Unnerving old friends

Your Balance of Power newsletter focuses on how old Soviet nations are unnerved by Russia’s invasion of Ukraine. [View in browser]( [Bloomberg]( Russia’s invasion of Ukraine is driving some of its oldest ex-Soviet friends to look for ways to cut dependence on a weakened and increasingly unpredictable regional power. That wasn’t the plan when President Vladimir Putin launched his “special military operation” almost a year ago. A few days of military shock and awe to subdue the second-largest republic of the former Soviet Union were supposed to decisively re-assert Moscow’s dominance over other neighboring states that, until the 1991 collapse of the communist superpower, had fallen squarely under the Kremlin’s control. Key reading: - [Putin’s War in Ukraine Pushes Ex-Soviet States Toward New Allies]( - [Putin Braces for Long War as He Plans New Offensive in Ukraine]( - [EU Deploys Team on Armenia-Azerbaijan Border After Deadly Clash]( - [Putin Gets Unexpected Pushback from Ally Over War in Ukraine]( - [Russians Fleeing Putin’s Draft Stir Fears in Worried Neighbors]( The strategy backfired most clearly in Ukraine itself, which is now a candidate to join the European Union, deeply entwined with the North Atlantic Treaty Organization and united as never before by Russian aggression. But there are signs of unintended consequences in the Caucasus and central Asia, too, regions where Russia has wielded great influence for decades. The Collective Security Treaty Organization, a Moscow-centric NATO equivalent, is looking damaged. Turkey appears the main beneficiary. Earlier this month, Armenia said it wouldn’t host planned CSTO exercises, infuriated by Russia’s failure to intervene on its behalf in a long-running territorial dispute with Azerbaijan. It turned to the EU for help instead. Azerbaijan is deepening ties with Turkey and looking to beef up energy exports to Europe. Kazakhstan, a vast petro-state that shares a 7,644-km (4,750-mile) border with Russia, is expanding oil export routes across the Caucasus and Turkey. All this despite the fact that these nations are benefiting from a wartime surge in transit trade with the much larger Russian economy as it labors under the impact of international sanctions. As Kazakh businessman Beibit Apsenbetov put it: “What to do when your neighbor is a drunkard and rowdy, and you can’t move out?” — [Marc Champion]( A protester wearing the Armenian national flag stands in front of Russian peacekeepers blocking the road outside Stepanakert, capital of the disputed Nagorno-Karabakh region of Azerbaijan, on Dec. 24. Photographer: Davit Ghahramanyan/AFP/Getty Images [Click here]( to follow Bloomberg Politics on Twitter. And if you’re enjoying this newsletter, sign up [here](. Global Headlines Staking claim | China’s Coast Guard maintained near-daily patrols at key points across the disputed South China Sea last year, [ramping up its presence]( as tensions over the waterway with Southeast Asian neighbors remain high. The moves show Beijing’s determination to assert its claim to more than 80% of the waters, raising the risk of a mishap that officials worry could lead to a larger conflict. - Beijing is closely watching Russia’s war in Ukraine and [learning lessons]( that may influence future decisions, NATO Secretary General Jens Stoltenberg said after a meeting with Japanese Prime Minister Fumio Kishida. - Beijing told the Netherlands it wants to keep supply chains and trade open, a sign it’s trying to find room to [maneuver]( amid a US push to cut China off from advanced chip technology. Economic self-harm | The UK’s departure from the EU is [costing its economy]( $124 billion annually, stifling everything from business investment to companies’ ability to hire workers, a Bloomberg Economics analysis shows. Life has [got worse]( in most areas that voted strongly for Brexit. The International Monetary Fund predicts Britain now faces the [bleakest two years]( of any major industrial nation. - The UK slipped down Transparency International’s global corruption ranking, with the watchdog describing [public trust]( as “worryingly low” after a string of scandals. - Britain is enduring the same type of [mass strikes]( that have marked France’s political landscape for years. Food-price inflation is [still soaring](, with people in low and middle-income countries particularly hard-hit. The most recently available monthly data between September and December 2022 shows rates of increase above 5% in almost all economies around the globe, irrespective of their level of income. Pensions rage | French labor unions are leading a second day of mass [strikes]( and protests against President Emmanuel Macron’s plans for raising the retirement age. High-speed trains, the Paris metro and many schools are facing disruptions, while opinion polls show swelling opposition to his proposed pension reform and growing numbers are ready to take part. Best of Bloomberg Opinion - [Banning TikTok Would Likely Do More Harm Than Good: Editorial]( - [Israel’s Twin Crises Put the UAE in a Double Bind: Bobby Ghosh]( - [India Can’t Afford to Get the Adani Affair Wrong: Mihir Sharma]( Violence spikes | Pakistan’s worst suicide bombing in over four years tore through a mosque in a high-security compound in the northwestern city of Peshawar killing at least 92 people and leaving dozens wounded, hospital and rescue workers said. There’s been a spike in violence since the Taliban seized power in neighboring Afghanistan, the [latest headache]( for Prime Minister Shehbaz Sharif. The site of the blast in Peshawar yesterday. Photographer: Abdul Majeed/Getty Images Explainers you can use - [Understanding the Shadow War Between Israel and Iran]( - [The World’s Next Big Inflation Surprise Is Looming in China]( - [Tax Cuts, Factory Perks: What to Watch for in India Budget]( Not interested | Brazilian President Luiz Inacio Lula da Silva turned down a German request to send [ammunition]( to Ukraine to help repel Russia’s invasion. “Brazil does not want to have any participation, even indirect” in the war, Lula told reporters in Brasilia alongside German Chancellor Olaf Scholz, who’s been trying to rally support for Ukraine during a four-day visit to South America. Check out Bloomberg Opinion’s Crash Course podcast at 4am ET featuring Tim O'Brien’s conversation with the New York Times’s Maggie Haberman about the collision between former President Donald Trump and the Republican Party. You can listen on Apple [here]( and Spotify [here](. News to Note - President Joe Biden’s administration is considering [cutting off]( Huawei Technologies from all of its American suppliers as Washington intensifies a crackdown on the Chinese technology sector. - Former Brazilian President Jair Bolsonaro applied for a six-month [visitor visa]( to remain in Florida, a source says, making life deeply uncomfortable for the White House as it gets ready to welcome Lula next month. - China’s manufacturing and services [expanded]( for the first time in four months in January as the end of Covid Zero restrictions continued and the Lunar New Year holiday spurred travel and spending. - The IMF raised its global economic [growth]( outlook for the first time in a year, to 2.9%, with resilient US spending and China’s reopening buttressing demand against a litany of risks. - South African President Cyril Ramaphosa may overhaul his [cabinet](, with his deputy David Mabuza among those in danger of losing their jobs, as public anger mounts over record power outages and the struggling economy. - The US and South Korea are planning to step up the scale of their joint [military exercises](, a move that has in the past prompted threats and weapons tests by North Korea. And finally ... Trump is suing journalist Bob Woodward for almost $50 million [in damages]( for releasing recordings of interviews conducted in 2019 and 2020 for his book, Rage, about the former president. While Trump says he agreed to allow their conversations to be taped, he maintains that was “for the sole purpose of a book.” Publisher Simon & Schuster, which is also named in the lawsuit, released an audiobook of the recordings, The Trump Tapes, last October. Rage by Bob Woodward. Photographer: Scott Olson/Getty Images 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 Bloomberg Politics newsletter. If a friend forwarded you this message, [sign up here]( to get it in your inbox. 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