Putin’s next move

Having failed to break Ukraine’s army on the battlefield, Vladimir Putin’s attempts to freeze and starve its population into submission aren [View in browser]( [Bloomberg]( Having failed to break Ukraine’s army on the battlefield, Vladimir Putin’s attempts to freeze and starve its population into submission aren’t having a lot of success so far either. Russia’s relentless campaign of missile attacks on Ukraine’s critical energy infrastructure is certainly inflicting enormous winter hardship. Yet as [Volodymyr Verbyany]( and [Olesia Safronova]( report, Ukrainians are defiantly getting on with it, adapting their daily lives to blackouts and heating outages. Key reading: - [Plunged Into Darkness, Kyiv Braves Putin’s Latest Barrage]( - [Strikes in Russia Leave Ukraine’s Allies Uneasy at Putin’s Reply]( - [EU Targets Russia’s Drone Access, Banks in Sanctions Package]( - [Putin Calls Russian Nukes Deterrent Factor, Says War Risk Rising]( - Follow our rolling coverage of the war [here](. This week’s drone strikes on Russian airfields hundreds of miles inside the country present a potential new challenge for Putin. While the attacks that the Kremlin blamed on Ukraine had only symbolic military importance, they sent a message to Russians that Putin may not be able to keep them safe, a key element of his presidential image. Ukraine hasn’t admitted involvement in the strikes that its people may have cheered. But the prospect of the war expanding into Russia has sent nervous shivers through some of Kyiv’s allies that Putin may go nuclear in response. Europeans are split over whether enabling Ukraine to hit back risks a spiral of escalation that may drag them into the conflict. Washington insists it’s not encouraging Ukraine to strike inside Russia, while saying it’s for Kyiv to decide how to use the weapons it receives. Putin warned yesterday of a growing threat of nuclear war in the world, even as he called Russia’s arsenal a “deterrent.” The US and its allies faced down past Kremlin attempts at nuclear saber-rattling as its invasion of Ukraine faltered. With his military in retreat and morale among Ukrainians seemingly unbroken, Putin risks being seen as weak by Russians if attacks inside his country continue. For Ukraine’s allies, the worry then is how far an unpredictable Putin may go. A power outage in Kyiv on Tuesday. Photographer: Andrew Kravchenko/Bloomberg Click [here]( to listen to our Twitter Space conversation yesterday on growing ties between China and Saudi Arabia. And if you’re enjoying this newsletter, sign up [here]( for Balance of Power. Global Headlines Drama in Lima | A [remarkable]( day in Peru saw President Pedro Castillo try to dissolve Congress hours before an impeachment vote, only for his attempted coup to backfire in the face of challenges by the military and members of his own party. Congress then voted overwhelmingly to impeach Castillo, who was detained by police. His deputy, Dina Boluarte, was appointed as the nation’s first female president. Chip ban | Dutch officials are planning new [controls]( on exports of chipmaking equipment to China, further hindering Beijing’s access to advanced semiconductor capabilities, sources say. The Netherlands is home to ASML, a company that has a near monopoly on a type of machine used in leading-edge chipmaking. The Dutch move may come as soon as January, aligning it more closely to US curbs on China that Europe and Japan have so far resisted. - The US Congress is set to pass legislation [revamping]( policy toward Taiwan and restricting government use of Chinese semiconductors, moves that appear certain to antagonize Beijing even as President Joe Biden seeks to ease tensions. Britain’s property appraisers expect a potentially [short downturn]( in the housing market, avoiding a 1990s-style plunge, because many people are likely to keep their jobs during the recession. While buyers are growing more cautious after a jump in interest rates, the labor market remains tight and workers in short supply. People power | China’s move to dismantle the core pieces of its Covid Zero strategy following widespread street protests amounts to a de facto admission of failure by President Xi Jinping, who insisted the policy would “stand the test of history.” The [U-turn]( offers Chinese people a template for pushing back against the Communist Party over other of grievances. - State media struck a [triumphant chord]( over the efforts to contain the pandemic, reflecting a bid to dilute perceptions that public discontent forced the shift away from Covid Zero. Best of Bloomberg Opinion - [Germany Just Averted Its Own Jan. 6 Moment: Andreas Kluth]( - [Post-Brexit UK Is Becoming a Worst-Case Scenario: Clive Crook]( - [South Africa and Ramaphosa Have a Lot to Clean Up: Bobby Ghosh]( ‘Kiss of death’ | Former US President Donald Trump’s [false claims]( about the 2020 election hurt Republicans in the midterm elections, two prominent GOP members said a day after the party lost a Georgia Senate seat. John Thune, the No. 2 Senate Republican, called Trump’s obsession with his defeat to Biden “an albatross.” - Trump’s lawyer argued that presidential immunity would [protect]( him from lawsuits even if he had urged his supporters to “burn Congress down” while in office. Explainers you can use - [What to Watch for Next in South Africa’s Cash-in-Sofa Scandal]( - [Understanding War Crimes and the Crime of Aggression]( - [China’s Economy In for a Bumpy Ride as Covid Zero Comes to End]( Death sentence | Iran [executed]( Mohsen Shekari, a prisoner arrested during anti-government protests, in the first known case since the unrest began in September.  The Islamic Republic has been rocked by widespread demonstrations that erupted over the death of Mahsa Amini, a 22-year-old woman who fell into a coma after being detained for her attire by the “morality police.” Protests in Tehran on Oct. 8. Source: AFP/Getty Images Bloomberg TV and Radio air Balance of Power with [David Westin]( on weekdays from 12 to 1pm ET, with a second hour on Bloomberg Radio from 1 to 2pm ET. You can watch and listen on Bloomberg channels and online [here](. News to Note - Biden pleaded for US lawmakers to again enact a ban on semi-automatic rifles, outlining measures he believes would [combat a scourge]( of gun violence. - Indian Prime Minister Narendra Modi’s Bharatiya Janata Party is poised for a [landslide election]( win in his home state of Gujarat, showing his appeal with voters remains intact despite higher living costs. - Chinese and Saudi companies signed investment pacts for [green hydrogen]( and solar energy during Xi’s visit to the kingdom. - Saudi Arabia said it will help Pakistan’s finances as it looks to [shore up]( alliances with countries struggling with rising inflation. - South Korea [ordered]( striking truckers in the petrochemical and steel sectors to return to work, as it aimed to end a labor impasse the government said could deal a “fatal blow” to its global competitiveness. And finally ... A few blocks from Ghana’s statehouse in Accra sits a 14.5-acre parcel of prime real estate with a football field-sized hole in the middle of it. What should be emerging from the ground is the frame and sweeping, concave roof of the futuristic 5,000-seat National Cathedral of Ghana. Instead the project has stalled amid a quadrupling in its original $100 million price tag, a victim of a [debt crisis]( in a country that was until recently one of the world’s fastest growing economies. The stalled cathedral construction site in Accra. Photographer: Nipah Dennis/Bloomberg Follow Us 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. If a friend forwarded you this message, [sign up here]( to get it in your inbox. 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