A political earthquake

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It was nothing short of a political earthquake that gripped Central Europe as heads of the established leaders began to roll over the weekend. In Austria, Chancellor Sebastian Kurz resigned over a corruption scandal, while elections in the Czech Republic dealt a blow to billionaire Prime Minister Andrej Babis. It's been a dizzying turn of events in neighbors that straddle east and west. Both are members of the European Union that have tested its rules-based system. Neither are big hitters in the 27-nation bloc, but they've exploited opportunities to punch above their weight. Kurz, Europe's youngest leader, was at the vanguard of the far-right populism that gripped the EU after the refugee crisis that presaged Brexit and the rise of Donald Trump. His anti-immigration stance caused trouble for Germany's Angela Merkel and his perceived fiscal stinginess also made life difficult when the EU needed everyone to support a pandemic recovery fund. Kurz's demise is unlikely to be mourned west of Vienna, though a comeback cannot be excluded. He bounced back from a 2019 sleaze scandal that toppled his earlier government. The situation in the Czech Republic is more volatile. Babis is locked in a long-running battle with the European Commission over conflicts of interest and whether he directed EU funds toward his agri-food conglomerate. Holding onto power is potentially key to keeping him out of jail, which is why the combination of losing an election and his protector — President Milos Zeman was rushed to hospital yesterday — could mean power may change there too in more significant ways. In Austria, Kurz stepped down and put forward an ally, Foreign Minister Alexander Schallenberg, with a view to still exerting influence behind the scenes. In Prague, it's looking more like the end of an era. — Flavia Krause-Jackson

Sebastian Kurz during a Bloomberg Television interview in New York on Sept. 22.  Photographer: Christopher Goodney/Bloomberg Click here to follow Bloomberg Politics on Twitter and tell us how we're doing or what we're missing at balancepower@bloomberg.net.

Global Headlines

High bar | Hong Kong Chief Executive Carrie Lam defended Covid-19 travel curbs that are frustrating companies, even as fellow financial hub Singapore allows more quarantine-free movement. Lam told Bloomberg Television that a single virus fatality "will cause a major concern in society," and mainland Chinese officials expect Hong Kong to more closely follow their strict approach on Covid to prevent the city from becoming a "weak link" for infections. Click here to watch Lam comment on a potential anti-sanctions law. More headaches | The U.K. is set for a clash with the EU this week over border controls in Northern Ireland, an issue that could spark a full trade war. Yet, as Reed Landberg and Golnar Motevalli report, the rift with Brussels may help Prime Minister Boris Johnson nudge the narrative away from how Britain is reeling from a supply-chain crisis that the Brexit divorce from the EU has exacerbated. Fossil fuels are making a remarkable comeback as a global recovery from the pandemic boosts demand. Javier Blas explains that for all the green energy promises and plans, that transition to sources like wind and solar is in its infancy, and the world still leans heavily on fossils. It's an addiction built up over two and a half centuries, and it runs deep. Taliban talks | U.S. officials held talks with senior Taliban representatives in Qatar over the weekend in their first official meeting since the American withdrawal from Afghanistan in August. The State Department said the "candid and professional" discussions covered safe passage of U.S. citizens, other foreign nationals and Afghan partners, the rights of women and humanitarian aid. The Afghan foreign ministry said the two-day meeting "went well." Group of 20 nations are holding a virtual summit tomorrow to discuss Afghanistan. Best of Bloomberg Opinion Boris Johnson Is the Master of Political Cheer: Martin Ivens IMF Agony Goes Way Beyond Georgieva's Survival: Daniel Moss Don't Blame ESG for the Global Energy Crisis: David Fickling Pointing fingers | China and India traded blame for a lack of progress in easing friction along their disputed border, underscoring lingering ill will following clashes last year. While the Chinese side said it "made great efforts" in a meeting of military officials yesterday and called New Delhi's demands unrealistic, India said Beijing failed to provide "any forward-looking proposals." India said five of its soldiers were killed in a gunfight along a disputed border with Pakistan. Changing gears | New Delhi is racing to wrap up a clutch of quick-fire bilateral pacts by the end of March as economic necessity spurs a shift from India's usual go-slow approach on trade deals. Archana Chaudhary reports it also means Prime Minister Narendra Modi's government is prioritizing "early harvest" pacts over comprehensive free-trade agreements with partners. Bloomberg TV and Radio air Balance of Power with David Westin weekdays from 12 to 1pm ET, with a second hour on Bloomberg Radio from 1 to 2pm ET. You can watch and listen on Bloomberg channels and online here or check out prior episodes and guest clips here. What to Watch This Week Lee Jae-myung, the governor of South Korea's most populous province, won the presidential primary for the ruling party on a platform of universal basic income and expanding the social safety net. Iraq's parliamentary election leaves Prime Minister Mustafa al-Kadhimi's attempts to calm a major source of Persian Gulf insecurity and repair his nation's oil industry hanging in the balance. The U.S. arrested a Navy Department employee and his wife on spying-related charges after they allegedly sold restricted data on nuclear-powered submarines to an FBI agent posing as a foreign official. Hungary's first-ever opposition primary has mobilized voters, helping the bloc of six trying to unseat Prime Minister Viktor Orban pull ahead of his ruling party in opinion polls before elections next year. Exiled former Burkina Faso President Blaise Compaore stands trial for the murder of Thomas Sankara, the West African nation's leader killed in a coup in 1987. The International Monetary Fund's executive board deliberates today over the fate of the lender's chief, Kristalina Georgieva, after discussions with her and the law firm that alleged she acted improperly in her previous job at the World Bank. Thanks for the 50 responses to our Friday quiz question and congratulations to Saanjaana Rahman, the first to name Russian President Vladimir Putin as the leader who, after years of publicly dismissing climate change, is finally prodding officials to take the threat it poses to his economy more seriously. And finally ... From a new Texas law to a gauntlet of opponents outside a Kentucky clinic for women seeking to end pregnancies, abortion rights are under attack in the U.S., and the Supreme Court may have the final word. Greg Stohr outlines how America's top court, with conservatives holding a 6-3 majority, could gut the constitutional right to abortion and allow sweeping new restrictions in much of the country. The Women's March and Rally for Abortion Justice at the State Capitol in Austin, Texas, on Oct. 2. Photographer: Sergio Flores/AFP/Getty Images

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