Salvaging a war-ravaged economy

In the early days of the Russian invasion of Ukraine, there was a school of thought that, however the war panned out, it was unlikely to las [View in browser]( [Bloomberg]( Follow Us [Get the newsletter]( In the early days of the Russian invasion of Ukraine, there was a school of thought that, however the war panned out, it was unlikely to last long. Kyiv’s allies talked about deploying a sweeping Marshall Plan to rebuild Ukraine’s industry, agriculture and businesses in the aftermath. More than five months later, the fighting rages on, and Ukraine faces the reality that its economy is shattered. Key reading: - [Ukraine’s Fight to Rebuild in Face of Unrelenting War]( - [Russia Moves to Annex Occupied Ukrainian Land by September]( - [EU Nations Reach Agreement to Reduce Gas Use for Next Winter]( - [Long-Range Guns Given to Ukraine Open Door to New Phase of War]( - Read our rolling coverage of the Russian invasion of Ukraine [here](. As [Marc Champion]( and [Daryna Krasnolutska]( discovered in tracing a section of the Dnipro River, steel plants, factories and farms along the massive trade artery that snakes through the country can’t afford to wait for the war to end. They have to find a way to operate under fire. That is crucial not just for Ukraine but for the world. The conflict has shown how much other countries rely on the grains and fertilizers Ukraine produces, as its Black Sea ports remain largely blocked. Nations are battling inflation fueled by the shortages of food and energy the war has spawned. Benchmark European natural gas prices are more than 10 times higher than the usual levels for this time of the year. The obstacles for Ukraine are enormous. Its businesses face risks from the fighting. Many are bleeding money to support the battle against Russia. Their costs for transport and materials have spiked. With Europe facing the prospect of gas rationing into winter as Russia curtails supply, and as talk of a global recession grows, keeping the financial aid flowing into Ukraine and sustaining unity against Moscow will only become harder. For Ukraine’s business owners, that highlights the imperative of doing all they can to get back to work now. “Ukraine itself has become a brand,” says Yuriy Sinitsa. “That’s an opportunity and we need to use it.” — [Rosalind Mathieson]( A resident in front of a destroyed bridge in Chernihiv, Ukraine, on July 4. Photographer: Andrew Kravchenko/Bloomberg Click [here]( to follow Bloomberg Politics on Facebook and share this newsletter with others. They can sign up [here](. Global Headlines Frank chat | US President Joe Biden will speak with Chinese leader Xi Jinping tomorrow for the first time since March as [tensions]( intensify over Taiwan. House Speaker Nancy Pelosi is considering a visit to the island, which China considers part of its territory, after the US ambassador said Washington’s ties with Beijing had deteriorated to probably “the lowest moment” since diplomatic relations resumed in 1972. Grand jury | The US Justice Department is using a grand jury to [investigate]( efforts by former President Donald Trump and his staff to create false electors and overturn the 2020 election, a source says. Two of ex-Vice President Mike Pence’s aides testified about conversations they had with Trump and his allies regarding efforts to submit false elector certificates from states Biden won. - Trump returned to Washington yesterday to [depict]( the country as devolving into “carnage” since he left office, and predicted in a speech that Republicans would take control of Congress in November and the White House in 2024. The International Monetary Fund cut its global growth [outlook]( for this year and next, warning that the world’s economy may soon be on the cusp of recession. The Washington-based lender also projects consumer prices to increase 8.3% this year worldwide, which would be the biggest jump since 1996. Health crisis | Britain’s National Health Service has become a [crisis]( neither candidate campaigning to replace Boris Johnson as prime minister can afford to ignore. Years of budget cuts, staffing shortages and Covid’s relentless burden now mean a record number of people — more than 6.6 million — are waiting for treatment, and the only easy way to resolve the backlog may be to raise taxes. - Rishi Sunak pledged to [scrap]( the value-added tax on all domestic energy bills for the next year if he becomes premier, a move his leadership rival, Liz Truss, criticized as a U-turn. Best of Bloomberg Opinion - [Europe Is Faking Solidarity, and Putin Knows It: Andreas Kluth]( - [Liz vs. Rishi? The Real Winner Is Boris Johnson: Therese Raphael]( - [Pelosi Trip Won’t Harm Biden’s Poor Taiwan Strategy: Hal Brands]( Democracy warning | More than 3,000 executives, economists and other professionals [signed]( an open letter in defense of Brazil’s democracy, pushing back against President Jair Bolsonaro’s attempts to smear the electoral authorities and voting system. “We are going through a moment of immense danger to democratic normality,” they said, demanding that the result of October’s presidential election be respected. Explainers you can use - [Fun-in-the-Sun Photos Don’t Show the Real Risks of Heat Waves]( - [Solar Power Equipment Prices Keep Rising in Clean Energy Threat]( - [Why Blackouts Are Still Crippling South Africa]( Ratcheting rhetoric | North Korea used the anniversary of the armistice that halted fighting on the peninsula 69 years ago to [warn]( of a “second Korean War,” blaming the US and South Korea for inflaming hostilities. It called the two nations, which held joint military exercises this month, a “horde of belligerents wanting the wretchedness of war.” - South Korean President Yoon Suk Yeol’s latest [battle]( is a feud with the police force over a plan to have more oversight of the powerful law enforcement agency. Tune in for our weekly global politics Twitter Space at 8 a.m. ET today for a conversation on Ukraine, Russia — and the response of the Global South. You can find the link via our Politics Twitter handle at [@bpolitics]( and it will also be available to listen to for a week afterward. News to Note - Hungarian Prime Minister Viktor Orban will [address]( a gathering of US conservatives next week despite a furor over recent remarks on race that prompted an aide to resign in protest. - Saudi Arabia’s Crown Prince Mohammed bin Salman kicked off his first European [trip]( since the 2018 killing of columnist Jamal Khashoggi with a stop in Greece before heading on to France. - French President Emmanuel Macron, on an African tour, is ready to step up [support]( to countries facing food and security concerns in a bid to stem Russia’s growing sway in the region. - Russia’s gas cuts risk [fracturing]( the unity of the European Union this winter as strained budgets and supply issues limit the bloc’s capacity to cope with a sudden, severe energy shortage. - Tunisian voters [approved]( constitutional changes granting President Kais Saied sweeping authority, even as a lukewarm turnout showed deep divisions over a move opponents describe as a death knell for the country’s hard-won democracy. And finally ... The International Space Station has been buzzing with US astronauts and Russian cosmonauts in recent days. That scene may belong to a waning era of cooperation, though, after Russia’s top space official said the country is [pulling out]( of the program. Tension over the war in Ukraine has cast a pall over the orbiting symbol of US-Russian diplomacy, and Yuri Borisov, the new head of Roscosmos, told President Vladimir Putin in a televised meeting yesterday that the decision to leave after 2024 had been made. The International Space Station orbits Earth. Photographer: Paolo Nespoli/ESA/NASA/Getty Images 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. 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