A tough choice

Follow Us Get the newsletter Five days after a Belarusian fighter jet intercepted an airliner flying between two European Union capitals to arrest a dissident journalist, Russian President Vladimir Putin is hosting the country's leader, Alexander Lukashenko, at the Black Sea resort of Sochi. Today's meeting between the two presidents, who've run their ex-Soviet states for almost half a century combined, is a clear signal Putin doesn't feel the need to play by the West's rules. The question for the U.S. and Europe is what to do about it. They've sanctioned Russia for everything from the 2014 annexation of Crimea and election meddling to the failed assassination attempt by poisoning of dissident Alexey Navalny. The Kremlin denies involvement in the hacking and poisoning, just as Putin's spies also reject blame for a litany of attacks and crimes on NATO soil. The EU is threatening to escalate its retaliation against Lukashenko, which will raise the diplomatic cost for Putin of defending his isolated ally. But it could be a month or more before EU sanctions take effect. And not all Europeans are ready to blame Putin. While Russia pundits say the authorities in Minsk would have never acted without his knowledge, German Chancellor Angela Merkel insisted this week that there's no evidence. Joe Biden hasn't indicated when he might act on Belarus. And while the U.S. president has called Putin a "killer" and warned he'll pay a price for his actions, his administration has also said he seeks a "stable, predictable relationship" with Moscow. When he sits down with Putin at their summit in Geneva on June 16, Biden may find he has to choose. — Michael Winfrey Lukashenko and Putin. Photographer: Sergei Bobylyov/AFP/Getty Images Click here for this week's most compelling political images and tell us how we're doing or what we're missing at balancepower@bloomberg.net. Global Headlines Shaping up | The Senate is slowly moving toward passage of a bill to bolster U.S. economic competitiveness and confront China's rise. The measure, which still faces significant hurdles in the House, would plow more than $100 billion into research and development and provide $52 billion for domestic semiconductor manufacturing. It also includes measures targeting China on human rights and its influence in the U.S. China reaffirmed its "traditional friendship" with North Korea, days after the U.S. and South Korea reached a deal that allows Seoul to step up the range and power of its missile arsenal. Factories' squeeze | Many Chinese manufacturers aren't planning to expand their operations as surging raw material prices cut into companies' profit margins. That poses a risk to both growth in the world's most populous nation and to a global economy grappling with supply shortages and rising costs. A bipartisan pair of U.S. representatives is proposing a law that would penalize companies that sponsor or do business with the 2022 Winter Olympics in Beijing. Bail denied | Hong Kong prosecutors cited an ex-lawmaker's WhatsApp chats with reporters from foreign news outlets in a successful bid to deny her bail, fueling concerns about the implications of a China-imposed national security law for free speech in the Asian financial hub. Claudia Mo's private conversations with staff from the BBC, the New York Times and the Wall Street Journal were submitted by prosecutors last month during her bail hearing. A Hong Kong court jailed media tycoon Jimmy Lai and other pro-democracy activists for their roles in organizing a protest highlighting opposition to the Chinese Communist Party. Japan would need to enact steep carbon tax increases to meet its new target for reducing greenhouse gases over the next decade, tax and energy experts say, after Prime Minister Yoshihide Suga pledged in an April meeting with Biden to cut carbon emissions to 46% of the country's 2013 levels by 2030. Online battle | The Indian government accused Twitter of attempting to "defame India to hide their own follies," escalating their dispute after the social network accused officials of intimidation. Saritha Rai reports the latest flare-up followed Twitter's decision to label posts from Prime Minister Narendra Modi's ruling party as "manipulated media." History's debt | The Illinois city of Evanston is the first in the U.S. to attempt to pay local reparations to its Black residents for losses inflicted historically by racial policies, Susan Berfield and Jordyn Holman report. It's begun a $10 million, 10-year program, starting with housing. But restitution is complex and emotional. What to Watch Japan's government will extend a state of emergency that includes Tokyo and other major cities in a last-ditch effort to rein in Covid-19 infections ahead of the capital hosting the Summer Olympics in less than two months. At least two European airlines scrapped flights to Moscow yesterday after Russian aviation authorities didn't give them permission to change their routes in order to bypass Belarus. Singapore plans to roll out vaccines to students, followed by everyone else eligible, in what will be a "great acceleration" of inoculations, Foreign Minister Vivian Balakrishnan told CNN. Pop quiz, readers (no cheating!). Which nation is taking a gamble that it can solve a worsening Covid-19 crisis itself with vaccines made by local labs? Send your answers to balancepower@bloomberg.net. And finally ... For the last two decades an elephant poaching epidemic has raged across Africa, with populations in some areas decimated and multiple species increasingly at risk of being wiped out by humanity's lust for ivory. A proposal by the EU would match U.S. and China bans, but given recent record seizures, it may be too late. Illegal stockpiles of elephant tusks, ivory figurines and rhinoceros horns are burned at the Nairobi National Park in Kenya in 2016. Photographer: Carl De Souza/AFP/Getty Images     Like Balance of Power? Get unlimited access to Bloomberg.com, where you'll find trusted, data-based journalism in 120 countries around the world and expert analysis from exclusive daily newsletters.   You received this message because you are subscribed to Bloomberg's Balance of Power newsletter. Unsubscribe | Bloomberg.com | Contact Us Bloomberg L.P. 731 Lexington, New York, NY, 10022