War helps Netanyahu stay in power

The war against Hamas may help Netanyahu stay in power [View in browser]( [Bloomberg]( Welcome to Balance of Power, bringing you the latest in global politics. If you haven’t yet, sign up [here](. Benjamin Netanyahu has long been known as the magician of Israeli politics. The nation’s longest-serving prime minister may have faced daily rallies against his plan to weaken the judiciary, presided over the most right-wing and religious government in Israel’s history and been on trial for bribery and fraud. But Israel seemed secure, and Netanyahu appeared close to winning a huge diplomatic prize: a deal that would offer US security guarantees to Saudi Arabia in exchange for its open embrace of Israel. As Ethan Bronner writes, [Netanyahu’s reputation as Mr. Security]( came crashing down on Oct. 7, when Hamas launched a spree of killing, raping and kidnapping in the single worst massacre of Jews since the Holocaust. Israel’s response — an attack on Gaza that’s killed more than 22,000 Palestinians, according to authorities in the Hamas-run enclave, left almost 2 million homeless and produced a humanitarian catastrophe — has complicated relations with Washington and other key allies. What’s more, constant skirmishes with the Iranian-backed Hezbollah in Lebanon and attacks by Houthi rebels in Yemen on [commercial shipping lanes]( in the Red Sea are raising fears of a full-blown regional conflict. WATCH: US Secretary of State Antony Blinken warns the Israel-Hamas war could “easily” turn into a full-blown Middle East conflict. Source: Bloomberg At home, Israeli protesters demand the government obtain the release of the remaining hostages held by Hamas, which is designated a terrorist group by the US and the European Union. Netanyahu’s approval rating has collapsed, and polls show his coalition wouldn’t win a parliamentary majority in a new election. In short, many believe his time as leader is up. And yet, the old magician may retain a trump card: the war. As long as it continues, Israel is unlikely to be able to hold a vote that would almost certainly see Netanyahu forced from office. However much Hamas has damaged Netanyahu’s legacy, it may also be helping him hang on to power. Demonstrators demanding the release of hostages in Tel Aviv on Jan. 6. Photographer: Kobi Wolf/Bloomberg Global Must Reads Chinese President Xi Jinping upgraded diplomatic ties with a record number of countries last year as he seeks to rally the Global South to [reshape the US-led world order](. While Washington has built a diplomacy strategy that depends on coalitions of mostly rich allies, Beijing is using aid, trade and investments to woo developing nations that make up the majority of the world’s population. A constitutional crisis is escalating in Poland, where two officials of the former ruling party were apprehended by police while holed up at the presidential palace. The arrests late yesterday open [fresh tensions between President Andrzej Duda](, an ally of the ousted nationalist administration who had granted refuge to the pair, and new Prime Minister Donald Tusk. A campaign of terror unleashed across Ecuador by drug gang members risks hampering newly installed President Daniel Noboa’s attempts to clamp down on organized crime and reverse years of economic malaise. As Stephan Kueffner reports, [images of masked thugs taking journalists hostage]( on live TV will do nothing to bolster business confidence, with the mayhem already denting investor sentiment. Police outside the Turi prison as inmates hold guards hostage, in Cuenca, Ecuador, on Monday. Photographer: Fernando Machado/AFP/Getty Images Voters want the UK government to prioritize spending on public services over tax cuts, according to polling that suggests the opposition Labour Party [has the advantage]( on key political and economic dividing lines ahead of a general election expected this year. The findings appear to contradict the strategy of Prime Minister Rishi Sunak, who is building a pitch around lower taxes and a crackdown on immigration. Mario Draghi’s latest mission sounding out the heads of leading companies on ways to boost competitiveness is [fueling speculation]( that the former European Central Bank chief may be aiming for the post of EU Council president. Charles Michel, the incumbent, has announced that he plans to leave early to seek a seat in the European Parliament elections. US and Chinese defense officials held policy coordination talks at the Pentagon over the past two days in the [first such in-person meetings]( since before the coronavirus pandemic. The man accused of stabbing the leader of South Korea’s biggest opposition party had followed the politician for months and [wanted to prevent him]( from becoming president, police said. A key US lawmaker is urging the Commerce Department to consider trade restrictions on [Abu Dhabi artificial intelligence firm]( Group 42 Holdings over its ties to China. Washington Dispatch Nikki Haley and Ron DeSantis will meet later today [in the final debate]( of the Republican presidential race before the Iowa caucuses, and once again their chief opponent, Donald Trump, will be elsewhere. Their other rivals for the Republican nomination have either dropped out or did not qualify for the CNN event. Yet at this point, DeSantis, the governor of Florida, and Haley, the former governor of South Carolina, seem to be competing for a distant second to Trump, who will appear at a Fox News town hall at the same time. Trump, by his absence, has cast a shadow over the Republican debates since they began in Milwaukee last August with eight contenders. He refused to take part, arguing that his superior position in the polls made it unnecessary for him to engage with rivals who, according to him, had little chance of winning the nomination and would attack him to raise their profiles. Next week will determine if that strategy was a successful one. One thing to watch today: Members of the House and Senate continue talks intended to avoid a US government shutdown on Jan. 20. [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 Russia was on pace for a second year of record oil drilling in 2023, further evidence of its [resilience to Western sanctions](. The boom in activity came alongside a recovery in the volume and value of Russia’s crude exports, a stark illustration of how its fossil fuel industry has been a crucial source of funds for President Vladimir Putin’s war in Ukraine. And Finally Xiongan was billed as a gleaming, high-tech metropolis to be built outside Beijing as a release valve for the crowded Chinese capital. The Communist Party has spent some $85 billion on the city, and on former cornfields now stand a train station, office buildings, residential compounds, five-star hotels, schools and hospitals. As this piece explains, only one thing is lacking: residents, [a reality that underscores the flaws]( in Xi’s plan and exposes the limits to the Chinese leader’s power to impose his will over market forces. Rows of new residential buildings in Xiongan in August 2023. 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