Bloomberg.com]( for unlimited access to trusted, data-driven journalism and subscriber-only insights. You received this message because you are subscribed to Bloomberg's Balance of Power newsletter. [Unsubscribe]( | [Bloomberg.com]( | [Contact Us]( [Ads Powered By Liveintent]( | [Ad Choices]( Bloomberg L.P. 731 Lexington, New York, NY, 10022