A toxic mix

Mixing politics and monetary policy is a dangerous game [View in browser]( [Bloomberg]( Welcome to Balance of Power, bringing you the latest in global politics. If you haven’t yet, sign up [here](. Some things, like pulling the levers that control the economy, don’t mix well with politics, and can even have disastrous effects. That’s what is unfolding in Poland, where central bank Governor Adam Glapinski is facing accusations that he tried to juice monetary policy to help his friends in the ruling Law & Justice party win next month’s elections. He blindsided markets this week with an unexpectedly large reduction in the borrowing costs that underpin the economy, triggering the biggest selloff of the zloty currency since Russia invaded neighboring Ukraine. Market watchers were quick to see the similarities with Turkey, where a central bank under the sway of President Recep Tayyip Erdogan slashed interest rates before May elections, triggering an almost 30% plunge in the lira this year. And less than a year ago, Liz Truss was effectively forced out as UK prime minister after just 44 days in power by bond investors for stoking financial turmoil. At a news conference yesterday, Glapinski made it worse. After arguing the move will help ordinary Poles, the 73-year old economics professor denounced skeptical economists as supporting the political opposition. The decision only adds to the controversy surrounding Law & Justice, which has for years drawn fire from the European Union for blurring democratic checks and balances and undermining Poland’s institutions, prompting the European Commission to block billions of euros in aid. While the party leads opinion polls before the Oct. 15 vote, a cost-of-living crisis has hit a lot of Poles, and it may struggle to hang on to power. In the past, it won people over by lavishing them with state handouts. The latest move by Glapinski may backfire, not only by devaluing the zlotys in voters’ wallets, but also raising doubts over whether the government is fit to run the economy. — [Piotr Skolimowski]( Adam Glapinski. Photographer: Piotr Malecki/Bloomberg Global Must Reads The Group of 20 nations is nearing agreement on a joint statement on climate change after [resistance to concrete action]( faded. As negotiations continued today on the eve of the summit in New Delhi, Vladimir Putin’s war on Ukraine is the sole topic still to be resolved, with China apparently dropping its initial opposition to measures on global warming and language on Ukraine and Russia, a Beijing ally. Indian Defense Chief General Anil Chauhan commissioned a study on possible responses to a [potential Chinese invasion of Taiwan]( following US inquiries on how the South Asian nation could contribute in the event of a war, sources say. The study will assess various scenarios and provide options for India in case a conflict breaks out, they say. Mexico’s main opposition presidential candidate, Xochitl Galvez, called for sweeping reform of state oil firm Pemex, opening the energy sector to private investment and supercharging renewables. In a [Bloomberg interview](, Galvez didn’t commit to privatizing the company but said Mexico doesn’t have the resources to transform the industry and wider economy on its own. CLICK TO WATCH: Galvez discusses reforming the state oil producer Pemex. Photographer: Alicia Vera/Bloomberg ​North Korea showed off a new submarine it said was capable of launching [tactical nuclear attacks]( in a ceremony attended by leader Kim Jong Un. South Korea’s military expressed doubts about the vessel’s capabilities. Former US President Donald Trump faces 91 criminal charges in four jurisdictions, including an alleged conspiracy to overturn the results of the 2020 election, while remaining the leading Republican candidate for the 2024 vote. Gregory Korte explains why that raises a host of scenarios in which the US Constitution would be consulted [on a collision of politics and law]( that America’s founders could scarcely have anticipated. A Nigerian court upheld Bola Tinubu’s victory in the February presidential election in Africa’s most populous nation, [dismissing an application]( from three political parties to overturn the result. President Xi Jinping will host the leaders of two heavily indebted nations, Zambia and Venezuela, this weekend as he skips the G-20 summit in New Delhi. Treasury Secretary Janet Yellen pledged more [US financial assistance for Ukraine](, saying she’s confident the effort will win congressional support despite a looming partisan showdown. Washington Dispatch The war in Ukraine threatens to touch off another political battle in the US capital, this time within the Republican Party, and House Speaker Kevin McCarthy risks becoming a casualty. McCarthy, facing strong opposition from his right flank on more aid for Ukraine, is testing the idea of linking any new assistance to immigration legislation that has yet to be specified. The maneuver puts McCarthy at odds with President Joe Biden and Democrats as well as some Republicans in the Senate who want $24 billion in new Ukraine assistance to be passed along with $16 billion for disaster relief. It also comes as the government confronts the possibility of a shutdown unless Congress approves several spending bills by Sept. 30. One thing to watch today: After his fourth indictment, Trump returns to the campaign trail, headlining a Republican Party event in Rapid City, South Dakota. [Sign up for the Washington Edition newsletter]( for more from the US capital and watch Balance of Power at 5pm ET weekdays on Bloomberg Television. Chart of the Day Electricite de France’s confidence that it won’t have to switch off some of its nuclear reactors as it did last year has buoyed hopes that European households and businesses may not face the threat of blackouts or demands to make drastic cutbacks that [sparked an energy crisis]( in Europe last winter. And Finally Chile was once on track to eliminate informal settlements, but now the number of so-called “tomas” is [growing at a dizzying rate]( all around the South American nation. The reason, Eduardo Thomson explains, is a dearth of affordable housing, unemployment, migratory waves, and discrimination. The Flor de Poblacin encampment in Alto Hospicio, Chile, on April 16. Photographer: Tamara Merino/Bloomberg Pop quiz (no cheating!) Which country is home to the world’s oldest bank? Send your answers to balancepower@bloomberg.net. More from Bloomberg - [Bloomberg Opinion]( for a roundup of our most vital opinions on business, politics, economics, tech and more. - [Economics Daily]( for what the changing landscape means for policy makers, investors and you - [India Edition](, an insider’s guide to the emerging economic powerhouse, and the billionaires and businesses behind its ris - [Green Daily]( for the latest in climate news, zero-emission tech and green finance Explore more newsletters at [Bloomberg.com](. 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](. 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. [Unsubscribe]( [Bloomberg.com]( [Contact Us]( Bloomberg L.P. 731 Lexington Avenue, New York, NY 10022 [Ads Powered By Liveintent]( [Ad Choices](