When force trumps diplomacy

A short, bitter conflict has ended for now [View in browser]( [Bloomberg]( Welcome to Balance of Power, bringing you the latest in global politics. If you haven’t yet, sign up [here](. One of the world’s most bitter and [intractable territorial disputes]( appeared to be close to a resolution today, though it’s not a triumph for diplomacy. Renewed fighting erupted in Nagorno-Karabakh after Azerbaijan declared it intended to take full control of the region from Armenians living there who’ve sought independence for decades. After two days of combat, the Armenians effectively conceded defeat, agreeing to disband their defense forces and hold talks with the government in Baku. The conflict is another legacy of the collapse of the Soviet Union that diplomacy has failed to resolve, as major powers jostled for influence in the Caucasus region that’s a key bridge to the mineral and energy riches of central Asia bypassing Russia. Nagorno-Karabakh has a majority Armenian population though it’s recognized internationally as part of Azerbaijan. Repeated efforts by Russia, the US, France and the European Union to negotiate a lasting resolution to the conflict had failed since the early 1990s when Armenians broke away after the Soviet collapse. The outcome is a personal triumph for Azerbaijani President Ilham Aliyev, who ignored demands from the US, France, the EU and other powers to halt the offensive. Russian troops on the ground mediated today’s agreement, helping to strengthen Moscow’s hand in a region where its grip weakened after a 2020 war between Armenia and Azerbaijan over the territory. Turkey gained influence after helping its ally Azerbaijan. Relations between Russia and Armenia, long Moscow’s closest ally in the region, have been strained recently as Prime Minister Nikol Pashinyan has sought to strengthen ties with the US and the EU. Pashinyan now risks a backlash from critics at home over his refusal to aid Armenians in Nagorno-Karabakh that Russia may seek to exploit. A final peace deal between Armenia and Azerbaijan has still to be agreed. Others involved in territorial disputes will note, though, that decades of talk proved less effective than days of force. — [Anthony Halpin]( Damaged buildings following shelling in Stepanakert, Nagorno-Karabakh, yesterday. Photographer: Siranush Sargsyan/AP Photo Global Must Reads Polish President Andrzej Duda [criticized Kyiv]( for its handling of a dispute over imported grain, adding strains to an alliance central to repelling Russia’s invasion of Ukraine. In a Bloomberg Television interview, Duda defended Warsaw’s extension of a ban on crops from its eastern neighbor in a bid to placate Poland’s farmers whose support will be crucial in next month’s parliamentary elections. The risk of a US government shutdown on Oct. 1 rose as [Republican Party hardliners]( opposed House Speaker Kevin McCarthy’s proposal to approve funding for 31 days while changing US immigration rules and cutting spending on domestic agencies by 8%. Even without the far-right opposition, his plan stands little chance of approval by the Democratic-controlled Senate. There’s wide consensus that climate change is among the world’s top problems. Yet, as Zahra Hirji writes, the hours of speeches at the United Nations General Assembly this week offered a preview of [battles to come]( — over the rich world’s responsibility to reduce emissions and the financing needed for climate adaptation — that are likely to feature at the UN’s COP28 climate conference starting in November. Flooding in Artitsa village, Greece, on Sept. 8. Photographer: Konstantinos Tsakalidis/Bloomberg Sweden looks set to miss its legislated climate goals, despite being the first nation globally [to set a milestone target]( for net zero emissions. In the UK, Prime Minister Rishi Sunak’s decision to roll back some green-energy policies [sparked a backlash]( among Conservative members of parliament and created uncertainty for industry. The discovery of what some have touted as the biggest-ever deep-water oil find has generated [understandable excitement]( in the southern African nation of Namibia, where it holds the promise of untold riches. Yet as Paul Burkhardt and Kaula Nhongo report, the corruption and instability crude has spawned elsewhere on the continent is injecting a dose of caution. Iranian President Ebrahim Raisi called on the US to make clear [if it wants a nuclear agreement or not](, criticizing Washington’s track record while leaving the door open to a future deal. Support for New Zealand’s governing Labour Party has dropped to [a six-year low]( less than four weeks from a general election, according to the latest opinion poll. Hong Kong has lost the crown it held for half a century as the [world’s freest economy]( to Singapore in rankings compiled by the Fraser Institute, a Canadian think tank that cited eroding judicial independence as a factor. Washington Dispatch Ron DeSantis will present his US energy proposals today in Midland, Texas, a city that has loomed large in the state’s oil industry and where George H.W. Bush, who later became president, sought his fortune. While the precise details have yet to be released by his presidential campaign, the Florida governor has championed fossil fuels as essential to the US economy, and belittled President Joe Biden’s campaign to confront climate change by promoting electric vehicles and renewable energy. To illustrate his agenda DeSantis will speak with an oil rig as a backdrop. His stance, however, differs little from positions taken by his Republican rivals, and shows how energy and climate issues have become another predictable partisan flashpoint in American politics. The rancor has permeated the UAW strike against Detroit’s Big Three automakers, with Republicans arguing that EV policies will hurt union workers. Biden counters that they will produce more jobs while protecting the environment. One thing to watch today: The US Federal Reserve announces its decision on rates as well as economic forecasts. [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 The surge in oil prices toward $100 a barrel presents central bankers meeting this week from London to Washington with a difficult question: whether the crude spike is a [temporary blip or more enduring](, as the rise can act both as a spur to consumer prices and a brake on economic growth. That trade-off will test the emerging consensus among officials that inflation risks are muted enough for them to pause lifting interest rates. And Finally The 6.8 magnitude earthquake that killed 2,900 people in Morocco and displaced 300,00 has raised new questions about [the safety of buildings]( made of unfired mud bricks and rammed earth, an ancient technique used in a 10th of Unesco’s World Heritage sites. María Paula Mijares Torres writes that the Sept. 8 tremblor has reignited a debate about how such traditional buildings can be strengthened to withstand future disasters. Mud-walled buildings lie in ruins in Ouirgane, Morocco, on Sept, 11. Photographer: Nathan Laine/Bloomberg 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 - [Green Daily]( for the latest in climate news, zero-emission tech and green finance - [Next Africa](, a twice-weekly newsletter on where the continent stands now — and where it’s headed 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. 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