Latin influence

The US-China rivalry has become a focus in Paraguay’s election on Sunday. [View in browser]( [Bloomberg]( A presidential election in Paraguay is hardly a global event. But Sunday’s vote in the landlocked South American nation has suddenly turned into another chapter of the US-China competition. That’s because Paraguay is one of a dozen countries that still has full diplomatic relations with Taiwan. Initiated in 1957 under the fiercely anti-communist dictatorship of Alfredo Stroessner, the relationship has evolved over the decades thanks to his Colorado Party retaining power for all but five years. Key Reading: - [Paraguay Candidate Says Taiwan Alliance Costing Opportunities]( - [Presidential Hopeful Has Plan for an Investment-Grade Paraguay]( - [US Sanctions Two of Paraguay’s Political Elite Ahead of Vote]( - [Taiwan Loses Ally of Decades as Honduras Sides With China]( - [US-Blacklisted Leader Tightens Grip on Paraguay Ruling Party]( More recently, the cost of ignoring China for Paraguay, one of the world’s top soy exporters and a significant beef producer, has become hefty. Enter Efrain Alegre, the opposition figure fighting head-to-head for the presidency against the government’s candidate, Santiago Peña. Alegre suggested during the campaign that Paraguay isn’t getting enough out of the relationship and should consider changing sides. While his position appears to be purely pragmatic and he hasn’t explicitly pledged to start relations with China, just floating the issue was enough to stir unease in Washington. China has wooed several Latin American countries over to its side in recent years, including Panama, El Salvador, Dominican Republic and, last month, Honduras. The Asian giant’s growing influence has been irresistible in a region that produces commodities from copper to grains. Guatemala, the largest economy of the pro-Taiwan group, picks its president in June. Meanwhile, the US has taken the unusual step of [sanctioning]( two top Paraguayan government figures, Vice President Hugo Velázquez and Colorado Party leader and former President Horacio Cartes, alleging involvement “in systemic corruption that has undermined democratic institutions.” Regardless of their merits, imposing sanctions on the eve of a crucial vote in a country that has been a historic ally of Washington has the potential to tilt the election as corruption remains a main concern among Paraguayans. It’d be a geopolitical irony if the US move unintentionally sends Paraguay into China’s arms. — [Juan Pablo Spinetto]( Alegre supporters at a rally in Asuncion on April 16. Photographer: Santi Carneri/Bloomberg Click [here]( for this week’s most compelling political images, and if you are enjoying this newsletter, sign up [here](. Understand power in Washington through the lens of business, government and the economy. [Sign up]( for the new Bloomberg Washington Edition newsletter delivered weekdays. Global Headlines Russia unleashed aerial attacks across Ukraine today, killing at least 14 people and damaging several buildings. [Explosions]( were heard in the capital, Kyiv, the first assault there in more than a month. Air defenses destroyed 21 of 23 cruise missiles and two drones during Russia’s strikes, which involved Tu-95 strategic aircraft from the Caspian Sea region, Ukrainian Commander-in-Chief Valeriy Zaluzhnyi said. - Follow our [rolling coverage]( of the war in Ukraine. A damaged residential building in Uman today. Source: Interior Ministry of Ukraine Democrats are concerned that US President Joe Biden [hasn’t raised enough]( money from donors in the initial days since this week’s reelection announcement, potentially underscoring the perception that his run isn’t exciting voters. The sluggish fundraising comes from a lack of outreach to major donors who can boost the early total by making big contributions to the Democratic Party, sources say. The European Union’s proposed overhaul of debt rules leaves a majority of member states without [sufficient firepower]( to finance the climate transition, the New Economics Foundation says in a report. Only Sweden, Ireland, Denmark and Latvia would have enough fiscal space to meet climate commitments required to keep global warming to below 1.5 degrees Celsius under proposals put forward by the European Commission this week. A publicity counteroffensive from the US and EU is trying to halt a shift in public sentiment in Hungary, where Prime Minister Viktor Orban has turned the country [increasingly eastward]( with years of anti-Western rhetoric. As Hungarians’ affinity grows for Russia and China, the risk is that a decline in backing for the EU might loosen the key guardrail keeping the country inside the bloc. - ​​​​​​Hungary’s president [pardoned]( a far-right figure convicted of terrorism hours before meeting Pope Francis in Budapest, a decision that risks damaging the optics of the pontiff’s visit. Best of Bloomberg Opinion - [How Much Extra Would You Pay to Save the Planet?: Chris Bryant]( - [Ukraine’s Grain Is Needed — But Not in Poland: Javier Blas]( - [Disney-DeSantis Suit Has Looking-Glass Logic: Stephen L. Carter]( Sudan has known just 17 years of peace in its nearly 70 years of independence, but the current conflict between the army and a paramilitary group is the [worst fighting]( the capital, Khartoum, has seen in decades. [Simon Marks]( and [Mohammed Alamin]( explain how the North African nation’s democratic transition unraveled because of the rivalry between two men emboldened by foreign powers competing for sway over the country and its resources. - The army and the paramilitary Rapid Support Forces agreed to extend what had been a largely [ineffective truce]( for an additional 72 hours. WATCH: Is Sudan heading for civil war? Source: Bloomberg Explainers You Can Use - [Global Climate Talks Target Reclusive Turkmenistan Over Methane]( - [How US Green Deal Has Opened Floodgates for Subsidies]( - [Big Power Shortfall Looms After Quebec Wooed US With Cheap Hydro]( China’s ambassador warned Japan that Taiwan was [a red line]( not to be crossed. “Foreign forces are colluding with Taiwan independence forces,” Wu Jianghao told reporters in Tokyo, adding that whipping up a division in China would “lead the Japanese people into a fire.” Wu also said the detention of an employee of Japanese drugmaker Astellas Pharma was related to a spying incident. Tune in to Bloomberg TV’s Balance of Power at 5pm to 6pm ET weekdays with Washington correspondents [Annmarie Hordern]( and [Joe Mathieu](. You can watch and listen on Bloomberg channels and online [here](. News to Note - Ties between India and China depend on peace on the border, India’s defense chief told his Chinese counterpart, amid [strained relations]( over their contested Himalayan frontier. - The UK government has signaled it will [break]( its Brexit pledge to scrap around 4,000 pieces of legislation dating from EU membership by an end-year deadline. - Tensions between Australia and China over issues ranging from foreign investment to security are easing as Beijing shifts to [improve relations]( with certain US allies. - Pakistan Prime Minister Shehbaz Sharif won a [confidence vote]( in parliament in a show of force against his rival and former premier Imran Khan, who is pushing for early elections. - Australia [switched off]( one of its largest coal-fired power stations after almost 52 years of operation as the country accelerates its transition away from fossil fuels. Pop quiz (no cheating!) Which nation’s president walked back an earlier statement that his government plans to withdraw from the International Criminal Court? Send your answers to balancepower@bloomberg.net. And finally ... As every major country in Latin America shifts to the left in reaction to widening inequality, [capital is flying out]( of the region. Wealthy and, increasingly, middle-class investors are looking for a Plan B in case of more economic and political upheaval. People and corporations in the region’s five largest economies pulled roughly $137 billion out of their countries in 2022. Colombians eager to buy property in Miami gather at Bogotá’s Hotel Estelar La Fontana in March. Photographer: Fabiola Ferrero/Bloomberg Follow Us Like getting this newsletter? [Subscribe to Bloomberg.com]( for unlimited access to trusted, data-driven journalism and subscriber-only insights. Want to sponsor this newsletter? [Get in touch here](. 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