A dystopian warning

We focus on the many challenges facing Pakistan and the warning signs that poses for others. [View in browser]( [Bloomberg]( Pakistan has touted itself as one of the world’s cradles of civilization, flourishing for thousands of years along ancient trade routes passing through the fertile Indus Valley. Now it presents a dystopian vision of the future, bankrupt, unstable and threatened by climate catastrophe. Its fate offers a warning to other heavily indebted nations on the precipice, from Sri Lanka to Zambia. Key reading: - [Imran Khan Popularity Soars Ahead of Vote, Pakistan Survey Show]( - [Pakistan Seeks to Arrest Imran Khan, Bans Him From TV Channel]( - [Pakistan Seals $2 Billion Loan From China Amid IMF Delay]( - [Pakistan Faces Economic Collapse. Debate Rages on Who Should Pay]( - [New Weather Patterns Are Turning Water Into a Weapon]( Pakistan is due to hold elections no later than October, and political jostling is narrowing the nuclear-armed nation’s options. Opposition leader Imran Khan, who was ousted from the premiership last year, is in a bitter standoff with Prime Minister Shehbaz Sharif over control of the country of 230 million. He’s held mass rallies in recent months to pressure the government into an early vote, while the authorities have filed numerous cases against him and issued a warrant for his arrest. As Islamabad fiddles, the country is burning up its foreign reserves, and investors see a growing risk of default. The government is living hand to mouth, reliant on outside loans from China while negotiating with the International Monetary Fund for the remaining funds in a $6.5 billion bailout — its 13th since the late 1980s. Pakistan already got a taste of economic disaster last year when deadly floods displaced millions. Such calamities are unlikely to be a one-off, with climate scientists forecasting massive increases in river flows as a result of melting Himalayan glaciers, inundating farmland and obliterating infrastructure — interspersed with drought. Pakistan could hardly have a more strategic location, lodged between Iran and India and with China and Afghanistan to the north. That, plus its sheer size as the world’s fifth-most populous nation, make it too big to be allowed to fail. The question is who, both in and outside the country, is going to come to its rescue. — [Alan Crawford]( Children sit by a fire on a commercial street in Lahore, Pakistan, on Jan. 23. Photographer: Betsy Joles/Bloomberg Coming Soon: Understand power in Washington through the lens of business, government and the economy. Find out how the worlds of money and politics intersect in the US capital. [Sign up now for the new Bloomberg Washington Edition newsletter](, delivered Mondays, Wednesdays and Fridays. And if you are enjoying this newsletter, sign up [here](. Global Headlines Return to freezing | Back in November, before the latest downward spiral in US-China ties, President Xi Jinping cast himself as a statesman in a meeting with President Joe Biden. This week, as top Chinese officials gathered for the National People’s Congress, Xi [stopped]( playing nice, reflecting mounting frustration in Beijing after an alleged spy balloon obliterated any goodwill. - China is setting up an enlarged national financial regulatory authority, a move to strengthen the Communist Party’s leadership in its $60 trillion financial system and [keep risks]( in check. It will also set up a new bureau to oversee the [vast quantities of data]( generated across the country. - The chairman of Australia’s sovereign wealth fund says he’s [increasingly wary]( of being caught in the crosshairs of US-China tensions and the potential for the Biden administration to place investment bans on Chinese companies. Where you sit can often tell your status in the office hierarchy. It’s no different at the NPC, where Xi’s allies are all [crammed around]( their leader. Gas focus | The European Union is seeking to drive down energy prices with its plan to take its first steps into the global natural gas market as a [buyers’ cartel]( next month. Joint purchases are a new tool the bloc deployed to limit a jump in costs triggered by a Russian supply cut following Moscow’s invasion of Ukraine. Conventional wisdom says the US will yet again avoid a [devastating federal payments default](. But that idea has proved spectacularly wrong months ahead of shocks that upended the world in recent years. The so-called X date — when the government won’t be able to pay all its bills — is just months away. And the politics driving negotiations look more perilous than in previous episodes. French strike | Unions are seeking to bring France to a [standstill]( today in a sixth day of protests against President Emmanuel Macron’s plan to raise the minimum retirement age to 64. Strikes are expected to cause severe disruption to trains, flights and possibly other sectors of the economy like utilities, even as the government insists the reform is crucial to keeping public finances sound. Best of Bloomberg Opinion - [Tough Talk Won’t Solve the UK’s Migrant Problem: Therese Raphael]( - [Tokyo-Seoul Accord Must Not Be Another False Dawn: Gearoid Reidy]( - [India Is Bruised After Battling Twin Shocks: Andy Mukherjee]( Step forward | China has given assurances it will support Sri Lanka’s debt restructuring, potentially clearing the [biggest hurdle]( for the South Asian nation to secure a $2.9 billion bailout soon from the IMF. The loan talks had dragged on for months as Beijing insisted multilateral institutions such as the World Bank be part of any restructuring for debtor countries, [raising tensions]( with the US. - The IMF will temporarily [increase funding limits]( which will give member states — particularly emerging markets facing vulnerabilities — access to funds without triggering the so-called exceptional access framework that entails tougher conditions. Explainers you can use - [What Are COP Meetings For? Does It Matter Who Hosts?]( - [How Nigerian Crackdown on Vast Cash Economy Backfired]( - [How Local Financing Is Adding to China’s Risky Debt]( Orbital shift | Georgia’s ruling party is pushing for a “foreign agent” bill that critics liken to a law President Vladimir Putin used to [crush dissent]( in Russia by curbing groups that receive US and European funding. Opposition parties, media and civil society groups warned the legislation would indirectly promote the Kremlin’s interest nearly two decades after the pro-Western “Rose Revolution” helped Georgia pull away from Moscow’s orbit. Travelers walking on the road from the customs checkpoint between Georgia and Russia in September. Photographer: Daro Sulakauri/Getty Images Europe News to Note - Slovakia’s caretaker Prime Minister Eduard Heger announced he’s [quitting]( the former ruling coalition’s strongest party and preparing a new political project ahead of a planned early election in September triggered by the government’s earlier collapse. - South African President Cyril Ramaphosa appointed a deputy and electricity czar and [replaced]( several ministers, injecting new blood into a cabinet that’s failed to get to grips with crippling energy shortages and revive the economy. - The powerful sister of North Korean leader Kim Jong Un issued a fresh warning to the US and South Korea, threatening severe [consequences]( if they go ahead with planned joint military drills next week. - Berlin plans to ban some Chinese [components]( in the country’s 5G wireless network, Germany’s Die Zeit newspaper reported, as lawmakers unwind an Angela Merkel-era compromise. - The government of Peru, the second-biggest producer of copper and zinc, expects [shipments]( of the commodities will begin to normalize within days as the nation’s worst street protests in decades ease. And finally ... The [outbreak of violence]( against Black migrants in Tunisia that critics say was stoked by President Kais Saied has prompted the World Bank to temporarily halt some work in the North African nation. Hundreds of sub-Saharan Africans have left Tunisia since Saied blamed Black residents for a rise in violent crime. He ordered security forces last month to stop illegal migration and expel undocumented migrants. The crackdown has caused racially motivated assaults. Sub-Saharan migrants load belongings onto a bus to head to a repatriation flight from Tunis. Photographer: Fethi Belaid/AFP/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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