The Palestinian question endures

The Palestinian issue is back in the spotlight [View in browser]( [Bloomberg]( Welcome to Balance of Power, bringing you the latest in global politics. If you haven’t yet, sign up [here](. The deadly attack on Israel by the Palestinian group Hamas not only marks the biggest Israeli intelligence failure in decades. It has shattered the idea [that the Palestinian issue]( can be ignored. An unknown number of Israelis have been captured and held hostage after Hamas militants invaded the south. Videos posted online show armed men marching or dragging men and women through the streets, some elderly, some bloodied. Instagram and other channels were flooded with faces of missing people and pleas for information. Many of those identified were young attendees of an outdoor desert rave. Israel is coming to terms with what its ambassador to the United Nations, Gilad Erdan, called his nation’s own Sept. 11 moment. It comes at a time of enormous diplomatic sensitivity and [a moment of weakness for Israel]( that analysts have been warning its enemies might seek to exploit. It risks expanding into a wider conflagration with consequences beyond the Middle East. While in Israel there’s suspicion of an Iranian role in the assault, Western officials have been reluctant to publicly say Tehran was directly involved. Iran has lauded the attacks while denying any part in them. Managing longstanding tensions with the Palestinians had become “sort of a check box,” Prime Minister Benjamin Netanyahu said in an interview with Bloomberg TV earlier this year. Those words will surely come back to haunt him. It’s also a deep political blow for Saudi Crown Prince Mohammed bin Salman. Together they had been edging toward warmer ties as part of complex talks mediated by the Joe Biden administration that critics argue have sidelined the future of a Palestinian state. Just days ago, the dawn of a new Middle East political landscape appeared imminent. Today, it’s clear the old Middle East won’t go away quietly.— [Paul Wallace]( Palestinian citizens evacuate their homes in the eastern area of the Gaza Strip. Photographer: Ahmad Salem/Bloomberg Global Must Reads Chinese President Xi Jinping will meet with a delegation of US senators in Beijing today, state broadcaster CCTV reported, as the surprise escalation of violence in the Middle East [threatens to add tensions to US-China relations](. Senate Majority Leader Chuck Schumer earlier in the day criticized Beijing’s response to Hamas’s unprecedented incursion into Israel this weekend during a meeting with Chinese Foreign Minister Wang Yi. Africa’s miserly share of the global economy has barely budged since 1973, the last time the continent hosted the International Monetary Fund and World Bank annual meetings, and African leaders complain [they’re overlooked](. Renewed great power rivalry pitting the US and its allies against China and Russia is ramping up pressure on the two Washington-based institutions meeting in Morocco this week to do more in Africa. An earthquake in mountains near Marrakech, Morocco, last month killed nearly 3,000​ people. Photographer: Philippe Lopez/AFP/Getty Images Stinging electoral blows in two key states piled pressure on Chancellor Olaf Scholz’s fractious ruling coalition [as voter frustration deepens]( over Germany’s economic malaise, illegal migration and the war in Ukraine. All three governing parties lost support in Bavaria and Hesse, while the far-right Alternative for Germany — known as the AfD — emerged as the second-strongest force in both states. Some of China’s rich are gambling on often unorthodox ways to move their cash overseas since the national borders reopened after the Covid-19 pandemic. As Lulu Yilun Chen reports, crackdowns on ideologically out-of-favor industries, uncertainty over geopolitical tensions and Xi’s push for “common prosperity” [have spooked the wealthy]( and even the middle class. Republicans in the US House predicted yesterday [they will have a new speaker]( in place by mid-week to avoid the messy 15-round process that led to the election of now-deposed Speaker Kevin McCarthy in January. The two contestants for the post are Jim Jordan of Ohio, who’s backed by former President Donald Trump, and Steve Scalise of Louisiana. Hundreds of people are dead, and at least another 2,000 wounded, from a [6.3 magnitude earthquake]( and multiple aftershocks in western Afghanistan. Prime Minister Kyriakos Mitsotakis’s party was set to [win gubernatorial races]( in more than half of Greece’s 13 regions, following New Democracy’s victory in parliamentary elections in June. Five Indian states will hold local polls from November, [posing a key test]( for Prime Minister Narendra Modi before general elections next year. Washington Dispatch Robert F. Kennedy Jr. plans to make a “major announcement” in Philadelphia today, which according to his presidential campaign will “lay out a path to the White House that involves a major shift in American politics.” While it’s unclear what he intends to say, Kennedy has complained about party rules involving his primary challenge to Biden for the Democratic nomination. He could instead run as an independent, creating a potential problem for the president in what’s expected to be a close general election. Kennedy remains far behind in the RealClearPolitics average of Democratic polls, 14% to Biden’s 65%. His promotion of conspiracy theories regarding vaccines had made him a pariah in the party even before he made remarks widely criticized as anti-Semitic, an assertion he denies. Yet his famous name and memories of his father and uncles John F. Kennedy and Ted Kennedy — three of the most prominent American politicians of the 20th century — as well as his impressive fundraising, $6.4 million through June 30, means that he would not be just another third-party candidate. One person to watch today: US Federal Reserve Vice Chair Philip Jefferson is to speak at the National Association for Business Economics meeting in Dallas. [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 Tourism revenue from China’s “Golden Week” holiday surged year-on-year [but edged only slightly above]( its pre-Covid level. That suggests relatively muted consumer sentiment continues to weigh on the country’s economic growth. And Finally Plans for Paris’s 2024 Olympics to stage an opening ceremony with a waterborne parade along the Seine River face a dilemma: What to do about the 950 wooden bookstalls [that give the quayside much of its charm](? Paris police say they pose a security risk — an all-too-easy place to stow explosives — as well as potentially create crowd crushes. The authorities and the Bouquinistes, as the booksellers are called locally, agreed this week to stage a test removal of a few stalls to see if they can be dismantled and reassembled without damage or delay. Tourists peruse antiquarian books and old posters displayed by the Bouquinistes of Paris on Aug. 12. Photographer: Miguel Medina/AFP/Getty Images Thanks to the 69 people who answered the Friday quiz and congratulations to Richard Lorenz, who was the first to name France as the European country whose government held an emergency meeting to discuss a suspected infestation of bed bugs across the capital. 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